What should the new government change?

[Leifur]

What should the policies of the new Iraqi government be?

 

What issues are in the most urgent need for reform, and what is neccasery to change now for the long term good of the country and to ensure future stability?

 

Most would say that security and stability are the most important things, but what do Iraqis and others beliewe to be the best ways of ensuring them? Or other problems facing Iraq, when they can allow themselves the luxury to think about them when the current situation has calmed? Is it maybe neccasery to take long term decisions today to ensure stability and peace?

 

One of the issues facing the whole region and could be instrumental in creating stability is how to take care of the old people. Most countries in the world have created pension systems that ensure that old people that have lost the ability to work can have money to live of. How they are and for whom they are intended is very different from each country to other. How should Iraq´s pension system be?

 

Here is an article that could be relevant into that discussion called:

Urgent Pension Reforms Needed in the Middle East and North Africa

 

WASHINGTON, August 23, 2005 - Pension systems in the Middle East and North Africa (MENA) are under growing financial stress and urgently need reform, according to a new World Bank report released today called Pensions in the Middle East & North Africa: Time for Change. The report-the first ever regional review of more than 30 pension systems in 13 countries1 - calls for a series of measures that would allow governments to gradually reform their unsustainable pensions systems, and thus avoid future crises.

 

According to the new report, pension systems in the region face problems in terms of limited coverage, fragmented administration, and system design that negatively affect incentives and equity. The report suggests that pensions systems try to offer too much in terms of benefits. On average, full-career workers would receive a pension of nearly 80 percent of earnings before retirement. This is much higher than the pension promise in 24 high-income countries (as well as 10 countries in Eastern Europe and Central Asia and 9 countries in Latin America and the Caribbean), where pension represents on average 57 percent of pre-retirement earnings.

 

"Pension crises are often associated with an aging population, which is misleading. In the MENA region, where 60 percent of the population is made up of young people, pension systems are already facing financial problems," says Christiaan Poortman, World Bank Vice President for the Middle East and North Africa. "So, the problem is structural, not demographic. The time for change is now. Postponing pension reforms will require dramatic adjustments in the future and it implies transferring the cost of reform to future generations," he adds.

 

Progress on pension reform has been uneven across the MENA region. Some countries like Algeria, Libya, and Syria are in the very early stages of the reform process or have not yet initiated discussions. In other countries like Iran, Iraq, Tunisia, and Yemen, policy discussions are more advanced but a coherent strategy has yet to emerge. Djibouti, Egypt, Jordan, Lebanon, Morocco, and the West Bank and Gaza, on the other hand, have made strides in pension reform, drafting progressive pension laws or introducing structural reforms.

 

The report urges countries in the early stages of reform, to conduct a proper assessment of the financial problems facing the systems. Without this baseline, it is not possible to initiate discussions about the costs and benefits of alternative reform packages. In other countries, the immediate goal is to move from strategic guidelines to a detailed reform concept, which will require further analytical work and consensus building. The remaining group needs to consolidate an integrated reform strategy and move toward implementation.

 

"MENA countries vary in terms of their political and economic conditions, but pension systems across the region share important design and structural problems," says David Robalino, a senior economist at the World Bank and lead author of the report. "It is possible to formulate a set of minimum standards that any reform program will have to meet; the specific content of these programs clearly will have to reflect social preferences and to be consistent with the local economic environment."

 

The report highlights that all the countries have earnings-related pension systems, financed on a pay as-you-go basis, which date back to the late 1960s and early 1970s. No changes to the structure of the systems have been introduced since then. These systems cover, on average, 30 percent of the labor force. Despite these relatively modest coverage levels and the fact that only 5-10 percent of the elderly receive a pension, spending as a share of gross domestic product (GDP) are already in the 1-3 percent range, which is high given the share of the elderly population.

 

Although there are important differences in demographic structure, all countries in the region share a relatively young population. A rapid increase in old-age dependency ratios will take place only after 15 to 20 years. However, independent of the aging process, pension systems will eventually run into trouble. The future aging of the population will simply make things worse. Most funds are accumulating large and unsustainable unfunded pension liabilities, which in the absence of reform, will have to be financed by future generations.

 

In addition, pension systems are hampered by policies that weaken incentives and arbitrarily redistribute income between plan members. The administration of pensions is fragmented, often with two or more schemes for different groups of workers. This is costly and limits the mobility of the labor force. The report also highlights governance issues that promote risky investment policies that do not necessarily benefit plan members.

 

The report also addresses the issue of gender equality within the pension systems. It shows that pension laws across the region have attempted to provide women with more flexible retirement decisions and more secure survivor benefits, driven by the assumption that men are the principal breadwinners. This feature of the law, however, also makes women more vulnerable to pension reform. Indeed, if the goal is to have a pension law that treats women and men equally, then adjustments are likely to affect women more than men. Thus policy makers will need to devise mechanisms that address the potential impact of pension reforms on women.

