Government offers loans to lure workers to Social Security SchemeAfter a lukewarm response to the contribution-based Social Security Scheme, the government has come forward with up to Rs10 million in loans to workers.
Following a lukewarm response in enrollments to the contribution-based Social Security Scheme, the government has now revised the scheme and offered to provide loans to registered contributors.
With changes in the scheme, workers can get a loan of up to Rs10 million after registration and regular contribution into the scheme.
According to Ram Prasad Ghimire, joint-secretary at the Ministry of Labour, Employment and Social Security, the government has drafted a working procedure for deciding how the loans can be given to workers who are contributing to the welfare scheme.
“Most of the stakeholders we have discussed with have suggested that workers get loans after making contributions. Following their suggestions, we are proposing that the workers should get loans,” said Ghimire, who is also the chief of Labour Relations and Social Security Division under the Labour Ministry.
As per the latest provisions of the scheme, a worker can get up to Rs10 million as housing loan and a maximum of Rs3.5 million as educational loan. The working procedures, which will further clarify the mechanism of distributing loans, will be finalised within a week, said Ghimire.
“Before issuing loans to workers, there should be sufficient funds collected. Also, we need to finalise when a registered worker becomes eligible for such loans and how much they can get,” said Ghimire. “We will be finalising the draft soon.”
Since the scheme was rolled out to provide comprehensive welfare coverage to formal private-sector workers, the government has struggled in getting employers and workers to sign up to the scheme.
When the deadline for registration under the scheme, which provides old-age pension, medical treatment, health protection, maternity coverage, accidents, and disability compensation, expired last month, just over 6,000 organisations from the formal private sector had registered with the Social Security Fund (SSF)—the government body ensuring rights of social security protection.
Following the lukewarm response, which has been witnessed since the beginning of the scheme, the government had given a month-long extension to the remaining employers and workers to enrol themselves.
Now the government hopes the proposal of offering loans would yield a positive response to the scheme.
“The provision of loans can be one of the attractions for employers and workers for registering under the scheme,” said Ghimire.
To avail of the contribution-based scheme, both employers and employees should register and make monthly contributions to the fund. An amount equivalent to 31 percent of the workers’ basic monthly salary—11 percent deducted from their monthly salary and 20 percent as employer’s contribution—will go to the Social Security Fund.
Labour rights organisations have also welcomed the government proposal of offering loans to registered workers.
“We have long been suggesting that the government provide loans to workers who have deposited their money with the fund. This is a good move,” said Janak Chaudhary, general secretary of the General Federation of Nepalese Trade Unions.
“This will further help in clearing the confusion among the workers if they will get loans after depositing their money for years. Employers’ and workers’ interest in joining the scheme is likely to go up now,” he added.