Ground-breaking reforms in Oman pave the way for a new social protection model in Gulf Cooperation Council countries

New draft law reflects an ambitious set of reforms which will lead to the modernization and redesign of the social protection system in Oman.

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GENEVA and BEIRUT (ILO News) - The Council of Ministers of Oman has approved the referral of a new draft law on social protection to the Council of Oman to complete its legislative session. The law reflects an ambitious set of reforms which will lead to the modernization and redesign of the social protection system architecture in Oman. This will include the establishment of a unified pension system for workers across all economic sectors, the enhancement of social insurance benefits during working life, and the establishment of life-cycle guarantees for the most vulnerable segments of society. The International Labour Organization (ILO) has closely supported the preparation of these ground-breaking reforms over several years.

"We congratulate our partners and constituents in Oman for achieving this important milestone” said Ruba Jaradat, Regional Director for the ILO in the Arab States. “The development of inclusive, comprehensive, equitable and sustainable social protection systems is critical for countries in the GCC to harness and facilitate ongoing social and economic transformations. A new social protection paradigm must be at the centre of a social contract that delivers decent work and social justice for all. Oman is showing that ambitious reform is possible, and must be rooted in international labour standards, careful analysis and extensive social dialogue".

Towards a more sustainable and equitable social insurance system

The ambitious reforms will lead to the integration of 11 separate pension schemes into one single national system. The new proposed pension system balances the different objectives of enhancing intergenerational equity, increasing financial sustainability, improving adequacy of benefits and extending coverage, especially among the most vulnerable workers. The reform also provides for the extension of short-term contributory benefits in case of employment injury, maternity, paternity, unemployment and sickness benefits, and puts particular emphasis on ensuring the participation of workers in all forms of employment in the contributory system, including with an important focus on the extension of social security rights to migrant workers in Oman.

"This has been one of the most complex and exciting projects I have been engaged in during my career” said André Picard, chief of the Actuarial Services Unit of the ILO in Geneva “The design of social security systems needs to constantly adapt to evolving demographic, economic and societal changes. The design solutions identified together with our Omani counterparts are both innovative as well as being firmly oriented by the core principles expressed in ILO social security standards".

A universal floor of social protection within a fully integrated social protection system

In strong alignment with the spirit of the ILO Social Protection Floors Recommendation, 2012 (No. 202), the reforms also establish universal life-cycle benefits for older persons, persons with disabilities and children. These have been designed to be fully complementary with contributory social insurance benefits and will operate under a unified social protection system and administration.

Ongoing transformations in the world of work and the COVID-19 crisis have shed light on the importance of combining financing streams from general revenue and social contributions to fill social protection coverage, adequacy and sustainability gaps.

"The integration of contributory and non-contributory systems within a single legal and institutional framework initiates a new era for social protection in Oman” says Luca Pellerano, Senior ILO Social Protection Specialist for the Arab States. “Administering social insurance and social assistance benefits through one single national social protection agency will not only increase efficiency, but also provide a more effective mechanism to support workers and their families through their life and work transitions by reducing fragmentation across programmes and systems".

Collaboration between the ILO and Omani constituents on social protection reforms and future steps

Over the last 3 years the ILO has provided technical assistance on policy, legal, governance, actuarial and socioeconomic modelling aspects of the reforms through a team of 10 specialized experts, coordinated by the Regional Office for Arab States in Beirut and the Social Protection Department in Geneva. The preparation of a draft national social protection policy, currently under review by national authorities, was also supported in partnership with UNICEF. Technical advice was directed to the Oman reform cell (Tawazun) and included support to workers’ and employers’ organizations to engage with different aspects of the reforms. This builds on previous collaboration with the Public Authority for Social Insurance which included the establishment of an unemployment insurance scheme for private sector workers.

"The reforms recently announced project Oman as a model for other countries in the region. Building on these achievements, we encourage ILO constituents in Oman to consider ratification of the ILO flagship Social Security (Minimum Standards) Convention, 1952 (No. 102) to preserve and sustain the reform trajectory that has been initiated” said Shahra Razavi, Director of the ILO Social Protection Department in Geneva.

The ILO will continue to support the implementation of social protection reforms as part of a new Decent Work Country Programme that is expected to be launched later in the year. This will include technical support to the new social protection agency and ILO tripartite constituents for the roll-out of the new social protection system.

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