Many years after the establishment of the Social Security Corporation in Jordan, early retirement has emerged as a major challenge affecting the sustainability of the social security system. This form of retirement increases financial pressure on the system, particularly due to the high percentage of early retirees in both the public and private sectors. It results in a premature rise in pension burdens, and rapidly depleting financial resources. Additionally, low wages in the labor market drive workers toward early retirement in pursuit of better economic opportunities or less demanding working conditions.
However, the pensions received by many early retirees are also very low, which adds to the economic and social challenges they face after retirement.
According to the 2023 Social Security Report, pensions are distributed as follows: less than 200 dinars: 9.6% of retirees, from 200 to 400 dinars: 54.1% of retirees, 400 to 700 dinars: 27.0% of retirees, and more than 700 dinars: 9.3% of retirees. It is important to note that a large percentage of early retirees fall into the categories that earn salaries less than 400 JDs, which reflects poor retirement wages and pushes retirees to look for additional sources of income[1].
The Legal Perspective on Early Retirement
Early retirement is closely tied to the right to work and social security, both of which are fundamental rights enshrined in international conventions. According to the International Labor Organization (ILO), pension systems, including provisions for early retirement, must be designed to ensure social justice and protect the most vulnerable. Article 22 of the Universal Declaration of Human Rights affirms that everyone, as a member of society, has the right to social security for the realization of their economic and social rights. Similarly, ILO Convention No. 102 calls for comprehensive social security systems to provide adequate pensions for all workers, including those who retire early.
One of the most significant human rights challenges related to early retirement is the issue of wage justice. Low wages in many sectors leave workers feeling unable to sustain long-term employment, leading them to view early retirement as a necessary, albeit forced, solution. This contradicts ILO principles, which advocate for fair wages and decent working conditions that uphold workers' dignity. Additionally, policies linked to early retirement may, in some cases, compel workers to retire prematurely due to organizational restructuring, violating the principles of ILO Convention No. 111 on Discrimination in Employment and Occupation[2].
Poor social protection is one of the main challenges of early retirement. Pensions resulting from early retirement are often very low, leaving retirees vulnerable to poverty and deprivation. Recommendation No. 202 on Social Protection Floors calls for adequate protection for seniors and ensuring that they have a decent life after retirement.
Improving wages and working conditions is a key step to reducing dependence on early retirement. Wages must be in line with the cost of living and must ensure healthy and sustainable work environments that support workers to stay in their jobs for longer periods. In addition to that, pension systems must be reviewed to ensure their sustainability and fairness, with policies in place that encourage continued employment rather than early retirement.
Figures and indicators:
Data from the Social Security Corporation for 2023 indicates that 50.6% of insured individuals actively working (on the job) are employed in private-sector establishments. In contrast, 39.6% are employed in the public sector, reflecting a slight decrease from 2022, when the percentage stood at 39.8%. Notably, the lowest proportion of insured active workers covered by social security in 2023 was in charities, at just 0.1%[3].
This data highlights a decline in public sector employment, reflecting the government’s ongoing downsizing. The figures also show that the cumulative percentage of retirees due to "old age and mandatory retirement age" from public sector establishments reached 31.7%, compared to 29.2% in the private sector. Meanwhile, retirees from international organizations, bodies, and charities accounted for 40.7% of this category. For "early" retirement, the cumulative figures reveal that 47.2% of retirees came from the public sector, 49.5% from the private sector, and 45.2% from international organizations and charities[4].
The data further indicates a significant increase in the number of new retirees under social security in 2023, totaling 26,875 compared to 19,677 in 2022—an increase of 36.6%. Of the total new retirees in 2023, 98.1% were Jordanian, and early retirees accounted for 64.0%, making it the largest category. Retirees due to "old age and mandatory retirement age" comprised 28.0% of the total, followed by "natural death" at 4.1% and "natural morbidity" at 2.7%. The smallest percentages were observed for "morbidity" and "injury death" retirees, at 0.7% and 0.6%, respectively. By sector, 53.6% of new retirees in 2023 were insured individuals working in the public sector, while 29.8% Many of the new retirees are private sector workers[5].
