Social security is a system through which public funds are used in the provision of economic security for the general public. The benefits from this social security system are paid out on a monthly basis to retired persons who have been paying funds directly to the social security pool during their working days. The benefits are also available to qualified individuals, who are considered to be completely and permanently disabled. The Social Security Administration has set out a predetermined criterion which is reviewed before admission to the program. For instance, the United States social security program deals with disability, insurance survivors, old age and also act as a supplement to security income. Employers and employees in the United States are required to make payments towards the social security in the form of taxes.
The collected money from the social security taxes is directed towards the provision of benefits for those who have attained the age of retirement or those who are currently qualified. The social security benefits are received based on the amount of money a person has been paying towards social security pool up to a certain maximum amount based on an individual level of income (Jorens et al., 2013). Despite all these achievements, social security faces many challenges with a huge number of people considering it an expensive system. It is also regarded to have deficiencies in its scope of coverage. With the increasing number of aging population, social security also lacks harmony in respect to taxation and labor law. Another problem is that of different financing method coupled with the issues of fraud and error.
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Social security currently faces the challenge of excluding a number of the population from any form of social security protection (Jorens et al., 2013). It can be noted that almost half of the world's population have been left out in this system (Jorens et al., 2013). These portions of the population are not insured by a social security scheme based on contribution or by social benefits financed by taxes. Only a small portion is covered in a few contingencies. According to global data, social security coverage shows that in Sub-Sahara Africa and South Asia, the estimation of coverage is between 5 to 10 per cent of the population that is working. In the Latin America coverage is considered to be between 10 to 80 per cent. In South-East coverage is deemed to vary between 10 to 100 percent. In industrial countries, coverage is considered to be 100 percent (Jorens et al., 2013).
Another challenge facing the social security scheme is the problem of differing financing methods. States members are allowed and are free to choose on ways through which they can finance their social security system. There exists no method of comparison between these states financing. There is the traditional method of financing which is mostly through taxes and contributions. It is, however, noted that there is no any state member that depends solely on taxes or contribution. A problem cannot exist as long as contribution and taxation are imposed by one and same member state. The issue arises on how to balance the total payment by an individual needs to pay in relation to taxes and contribution in the member states (Jorens et al., 2013). In an instance where the competence have been compromised between the tax levied and contribution, they are divided into two or more member state. This then means that the aim cannot be attained in the end.
A similar challenge exists between social security and labor laws. In cases where individual and the state engage in cross-border activities, it could be of great importance to use not only social security and tax laws of one member state but also its labor laws. The European Union’s legal instruments for the aspects of the employment law lack harmonies with respect to capabilities under regulation. These instruments do differ considerably from the basic principles of the coordination regulation. For example, the free choice principle in labor law related with the protection policy and the favoritism toward the employee (Jorens et al., 2013). In regards to the general labor law aspects, there exists a difference between the statutory and non-statutory social security system such as pension which must also be addressed.
Besides, there exists the problem of fraud and error which is becoming increasingly a politicized issue. In the member states, budget allocation for social security financing is continuously being decreased, with the combination of strengthening control mechanisms. The approach is meant to eliminate the issue of spending these financial resources on purposes and not in the members state’ social policy cover (International Labour Conference, 2001). It, therefore, seen that more effort is directed towards fighting unlawful acts such as people who direct these benefits to people who are not entitled to receive the benefits. Other efforts are geared towards pursuing people who attempt to escape the mechanisms of control put in place by different states. A publicly declared view is that each foreign individual claiming benefits is immediately considered to be abusing the social security system. Instead of harassing foreigners who are legally entitled to these benefits, the authorities need to prosecute individuals who are committing scams. Thus, fighting fraud and error should be a well-balanced act against the original drive of denying benefits to foreigners who are supposed to receive the benefits according to national legislation (International Labour Conference, 2001).
Lastly, aging is considered to represent the challenge for the financing of social security systems. Aging population will bring a significant problem if the aging population is increasing at a rate that cannot be contained by the overall social dependency. The dependency ratio can be decreased significantly if the retirement age is increased and women are given a greater role in participation in the labor force (International Labour Conference, 2001). It should be noted that an aging population is not supposed to be problematic to the social security system provided that the society can create jobs for the aging workforce. The existence of an improved health care system through social protection has enabled people to remain healthy even after the aging period making them continue working for a longer period. However, aging is more of a threat to socio-economic policy making and also the labor market.
In conclusion, social security is an important scheme to a country which needs to provide an improved living standard to its work force even after retiring. Despite the benefit accrued from participating actively in the social security pooling system, the system faces myriad challenges. Most of these issues are brought about by a huge number of citizens more so in developing countries. In these countries, the system is regarded as expensive, considering the low level of income in these countries. Such incidences have witnessed many people being excluded from the scheme. Different financing methods from one State to the others are also the cause of its ineffectiveness. Social security has not been harmonized due to differing labor laws. Nevertheless, there exists the challenge of fraud and errors as well as the challenge posed by the aging population to social security systems. It is therefore prudent to the government and the bodies concern to enact policies and make reforms that will help eliminate some of these challenges and make the social security system beneficial to its stakeholders.
References
International Labour Conference. (2001). Social security: Issues, challenges, and prospects. International Labour Conference 89th Session . Retrieved on 31 August 2017, from http://www.ilo.org/public/english/standards/relm/ilc/ilc89/pdf/rep-vi.pdf.
Jorens, Yves, Spiegel, Bernhard, Fillon, Jean-Claude & Strban, Grega. (2013). Key challenges for the social security coordination Regulations in the perspective of 2020. Think Tank report 2013 . Retrieved on 31 August 2017, from file:///C:/Users/User/Downloads/trESSIII_ThinkTank%20Report%202013.pdf.
