Prime Minister KP Sharma Oli flaunts the social security scheme for formal sector workers today and the scheme for informal sector workers is planned to be launching soon. With the brink of this agenda, the government vows to facilitate both the employers and employees after they contribute a significant amount to the scheme as an installment. As soon as the law gets enforced, both employers and employees will have to mandatorily deposit their installment for the scheme and it will be applicable to all types of workers.
Generically, social security aims to enhance the living standards of people by leveraging the wavelength of social equity and justice. Realizing this fact, social security is considered an essential tool to accelerate economic growth. The government aims to reduce its multidimensional deprivation with the full-fledged implementation of the social security plans and directives. The Government of Nepal has been enacting with multiple approaches to foster the efficacy of this dynamic mega plan. The Interim Constitution of Nepal 2007 included the
provision of social security with an aim to safeguard the security of citizens. The social security plan is implemented under the umbrella of local self-governance act.
Starting May 22- 2019, the department of MoLESS is subjected to be collecting monthly installments as the Social Security Fund. As soon as the formal sector enterprises register their entities in SSF system, private sector employees will have to mandatorily contribute 11% of their basic salary to the fund starting May 22. On the other hand, employers from the same will have to contribute another 20% of their employees’ basic salary.
Beneficiaries and provision of the scheme:
As of now, employees have to deposit 10% of their basic salary while employers contribute another 10% as the provident fund. Another 8.33% have to be deposited by the employers as a gratuity. As per the contribution- based Social Security guidelines, the contributors must have deposited their installment regularly in the SSF for at least six months in order to avail medical treatment scheme while for the health and maternity security, the contributor must have worked for minimum 18 months and regularly deposited installments for at least 12 months. As for the accident and disability, social security can be availed by workers a day after they deposit their first installment. Workers can also receive compensation if they are injured in the workplace or develop medical complications due to their work condition after they have worked for a minimum of two years and deposited all installments on a regular basis.
The program extensively aims to lubricate the security, healthy labor relations and uplift the status of society. The social security fund will channelize its operation by collecting 31% of the income from the workers. The fund, therefore, utilizes 1% of the total expenditure to the accident survivors and for the security of physically disabled people, followed by 1.40% of its fund for facilitating the dependent families. The scheme also entitles to provide benefits to the immediate member of the family if the contributor is dead in any circumstances. Further, the provision aims to incorporate education loan for homeless children, services for refugees’ parents and even compensate them to carry out the funeral process. The Ministry for Labor, Employment and Social Security claims that in order to instigate the impacts of social security it has slashed such scheme. The new social security regulation propounds that the beneficiaries will receive social security allowances for the various public services that they will consume which includes boundless use of medical care and services.
The article 34(2) of Nepal’s Constitution has guaranteed that every laborer shall have the right to appropriate remuneration, facilities and contributory social security. The MoLESS embraces the promulgation of the new scheme enforcement and appreciates that it would mark the beginning of a new era and creates a sustainable and professional atmosphere, healthy labor relations and decent livelihood for citizens. As per the scheme, of the total fund collected, SSF will allocate:
- 22% for medical treatment, health, and maternity security,
- 52% for accident and disability security,
- 87% for dependent family security, and
- 39% for old age security.
- Equity and predictability:
The government is on its frontier to increase its social security allowance to the civil servants, the government spent approximately 37 billion in the fiscal year 2073/74. On the forefront, in the last fiscal year 2074/75, the government spent around 41 billion rupees for the pension recipients. However, to enact the security scheme for the current fiscal year 2075/76, 46.23 billion have been allocated. Post declaration also releases many questions. Firstly, the allocated fund should reciprocate with the Fiscal need and also match the tax rates allocated within each local province. Will, there be a smooth disposition of the social security scheme? Will the government be able to cater the needs and also manage the existing pension schemes with the new one? The situation might worsen further as our PM had declared to increase the pension up to 5000 during his election campaign. Moreover, the government is still pressurized to increase the social security allowance among other seven different categories. The government distributes approximately 40 billion as pension to the pension recipients in the nation. Under the nook of social security fund, the government also plans to encompass various subsidies such as scholarship, employment guarantee, and agricultural tools into its action plan which proclaims bigger oppression to the financial sector of the nation.
- Accountability for efficacy:
Overall the government should be accountable for the overall administration of the program. Accordingly, citizens who are the prominent recipients need to ensure their liability towards the significant contribution that they will be making towards the scheme. This will support the nation in building a roadmap for the effective delivery of public services framework in Nepal.
List of Acronyms:
MoLESS: Ministry of Labor, Employment and Social Security
SSF: Social Security Fund
https://www.npc.gov.np/images/category/Assessment–of–Social–Security–Allowance–Programin–Nepal.pdf https://thehimalayantimes.com/nepal/govt–to–unveil–social–security–scheme–today/ http://www.bizmandu.com/content/20181127090949.html