GAZA CITY, Gaza Strip — The board of directors of the Palestinian Social Security Institution announced June 4 during a press conference held in Al-Bireh, in the central West Bank, that the agency has been launched and is now carrying out its duties and tasks while gradually rolling out its facilities in accordance with the provisions of Social Security Law No. 19 of 2016.
Palestinian Prime Minister Rami Hamdallah said during the same press conference that protecting Palestinian citizens from the dangers they face while providing them with a decent life is the government's raison d’etre and top duty. He said a number of companies are starting to register with the institution in the lead-up to the official and obligatory registration period, which will start Nov. 20.
Hamdallah said the institution will gradually embark on its work of providing benefits to its members. He said the implementation of the minimum wage decision No. 11, which was approved by the government in 2012, will become mandatory. He added that this announcement marks the first step toward safeguarding the rights of about 1 million Palestinian workers and employees.
Osama Harz Allah, the director general of the Social Security Institution, told Al-Monitor that the purpose of the institution is to provide insurance services and benefits to registered members. He said the law will be gradually implemented. The first phase will include provisions for retirement, disability, old age, death, work injury and maternity insurance. The second phase is the Nov. 20 compulsory registration phase, during which unregistered companies will be facing strict measures. The third stage will include provisions for health, unemployment and family compensation insurance based on regulations gradually issued by the government.
“The institution covers and protects its Palestinian members, and this system is applied in most countries of the world. We are almost the last to apply this system given the absence of the required political and legal environment,” he said.
He pointed out that Law No. 19 of 2016 was issued to cover private sector citizens who are not covered by other pension systems, such as the one provided by the Palestinian Pension Agency for the public sector. He stressed that the aim of the institution is to provide social protection to citizens throughout their lives.
Asked about the reason it took this system so long to see the light, he said, “We had to provide all the technical, logistical and professional requirements needed by the institution so it shows a high level of readiness and an effective capacity to respond to the citizens’ needs."
Harz Allah pointed out that within a few days, the institution will be launching its website. He said the institution is working on a smartphone application so that its members can easily access their data and get answers to their queries. In the event that small enterprises do not have internet access, he said, the institution would be willing to receive paper registration requests.
“The first Gaza branch of the institution will be inaugurated within 45 days, when the logistical preparations and building are ready, and more branches will be gradually announced,” he said.
He said the institution gets its direct funds from contributions paid by employers and employees, while it gets its indirect funds from grants, donations, loans and any other revenues accepted by the board of directors of the agency. Added to this are loans and grants provided by the government. There is also the return on the invested funds of the institution in accordance with chapter IV of the law, which explains the investment mechanism and controls. Harz Allah expects the agency to be one of the largest financial institutions in Palestine.
Asked about the financial resources of the institution, Salameh Abu Zaiter, a member of the board of directors, told Al-Monitor that the agency covers pension, work injury and maternity insurance by using the monthly contributions paid by employers and employees as well as the fines that result from noncompliance with the provisions of the social security law.
Workers pay 7.5% of their salaries to the social security institution, while another 8.5% is paid by employers.
Abu Zaiter said that once employees are 60 and have paid 180 contributions over the course of 15 years, they can apply for a retirement pension that does not go below 75% of the minimum wage. Work injury, maternity and pregnancy compensation, however, is provided as soon as employees register with the social security institution. He said that in the event the insured employee dies, his family can obtain a retirement pension.
Asked about the minimum wage, he said, “The institution does not accept that employers provide contributions for employees being paid less than the minimum wage, and this means that the institution is indirectly contributing to the application [of the minimum wage law].”
As for the difficulties that the institution may face, he said that these include the Palestinian division between Fatah and Hamas, the difficulty of enforcing the law in the Gaza Strip and the possible noncooperation of some small private enterprises, especially the unorganized sectors that evade taxes and fail to pay the minimum wage. However, he said there is an inspection department at the institution, and any companies that fail to register with the agency will be fined. He said that in case of further evasion, the agency will resort to the judiciary. He stressed that the future vision of the institution aims at preserving and investing the funds so that the organization can keep self-sustaining.
Amen Abu Aisha, a lecturer at the Faculty of Economics and Administrative Sciences at Al-Isra University in Gaza, stressed the importance of having an appropriate political and economic environment to be able to implement such a law. He said the difficult economic situation in Gaza may limit the law implementation process, especially amid the ongoing political division, the Israeli siege, the high rates of poverty and unemployment, the weak and unstable labor market, and the failure of a large number of companies to pay the required rates that would allow them to join the institution. What’s more, he said, there is a widening gap between the West Bank and Gaza amid a lack of accurate information, data and statistics on the labor market. Add to this that there are workers in Israel, and it is difficult to collect financial rights from the Israeli side.
He called on the government to improve the Palestinian economic situation, provide some kind of stability, pay the salaries of public employees in full and provide an appropriate investment environment capable of spinning the economic wheel.
“The positive thing is that the institution will reduce the risks faced by workers and will secure their professional and retirement life, and this will serve as an incentive that boosts their productivity provided the necessary administrative and financial controls are in place,” he said.