Package proposed to reform the labor market and social security in Sint Maarten

Commissioned by Sint Maarten and the Netherlands, Amsterdam Bureau for Economics, in collaboration with SEO Amsterdam Economics, De Beleidsonderzoekers and Tackling Law, made recommendations for reforming the labor market and social security of Sint Maarten.

The labor market and social security system of Sint Maarten can be strengthened by a balanced package of reforms aimed at expanding employee insurance, increasing the financial sustainability of the basic pension, increasing procedural efficiency in attracting foreign workers and in case of dismissal, and combating poverty.

Four general problems and four specific problems have been identified that are relevant to the reform of the labor market and social security system of Sint Maarten. General issues that need to be addressed include: insufficient compliance and enforcement, the lack of frequent and structured social dialogue, underinvestment in human capital and a lack of adequate information for workers and employers when it comes to rights and obligations. Specific problems in the field of labor and social security are: employee risks related to unemployment and disability, the financial sustainability of the AOV (Old Age Pension), the inefficiency of procedures surrounding labor migration and dismissal, and poverty.

The improvements and reforms proposed in these reports contribute to a better functioning of the labor market and the economy, the fight against poverty, ensure greater income security and contribute to sustainable public finances. The integrated package of policy reforms results in a net improvement in public finances (government and implementing body SZV), and neutrality or a slight increase in employer contributions. The proposed reforms have been tested for economic, financial and social viability and sustainability. The recommended reforms are:

• Introduce unemployment insurance
• Abolish Cessantia, while retaining the severance pay
• Differentiate employer premiums for the sickness and disability insurances (ZV and OV) to encourage disease prevention
• Automatically index the AOV eligibility age to life expectancy
• Formalize assistance for the elderly with an incomplete AOV
• Streamline and speed up work and residence permit procedures
• Streamline and speed up dismissal procedures
• Develop new legislation for temporary workers
• Automatically index the minimum wage, financial assistance (FA) and disability benefits to inflation
• Strengthen incentives for FA recipients to accept paid employment

It is essential that social partners and stakeholders play a role in the entire process of implementing these reforms, that a programmatic and project-based implementation path is followed, and that a governance structure is installed that ensures implementation, support, direction, monitoring, coordination and coordinates implementation of the reforms.

The report on the labor market, the report on social security and the report with the integrated package of reforms for the labor market and social security of Sint Maarten can be found here.