Result of Service

The ultimate result of the service is the development of a concept note consisting of key design parameters of a simplified contribution scheme (i.e. monotax-type) for a group of low-income persons in Egypt – agreed upon by key national stakeholders and ESCWA. This concept note is expected to address the following key parameters (to the extent possible and relevant): Covered groups • Briefly summarize options for different groups of informal employment that would be eligible for enrolment under the simplified scheme: • Which sector should be prioritized for a pilot test? • What is the proposed maximum size limit of covered businesses (e.g. number of employees/contractors; maximum monthly/annual turnover/income)? • Should there be any restriction for remaining covered under the simplified scheme (e.g. a maximum duration)? Benefits provided • Propose alternative types of benefits and benefit packages available for persons covered under the simplified scheme. • Which social insurance benefits available under the regular scheme will be provided under the simplified scheme? Which social insurance benefits will be excluded? • Should coverage for certain risks be made voluntary? • How would the benefit level be determined? Should there be minimum/maximum benefit thresholds? Contribution payment • Briefly summarize options for determining a simplified contribution payment. • How would the insured’s contributions be determined? • How would the contribution level be reviewed/updated and at which interval? • What would the contribution requirement be for additional voluntary coverage (e.g. to cover for additional risks or dependents), if applicable? • How should the contribution payment schedule look like? • Which taxes would be covered by the unified payment? • Does the scheme require a tax-financed government contribution to complement the members’ contributions? If so, what level of tax financing would be required? While the above-mentioned key design parameters and related questions constitute a list of desirables, it is not expected that – given the relatively brief assignment period – all of these will be addressed exhaustively in the concept note. Conversely, should in due course of the assignment, however, additional (i.e. not mentioned above) parameter be identified as indispensable or at least relevant for the potential pilot test scheme, than these should be addressed in the concept note as well. References • Citing all data sources, literature, and external references used in the paper. Supervision • This assignment will be directly supervised by the Chief of Social Protection Section. .

Work Location

Remote

Expected duration

4 weeks

Duties and Responsibilities

Developing key parameters for a simplified contribution payment scheme in Egypt covering low-income persons in informal employment through social insurance-pilot test Background With only around 35% of households covered by one or more social protection benefits in 2020 according to the ILO, most of Egypt’s population is still lacking protection against life cycle risks and access to basic income security. In recent years, the government introduced several reforms that strengthened the social protection system, primarily by introducing and scaling up social assistance programmes. In parallel, reforms aimed at expanding social and health insurance coverage have been adopted (Social Insurance and Pensions Law No. 148 of 2019, Universal Health Insurance Law No. 2 of 2018). However, the phasing out of consumption-based subsidies in Egypt to the advent or expansion of poverty-targeted cash assistance programmes has limited the social protection coverage options for those without access to social insurance through formal sector employment who are at the same time not eligible for poverty-targeted programmes. This “missing middle”, who are frequently irregular, casual and/or informal workers – at times own-account workers, or micro- and small business owners – are thus often left without any protection. Among the obstacles preventing persons in certain forms of informal activity from formalizing their business or economic activity are their low contributory capacity and costs associated with complying with tax and administrative requirements. For example, micro- and small enterprises may not be able to afford to hire specialized staff that deals with tax and accounting obligations, and own-account workers may have to forgo earnings or close business to comply with burdensome administrative processes. The above-mentioned problem statement, however, is not unique to Egypt or even the wider Arab region. It is therefore instructive to identify and take stock of effective policy solution from within as well as from outside the Arab region. For example, from the 1980s and onwards, several countries in Latin America and the Caribbean started implementing simplified tax regimes for those who are self-employed and have low payment or contribution capacity. In the second half of the 1990s, Brazil (1996), followed by Argentina (1998), and then Uruguay (2001), took the concept a step further with the introduction of the so-called Monotax regimes. These bundle social insurance contributions with several taxes into a unified and simplified contribution regime, aiming to support the formalization of labour and small enterprises, in tandem with extending social security coverage. In Latin America, promising results have been achieved in terms of reducing informality and extending social protection coverage via the introduction of the Monotax model. In 2021, as part of a broader effort to extend contributory social protection to self-employed workers, Morocco was the first Arab country to introduce a national Monotax scheme, the so-called CPU (Contribution Professionnelle Unique or Unique Professional Contribution). Under the scheme, participating self-employed persons make a combined yearly payment covering income tax, professional tax, communal services tax, and complementary duties for health insurance. Similarly, in 2023, the Tunisian Finance Act defined parameters for a simplified contribution scheme for auto-entrepreneurs, which is awaiting implementation. Other Arab countries, like Egypt and Jordan, have also been looking into possible pathways to covering the “missing middle”. To this end, in 2023, the Egyptian Ministry of Social Solidarity (MoSS) requested technical support from the ESCWA Social Protection Team with identifying key design and implementation features of social security schemes that have successfully extended coverage to informal workers in Latin America. The request for technical support is a direct follow-up from a peer exchange workshop held by ESCWA in November 2022 with the participation of the MoSS, where the Monotax approach was presented as a possible pathway for extending social insurance. Objective and methodology The objective of this consultancy is to provide technical support and guidance, aiming to identify and clarify the key design parameters and delivery mechanisms of a possible pilot test for a simplified social insurance and tax contribution scheme for self-employed persons and microbusinesses in Egypt. Tasks – duties and responsibilities The international consultant is expected to undertake the following tasks in strong collaboration and coordination with ESCWA’s Social Protection team and relevant national stakeholders: (1) Based on information collected (e.g. virtual or by phone) before a South-South Learning and National Consultative workshop in Cairo (May 21-23) form a preliminary understanding of the social protection and labor force situation in Egypt. (2) Based on (1), develop a briefing note/preliminary proposal for a monotax-type pilot-test (see relevant design parameters below) as a basis for discussion during the above motioned workshop. (3) Inform and technically guide the discussion on the workshop’s 2nd day (roundtable w/ national experts on adapting a monotax-type scheme to the Egyptian social, political, and economic context), aiming to define key design parameters (groups covered, benefits and benefit packages, and contribution payments ), as laid out under (2) above, and support the process to identify relevant delivery mechanisms (administrative organization & communications and outreach) in discussion with workshop participants and national stakeholders. (4) If required, inform a ministerial roundtable (MoSS, MoF, MoL) on key design details of a potential monotax-type scheme pilot-test in Egypt.

Qualifications/special skills

A Master’s degree in Economics or related area is required. All candidates must submit a copy of the required educational degree. Incomplete applications will not be reviewed. A minimum of 15 years of professional work experience in social protection policy and implementation is required. A minimum of 15 years of professional work experience in a development or emerging economy context is desirable.

Languages

English and French are the working languages of the United Nations Secretariat; and Arabic is a working language of ESCWA. For this position, fluency in English is required and knowledge of Arabic is desirable. Note: “Fluency” equals a rating of ‘fluent’ in all four areas (speak, read, write, and understand) and “Knowledge of” equals a rating of ‘confident’ in two of the four areas.

Additional Information

Not available.

No Fee

THE UNITED NATIONS DOES NOT CHARGE A FEE AT ANY STAGE OF THE RECRUITMENT PROCESS (APPLICATION, INTERVIEW MEETING, PROCESSING, OR TRAINING). THE UNITED NATIONS DOES NOT CONCERN ITSELF WITH INFORMATION ON APPLICANTS’ BANK ACCOUNTS.