Mandatory SSF leaves startups in a fix

Published On: July 23, 2019 04:30 AM NPT By: Nikeeta Gautam

KATHMANDU, July 23: Startups are finding it difficult to participate in the contribution-based Social Security Fund (SSF) scheme that the government made mandatory from the current fiscal year. They argue that as these entities are different from traditional enterprises, it will be difficult to implement the scheme.

Manohar Adhikari, the founder of Foodmandu -- an online food delivery company, said he was positive about implementing the scheme. "However, as most of our staffers are working on an incentive basis, I think the implementation of the scheme will be difficult for e-commerce ventures like ours," he said, adding: "Though we have already enrolled in the scheme, we have no idea what to do next."

Aashish Adhikari, the founder of eatery chain RedMud Coffee, says he also supports schemes like the SSF. "But most of the startups like ours don't have enough cash flow like larger business entities," he said. "I think the scheme should be executed in a phase-wise manner. First, it should be made mandatory for larger organizations, then medium ones, and SMEs and startups.”

RedMud's Adhikari says the implementation of SSF will increase the overhead expenditure of his venture by around 20 percent. "Most of our staffers are teenagers and youths who want cash in hand rather than security for the future," he said. He further added that most of the startups hire staff as a trainee in the beginning. "If they draw a salary of say Rs 7,000, deduction of 11% means they will have a very meager amount," he added.

Under the scheme, employers will have to contribute 20 percent of the salary and deduct 11 percent of the salary of their staffers. The SSF will launch different products like medical treatment and health and maternity protection scheme, dependent family protection scheme, old age protection scheme, accident and disability protection scheme, among others, for the contributors.

Surath Giri, an entrepreneurship activist and co-founder of Onion Films, said that startups will face complications in the implementation of the SSF. "As startups mostly hire youths, I think it will be challenging to convince them for contribution," he said, adding: "Since most of them want to go abroad, they will feel that the SSF will be of no benefit to them."

Rama Bhattarai, the spokesperson for the SSF, told Republica that it will take some time for full-fledged implementation of the contribution-based SSF. “We are implementing the scheme as a trial for three months. After collecting feedback and studying them, we will make needful changes in our policy and also organize training and orientation sessions at enterprises," she added.

Bhattarai added that the scheme will mandatory for all enterprises regardless of the nature of their business. "We will give a social security number to all employees. It will be their permanent number even if they change their workplaces," she added.

Bhattarai further added that social security fund was necessary to develop a professional workforce and corporate culture in the country. "If we don't implement this scheme in every entity, we will never respect the labor rights,” she added.

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