Assessing the National Social Security Scheme

Case of Iran


History:

Social security in Iran began in 1930 with a decree insuring all worker against accidents at work resulting in disability or death. In 1953 a Workers
Insurance law was enacted which provided medicare coverage, sickness and disablement benefits, marriage and maternity grants, pensions and family al owances.
In 1974 the Social lnsurance Organization was replaceel by the Social Security Organization SSO, with wider responsibilities. In 1975 the Social Security
law came into force. It provided more substantial benefits financed from a contribution equal to 30 per cent of the insured person's earnings, 7 per cent of
which is paid by the insured, 20 per cent by the employer and 3 per cent by the Government; the same measurments are still practicing with similar
percentages. The SSO have been Iran's largest state insurance and relief body since the past 50 years and persumably at current situation is supposed to render services to some 27 million people across the country.

New Perceptions after the Revolution:

Following the popular Revolution that established the Islamic Republic in Iran governed under the sharia law, more than 27 governmental charity organisations
and several religious foundations became also concerned with social welfare demanding their share of public budget to act on behalf of the poor. Under Islamic law endorsed in the Constitution where the legal and traditional family structure in which male figure is the sole breadwinner, lies the pillar of the social protection system for women, children, disabled and elderly in the households. The responsibility of providing for the family is imposed on one person which is the man head of household either as spouse or father or even brother in law in case of wideowhood, as in traditional society. Dowry practices are popular in the country of Iran, it is a form of security for the wife, because legal provisions for women, in case of divorce or death of the spouse, are not provided otherwise. The relations between the family and economic life, and its importance in the structure of family, are well defined in the Constitution. Family's external relations also point us towards a consideration of too high interference of the state in marital and family affairs.In the patriarchy system where only men are socially and economicly active, the rules and regulations revolves around securing the breadwinner.

After the Islamic Revolution women workers were sacked from factories, encouraged to give up their jobs in favor of men, proposed early retirement after 15 years
of work background. The number of women workers in industrial sector reduced after the Revolution from 20 percent to 7 percent, although due to income hardship during 90s there were increases of female labour in industrial sector upto 11 percent. According to the labor Law women independenatly can enter into the system of social security officialy in wage employment. However, the effectiveness of the social security programs considering variety of risks, efficiency, and coverage
are under question. For instance, old age pension for a '5 member household and more' in support services in 2001, was between Rls. 60.000 (60 USD) and Rls.
150.000 (160 USD)/month, which is sufficient only to cover less than 20 per cent of the basic household needs.

Women homemakers do not have access to social security system neither do rural women family workers. There has been a small scale pilot project implemented on
2003 by Welfare Org to examine the coverage of women homemakers that is not worth mentioning since it was aimed at providing 10 USD/ month - one tenth of the minimum wage. Women in the Middle East countries have lowest economic participation in the national economy which is stemming out of the basic structure of oil dependent economies (World Bank 2003) in addition to other religious and traditional impediments.

Social Security Schemes and the 'Safety Net' for Women:

The available statistics in Iran to review household income are concerned with family units and do not disaggregate data by individuals. Therefore in order to measure women's economic status, in the majority of conducted studies, poverty among female headed households is analyzed as women’s poverty.
Two major issues for households headed by female are low economic participation of women in formal employment and secondly lack of comprehensive social
security covers. This issue for rural women farmers as non wage family workers is even more serious as they are not listed as workers in national statistics. Women homemakers comprising 65 percent of women population of Iran as well as family workers are major groups that are deprived from any social protection apart from that of the family coverage. Further more as women in informal economy do not contribute any insurance payment which is the basic for entering into the system of social security hence their pension and working status is complety ignored by the Government. In addition even the actual minimum appears to be faded away since the Government share of payment to Social Security Org was not fullfilled for several years making it even more difficult for female heads of households. The Welfare Org that was tasked to provide some assistance to poor women as heads of households for quite some time lacks adequate budget to fullfil its liabilities.
However for those of the informal working class, individuals who have formerly paid insurance premiums for at least one year, and are at present own account workers may, if interested, rejoin the insured population. Nonetheless poor families actualy can not afford to be part of the scheme due to high cost of monthly payment equal to 25 percent of lowest salary scale.

Under the Social Security Act, the Social Security Organization is bond to pay unemployment allowance to the insured eligible workers who are temporarily
unemployed but are actively looking for a job. There is also compensatory money legally paid to the insured during pregnancy, illness, and temporary disability
for not receiving wage or salary. Marriage aid is the money paid to the insured according to certain regulations to cover a part of the marriage expenditures. Newly married young couples by presenting their marriage certificate can apply for the provisional aid under the scheme of buying necessary household appliances for the newly wed or small amount to cover the downpayment needed by the housing banks to by home.


