Social security scheme, after being launched with pomp, receives lukewarm responseThe launching of the scheme had seen massive promotions from the government, which claimed the scheme as the beginning of a new era in the country.
Employers have shown little interest in joining the Contribution Based Social Security Scheme, which was hailed as a landmark scheme for the welfare of private sector workers when it was launched in November last year.
The launching of the scheme had seen massive promotions from the government, which claimed the scheme as the beginning of a new era in the country.
Rallies led by workers and their unions were taken out in various parts of the country and promotional banners and posters were plastered all across the Capital.
All three parties—workers, government agencies and employers—had celebrated the scheme from one stage.
However, the extravagant celebration has failed to reflect in its implementation on the ground, as employers, who had once praised the scheme as a landmark move in protecting the labour’s rights and safety.
Nearly 2,500 private sector have applied for registration in the last five months under the scheme that was introduced amid much fanfare on November 27 last year.
According to Shyam Raj Adhikari, executive director of the Social Security Fund, the main government authority under the Ministry of Labour, Employment and Social Security for implementing the scheme, the interest shown by the employers has been disappointing.
“The number of employers coming forward to enrol under the scheme is not low—it’s negligible,” Adhikari told the Post. “It seems there is a perception among employers that it will add additional financial burden on them.”
According to a preliminary report of the National Economic Census 2018, nearly 900,000 private firms, factories, business establishments and service providers are operating in Nepal.
As per the contribution based scheme, every month, private sector workers and their employers will be contributing to a common fund—Social Security Fund—which will provide financial support to workers.
An amount equivalent to 31 percent of workers’ basic monthly salary—11 percent deducted from workers’ monthly salary and 20 percent from employers’ chest—will be going to the social security fund.
“Big firms, it seems, are concerned that the scheme would mean extra burden for them, whereas small level companies feel whether they will be able to contribute to the scheme when they have been struggling to abide by the minimum wage,” added Adhikari.
Of the 31 percent, 1 percent will be used for medical treatment, health protection and maternity scheme; 1.40 percent for accidents and disability plan; 0.27 percent for dependent family plan; and 28.33 percent for pension or old-age security scheme.
Labour right organisations have also said employers have been reluctant to register under the scheme.
“We have been working to effectively implement the minimum wage and the social security scheme which is ‘win-win’ for all the three parties—government, workers and employers,” said Binod Shrestha, president of the General Federation of Nepalese Trade Unions.
“However, employers have shown little interest in implementing the scheme at their workplace. We will launch a whole campaign for its implementation,” he said.
The May Day slogan of labour rights organisations has also prioritised the enforcement of the scheme.
According to Adhikari, big companies and multinational companies have already registered under the scheme and response has been lukewarm from financial institutions, schools and colleges and tea estate companies, among others.
Private schools have already said the scheme was not feasible for small and mid level schools. A total of 4,000 workers from those firms, having completed registration procedures, have already enrolled under the scheme.
After making their regular contributions, workers will be entitled to old-age pension, medical treatment, health protection, maternity coverage, accidents, and disability compensation.
Employers, however, attribute the ‘state of confusion’ for the slow registration.
According to Bharat Raj Acharya, vice chairman of the Employer’s Council of the Federation of Nepalese Chambers of Commerce and Industry (FNCCI), workers and employers have been seeking some clarity before becoming part of the scheme.
“Workers are rather concerned—and hesitant—as the scheme is a long-term investment,” Acharya told the Post. “These workers are concerned how they will sustain when they need money in the meantime. The current model needs a revision so that it either pays interest on their deposits or they can withdraw money when required like the Provident Fund.”
Acharya said an FNCCI task force has already submitted its recommendations so that the scheme can be successfully implemented. They have also expressed their reservations about provisions that make it mandatory for the employers to register their workers, including foreigners, under the scheme.
“Employers hire foreign workers for a short period of time whereas enrolling with the scheme is long-term investment, adding extra burden on them,” added Acharya.
As per the Social Security Scheme’s operational directives, retirement pension will be provided to workers over 60 years of age who have contributed to the fund for 15 years.
“The Labour Act says an employee will be entitled to pension after 58 years whereas this scheme says over 60. Both should be uniform,” said Acharya.
The nationwide deadline for registration under the scheme expired on April 28, but the government has extended it till July 16—the end of this fiscal year.