Social security system: Implementation is the key

Published On: November 28, 2018 02:00 AM NPT By: Republica  | @RepublicaNepal

Prime Minister K P Sharma Oli on Tuesday unveiled a new social security scheme, aimed at protecting the rights of formal private sector employees. According to this scheme, all those employed by registered private sector companies will have to contribute a certain percent of their monthly salary to social security fund while the employers will also be required to add onto this. Once enrolled in this scheme, all staffs will be entitled to assistance for medical treatment, health and maternity protection, accident and disability protection, dependent family protection and elderly protection (pension). The government has instructed all employers to get listed in the scheme within the next three months. At the heart of this, according to the government, is the guarantee of appropriate remuneration, facilities and contributory social security to the employees, as per the spirit of the constitution. A lot of other promises have also been offered. Employees can draw support from the fund for medical treatment of families as well. The family members will receive the pension—60 percent of contributor’s last basic salary—in case of death of the contributing employee. His/her children will also be getting a 40 percent educational scholarship until they are 18. The scheme will cover full expenses in case of work-place accident or occupational disease. For non-workplace accidents, the scheme will cover expenses up to Rs 700,000. This sounds good.  

The hype created by the government and overtly exaggerated publicity given to it aside, such a scheme was long overdue for Nepal, where millions of people are employed in the private sector. According to Central Bureau of Statistics, a total of 932,000 industries and businesses in Nepal are providing jobs to over three million people. But the fact remains that Nepal’s private sector job providers have largely been exploiting their workers with abandon. The employees who work for years are sacked at the whims and fancies of employers and they are neither provided pensions nor gratuity. Besides, barring some exceptions, workers in formal private sectors have not been providing their staffs health insurance despite earning a lot from them. In this context, the government of K P Sharma Oli deserves praise for bringing out the scheme that offers to solve a lot of problems the employers face. 

But the caveat with this welcome initiative lies in its implementation. How will the government implement it? First of all, it will be extremely important for the government to take the private sector into confidence—the major stakeholders of this scheme. This plan won’t fully materialize unless private sector cooperates earnestly. And yet another risk is that of employers being cheated on their salaries in the name of social security fund. According to this scheme, the employees will contribute 11 percent of their basic salary and the employers will have to mandatorily contribute 20 percent of the employee’s salary amount to the fund. What if the employers try not to contribute or contribute by deducting from monthly salary (which is often low) of the employer circumventing the existing legal provisions? Social security fund in this form is a new concept for Nepal. A lot of challenges will come in the way of its implementation.  The government needs to remain prepared to face all such challenges. Every good policy is tested at the table of implementation. The policy that fails to be implemented is no good policy.

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