 

"International experience with reforms over the past ten years show that there's no single recipe for reform-that countries can mix and match different elements of an effective pension system, based on their own needs," says Robert Holzmann, Director of the World Bank's Social Protection Unit and a leading international authority on pension reform. "What also emerges is the continued need to reduce poverty, eliminate the risk of rapidly falling living standards, and protecting vulnerable elderly people from economic and social crises."

 

1Algeria, Libya, Syria, Iran, Iraq, Tunisia, Yemen, Djibouti, Egypt, Jordan, Lebanon, Morocco, and the West Bank and Gaza.

 

To see more information on the Bank's work in the area of pensions, visit: www.worldbank.org/pensions

 

Despite all other problems facing Iraqi´s today, the problems pointed out in this article are also there and they will only become worse for each year that passes. How do Iraqi´s beliewe this problem should be solved?

 

Many politicians claim it is enough to solve a problem to throw public money at it, is that the solution?

 

Others say that the best solution is to allow people to use their own money instead of having the government taking it away from them through taxation and dictating where the money should go.

 

That choise has not been for Iraqi´s and other Middle Eastern people for decades, as the oil wealth fills the public coffers, wich are then used by the government without the people having anything to say about it.

 

Democracy will only solve that problem partly as politicians that are not dependent on the population for funds are not responsible enough towards the population and it brings home the danger of favoritism and eventually the undermining of Democracy like we see in many other Middle Easter countries.

 

Now when Iraqi´s have a permanent government it is time for them to tell them what they should do and how in solving the various problems facing the country. It is time for Iraqis to start thinking for themselves how to solve the problems as I know they can. Take your destiny in your own hands!!!

[salim]

One of the issues facing the whole region and could be instrumental in creating stability is how to take care of the old people

 

Indeed Aljaafree had implemented the first wellfare system for the elderly and poor. more than 100 thousand families got enrolled in that program in the last five months..

[Leifur]

ndeed Aljaafree had implemented the first wellfare system for the elderly and poor. more than 100 thousand families got enrolled in that program in the last five months..

 

How do you or other Iraqi´s feel about this system beeing implemented?

 

In many countries welfare systems are opposed as the money to pay for them are payd from the taxes of the people, often resulting in very high taxation in many countries. That hinders growth and thus actually creates the need for welfare (unemployment and etc.) for many as higher taxes mean less consuption and investment wich mean less work available.

 

Often welfare system are also opposed as they result in social changes and in fact some have called them part of social engineering strategies. For example if there is a good welfare system to help single moms, such a system creates the incentive for women to become single moms, wich undermines the traditional family. Such systems are probably instrumental in the moral crumble of many western countries.

 

Many say that it is neccasery for a nation to help its lesser brothers, through such welfare systems, and although they are implemented in a leftist way, people often cite religious morality as the basis for such systems, that good muslims, good christians and etc. should take care of their lesser brothers.

 

Others say that if the government steps into this role, they are in effect taking the place that religious and charity organizations should have in helping them. And thus undermining religion and even basic compassion to other humans, as people stop beliewing they are responsible for helping their fellow citizens, instead they dump the responsibility on the government and thus walk away from the people dying in the streets and think: "the government should do something" instead of doing something themselves. This mentality has probably also helped to undermine morality in the West.

 

I am not saying that I am against government help for the poorest, I am just wondering how this system will be implemented and how big portion of the Iraqi people are eligable for help. Is it not true that there is about 80% unemployment? Hardly is Iraq rich enough to help all its people that are in need is there?

 

About Iraq welfare system, does the government still pay food for the people through the system created by the food-for-oil system?

 

And about helping the old people how many do you beliewe of the old, retired people of Iraq collect pension from the government like talked about in the article I posted? That is get 80% of their wages while they were working in retirement? The article states that such a system are bound to head to trouble, if they ain´t allready there, as it will become increasingly costly with more older people every day. Are you worried that it will maybe become too expensive for the government in the future, so the government should reform the system so that kind of problems could be avoided?

 

Many countries that have reformed their systems have got rid of this government guarantee for retirees, although ensuring the rights of those allready in the old system. Instead they have created systems that are based upon the basic principle of instead of retirees beeing payd from future earnings of the government the workers save a fixed proportion of their income over the whole working life to create a huge fund (savings plus interests) to live of when they retire.

 

Would you beliewe such a system could be good for Iraq? Should such a system bee adopted instead of the current system, and if so how do you think it be? And how do you think would be the best way to transform the current system into such a system? Or do you beliewe current system is better and if so why?

 

This kind of questions Iraqi´s need to start thinking about, that is one of the pillars of democracy. Dictators do not call the shots any more so people can now critizise the government and bring forth their own ideas of how things should be. How do Iraqi´s beliewe things should be, and more specifidly, how do YOU beliewe things should be?