Social protection is a powerful development policy tool. If well designed, it can contribute to manifold social, economic, and political goals such as those in the Agenda 2030 Its primary goal is to reduce poverty, vulnerability, and inequality. More indirectly, however, it can also promote education, health, gender justice, access to water, investment and pro-poor growth. And it can be a cornerstone in social contracts thereby stabilising societies, political systems and state-society relations. In most countries of the Middle East and North Africa (MENA), however, social protection systems are not well designed and, hence, have only marginal effects on all of these goals.
Social contracts can be defined as the entirety of explicit or implicit agreements between societal groups and the government on rights and obligations towards each other. Governments are meant to deliver protection (individual and collective security), provision (social protection and other social and economic benefits) or participation (in political decision-making) to citizens or even a combination of these. In exchange, citizens accept the government’s rule and pay taxes. For authoritarian regimes, this give-and-take reduces the need for repression (Loewe, Zintl and Houdret, 2021).
Until the 1970s, most MENA countries had quite similar and specific social contracts. These were based on the receipt of significant external rents (from natural resources and other sources) and the redistribution of parts of the rents to the population: Governments provided subsidised food and energy, free public education, health care and housing and public-sector jobs in order to generate popular support for their rule, despite an almost complete lack of political participation.
As populations grew and state revenues fell, these policies turned out to be a huge financial burden. Most MENA governments became more strategic in the allocation of their spending: They focused increasingly on the politically most influential groups of society (first the urban middle class in general, later just government employees and entrepreneurs) and neglected ever more poorer population segments (Loewe and Jawad, 2018). As a result, social protection systems in MENA countries are not fair, not efficient and not effective any more (Loewe, 2019). The former populist-authoritarian social contracts, which had relied at large on the delivery of provision (social benefits) by the state, transformed into ‘unsocial’ social contracts relying on the delivery of provision mainly for the elite and only protection (the promise of security) for the rest of the population. Egypt is perhaps the most advanced case in this transformation; here the government dismantled even food subsidy schemes, which are quite important for the livelihoods of the poor, without providing tangible compensation measures. This shows that the government no longer relies on social benefits as a means of legitimisation. Instead, it uses repression and the narrative that President al-Sisi was the only person being able to provide individual and collective security for Egyptians (Vidican Auktor and Loewe, 2021).
On average, MENA countries are still spending comparatively high shares of gross domestic product on social protection. However, most of this spending is on energy subsidies and social insurance rather than public health and social transfers. The spending is thus unfair as it benefits the middle class and the rich much more than the poor. For example, petrol subsidies help mainly those who can afford to own a car. And subsidies on social insurance does not benefit people with low income because these work in the informal economy, which is typically not covered by social insurance.
In addition, social protection systems in MENA countries are not efficient because their administration, targeting and transaction costs tend to be very high, and their targeting is miserable: Just a minority of the poor benefits even from tiny social assistance and public works programmes, while at the same time quite many of their beneficiaries are not poor by any definition.
As a result, social protection systems of MENA countries tend to also be ineffective. Due to their weaknesses regarding fairness and efficiency, they contribute only marginally to poverty, vulnerability and inequality reduction. Their effects on economic development are also limited because the criteria of benefit provision are unclear; households have no reason to be eligible even when falling into extreme poverty.
Finally, even if there are effects on political stability, these are not sustainable. Of course, social protection systems are still a key ingredient of social contracts in MENA countries. However, today, they stabilise mainly the relations between governments and the more influential and affluent parts of society. Low-income groups are increasingly left out. This may contribute to short-term but not to long-term stability. Many analysts argue that the upheavals that shook MENA countries in 2010-11 have been already mainly a sign of popular dissatisfaction with the degradation of social protection systems and social contracts in general.
If this interpretation is true, the world should be prepared for new waves of protests and revolutions to some leading to further state collapses, civil wars and waves of migration. Quite clearly, the likelihood of such a scenario can be reduced an overhaul of social protection systems in MENA countries strengthening their fairness, efficiency and effectiveness.
About the author
Markus Loewe is a research team leader at the German Development Institute (DIE), Bonn, where he has been working since 1999. He studied development economics and political science in Tübingen, Erlangen and Damascus and got his PhD from Heidelberg University. In 2015, he was offered a chair at the University of Erlangen-Nürnberg but rejected it. His research covers social protection, poverty reduction, industrial policies, micro, small and medium enterprise development and the concept of the social contract. His regional focus is the Middle East and North Africa. More recent publications include “Framing the emergence of new social contracts in the Middle East and North African countries” (special issue of World Development, 2021, ed.), “Handbook of social protection systems” (Edward Elgar, forthcoming 2021, ed. with Esther Schüring) and “Social protection in the MENA countries: prospects for a new social contract?” (special issue of International Social Security Review, 2018, ed. with Rana Jawad).
The opinions expressed in the guest blogs are those of the authors. They do not purport to reflect the opinions or views of the Middle East and North Africa Social Policy (MENASP) Network or the University of Bath.