In a nutshell
- Workers in Egypt have experienced declines in contributory social insurance coverage (and thus formality) over 1998-2018
- Multiple dynamics drive rising informality, including decreases in obtaining social insurance on entry and while employed, as well as increases in losing social insurance
- The unemployed do not value social insurance, as currently designed. Workers typically have the same reservation wages for jobs with and without social insurance in the private sector
- Further reforms will be needed to make social insurance more appealing to workers and firms, including less expensive and more flexible contributions, better benefits, higher quality of administration, and shifting to a progressive system
- The social insurance system could also be revised to be funded by consumption taxes (non-contributory) instead of the current contributory system.