Introduction
The social services system of Saudi Arabia aims at providing a decent living standard to all the citizens of the Kingdom. The safety and welfare of the people is the prime objective of the Kingdom that abides by the principles of Islam. A state agency called General Organization for Social Insurance executes these social welfare programs in the Kingdom (Social Services Network, 2013).
General Organization for Social Insurance (GOSI) was established in Saudi Arabia by the Royal Decree to implement the provisions of the Social Insurance Law and is responsible for administering the schemes under the Social Insurance Regulations. This financially independent organization runs its administration independently and seeks the fulfilment of the required insurance coverage. The GOSI is dedicated
“to implement the provisions of the Social Insurance Law and follow-up the process of achieving the compulsory insurance coverage, collecting contributions from employers and paying benefits for the eligible contributors of their family members” (Brief on the General Organization for Social Insurance, n. d. Para 2).
The work of the GOSI is administered and controlled by a Board of Directors. The position of the Chairman of this Board is held by the Minister of Labor. The GOSI Governor holds the position of the Vice-Chairman in the Board. One member from the Ministry of Health, one from Ministry of Finance and one from the Ministry of Labor are part of the Board of Directors.
Moreover, three members represent the contributors and the other three members are the representatives of the employers. All these eleven members constitute the Board of Directors for GOSI. The GOSI operates through a Head Office and 21 field offices located in different parts of the Kingdom (Brief on the General Organization for Social Insurance, 2012, Para 2).
GOSI deals with various governments agencies and contributors. It also covers establishments and hospitals under its scheme. It has around one hundred and six establishments. The number of its customers will soon be almost three million. GOSI keeps a record of the MONTHLY MOVEMENT of the establishments that includes monthly information about the modifications in wages, terminations, and joining of all workers.
The conditions that are required to be eligible for making GOSI contributions and avail the benefits of social insurance are that the employee must be working in an organization in Saudi Arabia. The employer of the individual must be providing a genuine funding and the employee must be holding eqama under the patronage of a Saudi-based company.
GOSI covers two types of contributions. Annuity Branch that covers contributions related to retirement and Occupational Hazards Branch that covers compensation and medical care against occupational hazards.
Annuity Branch
The eligibility criteria for the social insurance with respect to retirement include the following points:
- Only Saudi nationals and the GCC nationals come under the social insurance coverage.
- The age criterion for availing retirement benefits is 60 years onwards for men and women both.
- In case of death before retirement, the benefits are given to the nominated beneficiary (Social Insurance, n. d.).
The minimum monthly earning of SAR fifteen hundred is necessary for contributions. The maximum earnings should be SAR forty five thousand in a month. Employees are required to do minimum 120 months of paid or credited contributions for availing the old-age pension.
In absence of the necessary standards for retirement pension, GOSI offers onetime payment to the employees. In case of not having 120 months of paid contributions, the employees have an option to be suitable for the old-age pension by having at least 60 months of paid contributions and paying the balance contribution in monthly instalments.
They can also pay the remaining contribution in one lump sum. These are called “credited contributions” and are restricted to 60 months. The calculation of the retirement pension is based on the “2.5% of average monthly salary over the last two years multiplied by the number of years of social security contributions up to 100% of the pension calculation base” (Memorandum-General Overview Employment Law/Kingdom of Saudi Arabia, 2013, p.6).
In case of a person resuming covered employment, his old-age pension is cancelled till he resumes retirement. The benefits in this case are adjusted keeping in view the best possible favours for the individual based on his former contributions.
It may also consider only the concluding period contributions in this regard. In cases of survivor pensions, the pensions are allocated only if the departed person has paid three uninterrupted or six non-consecutive months of contributions, at the time of his death, to the social security system (Memorandum-General Overview Employment Law/Kingdom of Saudi Arabia, 2013).
Occupational Hazards Branch
The social insurance approach for the occupational hazards includes the following points:
- Employees can avail the occupational hazards contributions in case of accidents or death at the work site, or any disability (partial or complete) caused while at work.
- This covers Saudi nationals along with GCC citizens and expatriates.
- The employer solely is responsible for these contributions.
- The employer mediates between the GOSI and the employee in cases of disability or injury caused at work.
- In case of death due to injury or accident at the work site, the compensation goes directly to the beneficiary from GOSI (Social Insurance, n.d.).
