Timor-Leste: Economy urgently needs to grow to expand social security system – minister

Timorese minister Fidelis Magalhaes believes that the economy “urgently needs to grow” to allow the state to consolidate and expand the social security system, especially in the face of “finite and limited resources” and growing pressure on public spending.

It is a matter, said Fidelis Magalhães, the Cabinet office minister on Tuesday, of “ensuring the construction of a fair and sustainable social security system, but less costly” with an “effective management of the principles of justice and redistribution, and not just fiscal prudence.”

“The good governance, sustainability and sound financial management of the national social security system in Timor-Leste will depend, to a large extent, on the future capacity of the economy, which will have to bear the costs of existing and new social protection schemes,” he said.

“The sooner we realise this, the sooner we will be able to put in place the necessary measures to introduce appropriate gradual reforms in order to maintain living conditions and ensure the overall sustainability of the national social security system, in particular its pension system,” he stressed.

“We need to establish a lifeline in Timor-Leste and design an ‘economic correction’ path that is optimal for prosperity and stability” and, he noted, to improve legal and institutional frameworks, “strengthening and fine-tuning policies, and mobilizing” international partners.

Only in this way, he said, can Timor-Leste aspire to be “a middle-high income country” with the capacity “to extend social protection to all Timorese, and to prevent social and economic vulnerability”.

Fidelis Leite Magalhães was speaking at the closing of a two-day conference on the Timorese social security system, which completed five years of life.

The governor recalled the history of the various contributive and non-contributive regimes implemented over the years, leading to the current system, which “has proved to be a relevant political instrument to ensure income security for the elderly, workers and children, as well as to fight poverty and social inequality.

A model that reflects, he said, norms and standards of International Labour Organisation (ILO) conventions, anchored in the constitutional commitment “that the state takes charge of the social security system for the basic protection of social rights”, in the ideas of “social solidarity and solidarity in financing, to generate positive redistributive effects, in contrast to private management schemes”.

“In Timor-Leste, the state is and will be the guarantor of social protection. This has allowed us to envisage a system that provides income security to people that have reached old age and build other social protection schemes, in order to reach practically everyone, based on the capacity to respond to the specific needs of human development”, he stressed.

The governor considered the transition to a “more inclusive and sustainable” economy to be the ingredient to “achieve high living standards and a dignified life” for the public.

In this framework he stressed the need for the social security system to help “prevent and reduce poverty”, serving as an “automatic stabiliser when crises occur”, since “a prosperous economy and a dignified life result from a resilient and effective social protection system”.

“In both there is significant government involvement, so we must persist in strengthening the capacity of the social protection system through public policy, building sustainable partnerships to fund and set the standards to implement our roadmap for social security,” he said.

The minister said it is equally crucial, “to assess the risks associated with the national social security system” in the next decade, with a “deep social and political dialogue” that recognises the need to “balance the needs of social solidarity and redistribution”.

“We need transparent and efficient management of our pension funds, optimisation of management costs, the creation of stronger public institutions, broader political dialogue, better targeting of social assistance programmes, and comprehensive implementation of economic, labour and social policies,” he said.