Social security indicators confirm that there is a noticeable increase in the percentage of retirees on the "early" retirement system, whether in the cumulative number of retirees or during the year 2023, as the percentage of early retirement retirees constituted 64.0% of the total number of new retirees in 2023, which indicates that the majority of retirees prefer early retirement to old-age retirement or retirement for other reasons. This high percentage is due to a set of factors that can be summarized as follows:
Low wages
According to the report, 73% of Jordanians currently earn less than 600 dinars, and low wages are a major factor in workers' moving toward early retirement. Concerning cumulative retirees (the total number of retirees who received a pension from social security since the beginning of the pension system), 9.6% of the total retirees cumulatively until the end of 2023 received a retirement salary not exceeding 200 dinars, while 54.1% of retirees received a pension between 200 and 400 dinars, 27.0% of retirees cumulatively received a pension between 400 and 1000 dinars, while 9.3% of retirees received a pension of more than 1000 dinars[6].
These figures confirm that low wages constitute one of the main reasons workers retire early. The worker chooses early retirement to receive two wages: the retirement wage and the wage from working in the informal sector, due to insufficient retirement wages. Thus, the worker collects two wages, which constitutes a clear violation of the laws and regulations of the Social Security Corporation. This phenomenon leads to a significant expansion of the informal labor sector, which increases social security insurance evasion.
Hence, it becomes necessary to take steps to raise wages in line with the inflation and high prices in the Kingdom, in order to ensure a decent life for retirees and workers alike and to achieve social justice in the social security system. The International Labor Organization (ILO) estimates that about 1.207 million individuals in Jordan work in the informal sector, amounting to 46.1% of total employment[7].
Low wages are one of the main reasons that push workers to retire early, and this phenomenon leads to the spread of work in the informal sector, which exacerbates the problems of insurance evasion and puts pressure on the national economy.
Reforms in this area are necessary to improve the economic and social status of workers and retirees, and to promote social justice in the pension system, and therefore, pensions should be increased to be better able to provide decent life for retirees and workers alike. Actions can include amending laws and policies related to pension incentives to suit market needs, along with working to improve wages for workers on the job to be in line with the standard of living and the needs of individuals, which will enhance the stability of workers in their jobs and reduce early retirement.
Legislation and regulations
One of the reasons for the spread of the phenomenon of early retirement in Jordan is the issue of terminating the services of employees before reaching the mandatory retirement age in the public and private sectors, as "the government put many of its workers on early retirement before reaching the mandatory retirement age" with powers granted to government departments to lay off employees before they reach the mandatory retirement age, according to Article (107), paragraph (a) of the Human Resources Management System in the Public Sector No. 33 of 2024[8].
Article (100) (2) of the Human Resources Management Law in the Public Sector No. 33 of 2024 also stipulates that "the competent authority for appointment may terminate the service of an employee subject to the Social Security Law at their request or without their request if they meet the conditions for obtaining early retirement."[9]
These articles grant the competent authority the right to terminate the service of an employee if they meet the conditions for early retirement, whether at the employee's request or involuntarily (without the employee's request). This means that an employee may be put on early retirement even if they don’t want to.
Furthermore, Article 31, paragraph (a) of the Labor Law, relating to the termination of services in the event of restructuring of enterprises, stipulates that: "If the economic or technical circumstances of the employer require reducing the volume of work, replacing one production system with another, or permanently stopping work, which results in the termination or suspension of unlimited employment contracts in whole or in part, they shall notify the minister in writing, including the justifying reasons before taking any action in this regard[10]."
Accordingly, many employees are put on early retirement as a result of legal and economic conditions that allow the public and private sectors to make decisions related to staff downsizing or restructuring organizations. This may cause employees to be exposed to financial and social pressure due to their early retirement, especially if they have not yet prepared for retirement, and the powers stipulated in the law may be misused in some cases, which increases the chances of early retirement among employees suddenly and unexpectedly. Hence, there should be monitoring and review mechanisms to ensure that early retirement decisions are not taken arbitrarily or unjustifiably and that employees have the right to choose to continue working or go for early retirement without any pressure.
It is also necessary to review the legal provisions related to early retirement and termination of services to ensure that these decisions are informed and linked to actual business needs and not only taken for economic, administrative, or structural considerations.
Implications and Challenges:
It is important to carry out reforms and address the problem of early retirement, which has become the norm rather than the exception, to avoid the negative effects thereof. Early retirement significantly affects the financial sustainability of the public system in the Social Security Corporation, and leads to increased financial pressure on social security funds.