Social security and social protection has become more women's issues than men's for following reasons:
• Women are more vulnerable to economic crisis and recession periods
• Women more than men are bounded by cultural traditions and are imposed by heavier duties in the family which limit their economical participation and taking advantage of employment benefits
• Women more than men are deprived from official labor market and therefore have limited access to social security which is the only way to be included in social protection schemes. However some measures have been taken to insure homemakers but the scale is far from satisfying and the benefit is not more than 20 percent of basic expenses
• While widow or divorced, women are more exposed to poverty and need more social protection
• Women on average live longer than men and need more security in older age
• Women as care taker hardly have anyone to offer hand in their sickness and nursing the ill, therefore women need positive discrimination in terms of health insurance and subsidies
• One last comment is that women should have coverage in relation to her legal issues since in many cases women lacking independant income are unable to pay for legal advise as well as the general expenses for taking her case to justice, be it for unpayment of allowance or appeal against violence.


Recognizing Causes of Discrimination:

According to local official news agency, 95 percent of women who resort to the court of Justice to file complaint against the husband not providing her allimony or dowery (marriage portion) are homemakers out of which only 25 percent succeed. This is due to the fact that men exclusively have all the right to ownership of the home and other family earnings. There are cases in traditional families that female family workers, do not even take any share in their earnings, such as wages for waving carpet.

Although the Ministry of Health, Treatment and Medical Education is pointing out the coverage of 95 percent of workers by medical insurance; however he also added that 30 percent of insured workers have to sell their belongings in order to cover for the cost in case of illness and hospitalisation. As for drug coverage,
half of the medical insurance budgets are consumed for 30 specific drugs out of 1700. The OTC drugs are easily accessible in drugstores without doctor's
prescriptions including approx 15 types of antibiotics. Iran is on top of the list of drug consumption of injection types across the world. At present social security covers 70 percent of all prescriptions from 1 USD upto 1000 USD. Measures are taken to modify the covering of more expensive prescriptions, puting higher shares on the applicants.

According to the Health Minister at present in 2004, more than 1000 Billion Tooman (1.2 Billion USD) is allocated to food subsidies. He also stressed on the necessity for targeted subsidies such as milk and dairy products which has been excluded from the daily nutrition of poor families due to extreme poverty.

In any case, due to inflation and lower budget allocated to Health and Public Hygiene, in the coming year, there will be more people entagled in vicious circle of poverty. To keep up the current situation there is a need of 35 percent budget increase. However, due to decrease of allocated public budget we are faced with 60 percent of budget deficit in health system which is disasterous. Every one dollar invested in health will have three dollar output, this is due to the
fact that illness and hospitalization will drawn people in poverty more than any other problems.


Newly Established Welfare Ministry:

The ministry is set to give social support to the vulnerable strata, including women and children as well as to those living below the poverty line, in addition to helping to render social assistance to those affected by natural disasters. The new ministry, which was established by a Majlas act on 2004, has no budget of its own. “We don’t have a line item in the current fiscal year’s budget for something called the ministry of welfare and social security,” the Minister says. The resources of the new Welfare Ministry should come from public treasury, not a private fund. The reported plan was heavily criticized to pay for the new welfare ministry’s program from the social security insurance fund that belongs to 26 million workers , which collects contributions from workers and employers.

The Ministry of Welfare and Social Security is tasked mainly to pursue employment, health, housing and education affairs in the framework of the Comprehensive Social Security Law ratified by parliament. Article 16 of this law has referred to the ministry's main responsibility as "preparing the ground for the realization of education and insurance objectives." The ministry is assigned to cover more than one-third of the population with insurance services. In the meantime, the ministry is also responsible for providing assistance to self-employment initiatives and protecting the underprivileged, in which for the first time women's self employment was addressed. The ministry aiming to pave the way for greater participation of charity organizations in nationwide supportive and relief activities. A senior economic affairs and finance ministry official said recently that the newly-established ministry will take some 30 percent of the government's total yearly budget from next year, beginning March 2005, which includes the budget allocated to all state charity organisations, making them accountable to the Government. Deputy Minister of Economic Affairs and Finance for legal and parliamentary affairs, also elaborated on, that the new ministry has been enjoined to render insurance and supportive services to the public. The Medical Treatment Services Organization and the SSO are the two main subsidiaries of the new ministry. However apparently the aforementioned organizations would not be dissolved. The Ministry of Welfare and Social Security framework will be concentrated only to try to reduce poverty and
discrimination through controlling the budget and performance of its affiliated organizations. The ministry will work to expand the pension and supportive systems and make subsidies more targeted. Some 28 major organizations, including the SSO, Retirement Funds, charity organizations and the Red Crescent Society, have joined the ministry's affiliates.


