Reforming Algeria’s social protection system

The social protection system in Algeria is facing critical funding issues and increased demand from the population. To date, Algeria has introduced social protection programmes in a reactionary manner, leaving a patchwork of measures and mechanisms but without a considered overall long-term strategy. The coverage and adequacy of benefits provided by the current system are stretched. As a result, the system is in dire need of a far-reaching review and reforms that enable it to meet the basic needs of citizens. This research paper offers the first comprehensive mapping of the social protection space in Algeria, highlighting the broad activities led by government entities, but also the important role of homegrown civil society organizations (CSOs) and community-based organizations. The paper provides a snapshot of public opinion on key social protection-related issues. The analysis here illustrates the richness and the diversity of both formal and informal CSOs and community networks that work in Algeria’s social protection and voluntary sector, while also highlighting their fragmentation, which engenders lost opportunities around the pooling of resources. As laid out in the country’s constitution and its acceptance of the Sustainable Development Goals (SDGs), Algeria is committed to addressing inequality and social exclusion. However, certain aspects of the current welfare state are not functioning well enough to achieve these objectives. For instance, the quality and availability of specialized healthcare are strained and unable to meet current demand, which risks leaving large portions of the population behind. However, when compared to peers across the Middle East and North Africa (MENA) region, Algeria is performing relatively well on SDG progress. Universal basic income (UBI) could offer an alternative to blanket food and energy subsidies in Algeria, but such an approach would require additional fiscal space and would be most effective if it were complementary to social welfare rather than a direct replacement. The cost of implementing UBI in the least generous scenario outlined in this paper would be approximately 9.3 per cent of Algeria’s GDP. In 2019, Algeria’s social transfer expenditure accounted for 8.6 per cent of GDP. However, in a scenario with higher benefit levels, the cost could escalate to around 32.3 per cent of GDP. The government is yet to consider UBI as a policy instrument, but relevant policymakers could undertake a pilot study to gauge its costs, feasibility and effects. To enhance Algeria’s social protection system, policymakers need to explore various options to increase fiscal space. This includes raising contributory revenues through the expansion of social security coverage, increasing tax revenues, combating illicit financial flows, improving expenditure and revenue-collection efficiency, utilizing fiscal and foreign exchange reserves, managing debt, and adopting a different macroeconomic framework to allow for higher budget deficit paths and higher levels of inflation. These options have the capacity to expand financial resources, administrative capacity and policy bandwidth. Such decision-making should be aided and determined through a comprehensive social dialogue that engages all relevant stakeholders. However, increases in global energy prices – across hydrocarbon exporters – tend to stifle reform appetite, which may defer policy experimentation and innovation in the social protection space.