However, the employees are not supposed to contribute any amount. In cases of Saudi employees, the employers as well as the employees both have to contribute an amount equal to nine per cent of the employee’s wages to the annuities or pension branch of the GOSI that reserves the retirement benefit. The employers contribute their part and deduct nine per cent of the employees’ wages and deposit it to the GOSI branch of occupational hazards (Shoult, 2006).
GOSI, under the Social Insurance Law, is responsible for providing compensation to the injured employees that are registered under GOSI Scheme. GOSI may ask the establishments to contribute higher rates in case of their not fulfilling the requirements of safe and sound occupational environment. However, GOSI does not raise the contribution rate if the establishment has followed the required occupational safety regulations (Occupational Health and Safety in the Kingdom of Saudi Arabia, n.d.).
The social security scheme is administered by GOSI in Saudi Arabia and covers various benefits such as old-age pensions, compensation for ill health, incapacity grant and pensions to the survivors. The foreign workers get only the workplace injury compensation as social security from GOSI.
In September 2002, The reforms in the social security regulations conferred the benefit of retirement pension to all KSA employees. Earlier, it was restricted only to employees working in companies with more than 10 employees. Monthly income is topped at SAR 45000 for social security contributions (Memorandum-General Overview Employment Law/Kingdom of Saudi Arabia, 2013).
Ministry of Labor has now made it compulsory for private employers to let the expatriates benefit from the GOSI. The expatriates, if not registered under the insurance scheme earlier, could register their names for GOSI now and their private employers cannot stop them. The GOSI governor informed that the non-Saudi worker will be registered with the occupational hazards branch of GOSI with effect from the date he entered Saudi Arabia or the date his job was switched over to another employer (Legal expat workers eligible for GOSI, 2013).
The Social Insurance Scheme takes care of both private and public sector workers and ensures a decent life to its contributors even after their retirement from work. In addition to this, in the case of any disability and death in any family, the members of the family get an appropriate compensation. In cases of occupational diseases or accidents and injuries at the work site, there is a provision for medical care for the contributors. If a worker is disabled or dies in the work area, he or his family is provided the required compensation (Brief on the General Organization for Social Insurance, n.d.).
Besides this, GOSI also performs the following tasks to ensure safe and sound occupational environment in the work places in the Kingdom of Saudi Arabia:
- Adequate treatment and compensation for the injuries inflicted at the work site through its Occupational Hazards Branch (OHB).
- Active participation in the law making process related to occupational health and safety in Saudi.
- Keeping an updated version of the occupational diseases in accordance with international legislations.
- Regularly checking the realization of the occupational health and safety requirements by the companies.
- Making efforts to increase sensibility about occupational safety within establishments with the help of mass media, conferences and seminars.
- Studying the impact of various chemicals and equipment pertaining to occupational threats in the establishments.
- Presenting the Annual Statistical Report based on the information regarding the occupational injuries in the Kingdom.
- Increasing awareness about occupational hazards through published brochures and periodicals.
- Increasing occupational safety with the help of expert and trained medical and engineering staff.
- With the help of essential environmental procedures, ensuring a safe and sound environment at the work places (Occupational Health and Safety in the Kingdom of Saudi Arabia, n.d.).
Conclusion
GOSI has been very cautious in preparing an effective long-term strategy about managing its investments that are based on added experiences and extensive research. It attempts to take precautions to evade risks and focus on local investments that can bring profits. Moreover, it also aims at seeking large revenues to fulfil the accountabilities towards contributors or recipients.
Besides its main aim to uphold fund sustainability for covering the insurance paybacks of the contributors, GOSI investments play a vital role in reinforcing the developmental plans related human and material resources in the Kingdom (REDmoney, 2014).
References
Brief on the General Organization for Social Insurance (2012). Web.
Legal expat workers eligible for GOSI (2013). Web.
Memorandum-General Overview Employment Law/Kingdom of Saudi Arabia (2013). Web.
Occupational Health and Safety in the Kingdom of Saudi Arabia (n.d.). Web.
REDmoney (2014). The Islamic Finance Handbook: A Practitioner’s Guide to the Global Markets. Singapore: John Wiley and Sons.
Social Insurance (n. d.). Web.
Social Services Network (2014). Web.
Shoult, A. (2006), Business with Saudi Arabia (3rd ed.) London: GMB Publishing Ltd. Web.