Khaberni - With the Jordanian Cabinet's approval of the justifications for the amended Social Security Law for the year 2026, the debate about the nature of the proposed reforms and their impact on subscribers and the labor market is renewed. Although the official discourse focuses on enhancing financial sustainability, a careful economic reading reveals that the project carries deep social and economic dimensions that go beyond purely actuarial aspects.
One of the challenges is the gradual increase in the retirement age to 65 years for males and 60 years for females. Although the implementation will be gradual, the expected impact on the labor market raises real questions, especially in an economy suffering from high unemployment rates among youth. Delaying workers' exit from the labor market could mean slowing the movement of job replacement and reducing new employment opportunities, which exacerbates existing imbalances rather than addressing them. Moreover, some physically demanding or field-specific professions may not sustain continuation to older ages without health or productivity repercussions.
In addition, tightening the conditions for early retirement and raising the required number of contributions reflects a clear orientation towards reducing this window, which for years has been a flexible tool for managing individual risks, whether in cases of job loss, restructuring, or unclassified health decline. Although early retirement has placed financial pressure on the fund, gradually closing it may shift the burden to the broader social protection system unless real economic alternatives are available.
Also, increasing the required number of contributions for full retirement eligibility from 180 to 240 means practically mandating a longer service period, which could particularly affect workers in unstable sectors and seasonal employment, as well as women who may have career gaps due to social or family reasons. This shift raises questions about how well the project considers the specific nature of Jordan's labor market and its volatility in some sectors.
On the other hand, the negative aspect of raising the required number of contributions for early retirement to 360 lies in reducing the flexibility that this option has provided for workers in an unstable labor market with high unemployment. Many workers, especially in the private sector and physically demanding professions, may not be able to continue working until they complete this duration, and at the same time may not find alternative employment opportunities at older ages, creating a gap between unemployment and non-eligibility for retirement. Moreover, this amendment could have an even greater impact on seasonal or irregular labor, whose career paths include gaps in contributions, making reaching 360 contributions more difficult compared to workers in stable jobs, potentially shifting part of the financial burden from the social security fund to individuals, families or the social support system, if these changes are not accompanied by effective employment policies targeting older age groups.
The psychological impact of such amendments cannot be ignored, as any change affecting retirement generates uncertainty among participants, especially in a volatile economic environment. Trust in the insurance system is a fundamental element of its success, and any reform not accompanied by clear communicative discourse clarifying the justifications and real figures could gradually erode this trust.
Conversely, it cannot be denied that the amendment project is based on realistic financial considerations. Data from the Social Security Corporation show that the expansion of early retirement in past years has been a long-term burden, especially with the increase in the average expected lifespan and the growing number of beneficiaries compared to the number of contributors. From this perspective, raising the retirement age and increasing the years of contributions contribute to enhancing sustainability and reducing the future gap between revenues and expenditures.
Furthermore, raising the minimum pension to 200 dinars reflects an important social aspect, especially for low-income groups, and strengthens the protection umbrella for the weaker sections. Also, tightening penalties for insurance evasion can expand the subscription base and enhance fairness among establishments, a measure that may increase revenues without directly burdening contributors with additional costs.
Globally, many pension systems have moved towards raising the retirement age and restructuring benefits due to demographic changes and increasing average life expectancy. From this angle, the proposed adjustments can be seen as an attempt to align the Jordanian system with international trends, but the success of this alignment depends on the economy's ability to create real job opportunities for newcomers to the labor market.
Ultimately, the discussion is not about whether reform is necessary, as financial reform has become a factual demand in light of demographic and economic challenges, but about how its cost is distributed and who bears the larger burden. If the reform is limited to adjusting actuarial standards without addressing labor market imbalances, it could turn into a redistribution of risks from the fund to individuals. However, if it is accompanied by effective employment policies and enhanced transparency and trust, it could be a necessary step towards true sustainability that protects both the fund and the citizen simultaneously.
