The government needs to urge the private sector to sign up for Social Security SchemeAfter much fanfare during the launch, there are few takers for the programme.
When the KP Oli-led government rolled out its Social Security Scheme amid much fanfare, all stakeholders applauded the initiative. Indeed, if done right, this important programme would have covered more than 3.5 million private-sector workers and provided them with both short-term medical benefits and post-retirement monetary security. But it seems that even Oli’s portrait plastered on huge billboards across the country was not enough to convince businesses to register their employees.
To be sure, the Social Security Scheme as envisioned by the government is sound. Barring a few issues that need to be resolved, the scheme would have worked—had the government made as much effort in getting the private sector to register as it had in advertising the project to the general public. But it's not too late. The government can still ensure that the private sector adopts the scheme, which would secure the lives of millions of Nepalis.
For a supposedly communist government, it had, until the programme’s launch in November 2018, little to show in terms of pushing any socially beneficial agenda. In fact, in cosying up to controversial businesspersons, the leadership seemed to show their preference for capitalists over the people’s interest. It was in this light that the launch of the Social Security Scheme was seen in a positive light, even lauded.
The scheme is a contribution-based one. Every employee contributes 11 percent of their salary to the social security fund. The employer adds 20 percent of the employee's income for a total of 31 percent. The combined amount would be divided into four categories, namely: medical treatment, health protection and maternity scheme; accidents and disability plan; dependent family plan; and pension or old-age security scheme. More than 90 percent of the contribution would go to the pension plan, so that even private-sector employees and their immediate family would have secure retirement benefits (provided that they have worked for a minimum of 15 years before turning 60). An important part of the scheme was its transferability—even if employees switched jobs in the private sector, they would carry the same social security identification and their contributions would accumulate.
For such an ambitious programme to work, it is essential for the pool of contributors to be large enough to sustain coverage for all. In this area, the scheme has failed miserably. Even though private sector representatives joined labour unions and government representatives in hailing the launch of the Social Security Scheme, companies have not been registering their employees. Of the 900,000 firms employing over 3.5 million people registered in Nepal, only 4,092 business firms and 35,500 workers have signed up.
The companies themselves claim that their workers are ‘hesitant’ to register for a long-term programme with no provisions of drawing or borrowing amounts in times of emergency—as provident funds would allow. However, labour organisations have been accusing the firms of intentionally ignoring the programme to save money, even after workers show an interest. Wherever the lapses may have been, the onus is on the government to show how beneficial this programme could be for employers, both as workers’ insurance and to retain labour from out-migrating. It is surprising that a government that has successfully tightened the collection of income tax from the entire private sector cannot urge the same to implement this programme.
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