With the increase in the number of early retirees, the burden on the system increases due to the increase in the number of pension beneficiaries before their contributions are sufficient to support it. This means that financial resources are depleted rapidly, which threatens the system's ability to continue to provide services in a sustainable manner, in addition to exacerbating the financial deficit as a result of the increasing number of retirees. This leads to a decrease in financial revenues due to the reduction of the contribution period. As the deficit worsens, the government may be forced to raise taxes or provide additional budget support, affecting fiscal sustainability and increasing the burden of government responsibility.
Moving forward
Civil society organizations can play an important role in guiding public policies toward improving the economic and social conditions of retirees, supporting the sustainability of social security systems in Jordan, through awareness campaigns advocating for legal and social reforms, and contributing to providing solutions to early retirement problems by encouraging dialogue between the government and the private sector. These organizations also work to provide support to individuals affected by early retirement through providing legal services and retirement-related counseling, as well as seeking to ensure workers' rights and inclusive social protection.
Based on the efforts of the Arab Renaissance for Democracy and Development in monitoring the situation of social protection policies in Jordan and the region, and based on the importance of concerted efforts of all concerned parties from the public and private sectors and civil society, we propose the following:
1- Reinforce governmental efforts to work on improving work conditions and wage structure:
- Conducting periodic wage reviews and setting guidelines to ensure they are in line with inflation rates.
- Cooperating with the concerned authorities in the private sector to
- Encouraging employee retention: by offering incentives such as progressive retirement or skills development programs.
- Promoting work in the formal sector.
- Providing incentives for informal companies to register formally, and ensuring that workers benefit from social protection.
- Enforcing commitment to social security through targeted inspections.
2- For the government and legislative bodies, to initiate Legislative reforms:
- Reducing involuntary early retirement.
- Amending existing labor and retirement laws to ensure the protection of workers' rights and prevent involuntary early retirement.
- Promoting accountability: Establishing mechanisms to review early retirement decisions and ensure that they are justified based on clear criteria.
3- Strengthen Civil Society efforts in:
- Defending workers' rights: leading awareness campaigns to promote fair wages and ensure safe and sustainable retirement.
- Support services: free legal and financial advice to workers facing challenges related to early retirement.
- Promoting dialogue: Organizing discussion sessions that bring together the government, the private sector, and workers' representatives to develop inclusive policies.
4- All Stakeholders to join forces to implement evidence-based structural reforms
- Conducting analytical studies: conducting comprehensive studies to assess early retirement trends and their economic and social impacts.
- Social security reform: developing policies to promote the sustainability and fairness of pension systems and ensure their inclusiveness.
[1] Social Security Corporation. 2023. Annual Report 2023: Social Security Retiree Indicators.
[2] International Labor Organization. Discrimination (Employment and Occupation) Convention, 1958 (No. 111).
[3] Social Security Corporation. 2023. Annual Report 2023: Indicators of active insured persons.
[4] Social Security Corporation. 2023. Annual Report 2023: Indicators of Social Security Retirees.
[5] Social Security Corporation. 2023. Annual Report 2023: Indicators of Social Security Retirees.
[6] Social Security Corporation. 2023. Annual Report 2023: Indicators of active insured persons.
[7] Jordan Strategy Forum. 2023. Jordan's Informal Economy: A Potential Opportunity for Greater Productivity and Economic Growth.
[8] Article (107), paragraph (a) of the Human Resources Management System in the Public Sector No. 33 of 2024 stipulates that if the interest of work requires restructuring the department, creating new organizational units in it, merging it with others, canceling it, or reducing the number of employees in it, a ministerial committee shall be formed by a decision of the Prime Minister, whose chairman and members shall be determined in the decision to form it, to study the status of the department and its employees, take the necessary decisions, and exercise the following tasks and powers:
1- Putting the employee on retirement or provisional retirement if they complete the acceptable period. 2- Terminating the service of an employee who’s subject to social security in accordance with the provisions of this Law. 3- Laying off an employee if it is not possible to transfer them to any other department.4- Exercising any functions or powers stipulated in any other regulation that the cabinet decides to grant to the Committee.
[9] Public Sector Human Resources Management Law No. 33 of 2024
[10] Jordanian Ministry of Labor. 1996. Labor Law No. 8 of 1996 and its annexes and amendments.