Inefficient Protective Law :

Analysts in Iran make reference to the absence of competition and unreasonable interest rates, and unjustifiable allocation of resources to economic projects in the present banking system. At the same time providing special services to the depositors and tax exemption on their realized gains, provide the private depositors with additional incentives. According to the Article 177 of the "banks' joint recruitment charter" in the event a bank is no longer in need of services of one or more employees, due to the cancellation of a permanent position/s, and in the absence of a suitable open position/s to reassign such effected employee/s, the employee/s whose position was eliminated would receive full salary and benefits pending the opening of new and appropriate position/s. According to the same charter under the circumstances that the banks no longer are in need of services of a group of employees, they are obligated to pay their full salary and benefits for a period of 6 months, and 50% of their salary in the following 6 months. Therefore banks are unable to easily fire their excess personnel since they are obligated to pay their
salaries for a year, a factor that also exasperates banking inefficiencies. The absence of a competitive attitude among the public employees, which is due to
guaranteed salaries and benefits regardless of their level of productivity, lack of fundamental and effective systems of evaluations, and lack of accountability and responsibility with regard to their performance, is prevalent among the employees of the banking sector as they too are public employees.



State Owned Charities - Heavy Burden for National Economy:

After the revolution several charity foundations (Bonyads) were at first funded through revenues rising out of confiscated properties and money obtained from
the overthrown regime’s officials and later by donation and state loans. These 'Bonyads' were engaged in organising the poor to constitute a solid popular
base for the Islamic regime. Ultimately this approach, including housing for the low income groups, became an instrument for the institutionalisation of the
post-revolutionary political power. Thus, when allocating grants and loans, priority was not given to those whose need was greatest, but to those with the
strongest political links. The circle covered by these funds gradually narrowed and the distribution of loans and grants became more selective.

An investigative look at the poor performance of the existing supportive and charity organizations that devores lion share of the public budget should be on the agenda if there is any concern for the increasing number of population living under the poverty threshold. The 28-relief organizations' annual budget totals half the general budget and 30 percent of the national revenues. The large chunk of money involved in the charity business here would reveal the reason why many are against the accumulation of this huge wealth in the hands of a legal body, i.e a ministry. However as they were administered under the supervision of the Leader, hence exempt from tax payment; charities tend toward corruption and abuse of its budget since they were accountable to no one. During the years of reformist Parliament, dabates to pass the law to make these organisation as viable tax payers, did not succeed to overcome powerful individuals who were accorded with these laws.

Despite the emphasis of Islamic teachings on the right of ownership, the rulers of this country constantly confiscated public properties whenever they wished.
The only result was that there was practically no room for the right of citizens'ownership. This actually helps explain why the national economy has been on the decline throughout the years. Despite the sacredness of ownership in Islam we still encounter problems in terms of institutionalizing the right of private ownership.

In conclusion, ineffectiveness of the social security system and its supportive programs are less due to scarcity of financial resources and mostly are the outcome of improper budget allocation, mismanagement, corruption and lack of systemic approach. In this respect, ignorance of NGOs in relief and aid delivery is
significant which has to be seriously addressed. Target planning for providing subsidies to the real poor population, policies to engage civil society and NGOs to strenghten capacity building and empowerment of the poor to replace the subsidies, along with effective macro economic policies planned for long-term basis to attract trust and security for investments are needed to improve the safety net and concerns for the poor who are increasingly falling into trap of poverty. At the end, a populistic regime that claims its source of power to come from the people has to demonstrate more willingness to apply good governance. This could be emphasised by creating and adding on people's power to administer their own affairs through civil society and civil services. Accompishing this task enhances the government's social power and legitimacy.


Nasrin Azadeh
16.2.2005

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University publishing, (Poverty in Iran: 43)
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East and North Africa, Women in the Public Sphere
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Norouzi, 2003, Women Research Journal: 9
8) Federal Research Division of the Library of
Congress as part of the Country Studies/Area Handbook
Series sponsored by the U.S. Department of the Army
between 1986 and 1998, http://countrystudies.us