Has the Social Security Fund failed?

Although there are more than 9.5 million enterprises and business establishments across the country, the affiliation to the social security fund seems disappointing.

So far, only 18,823 employers have joined the Social Security Fund, which was launched five years ago. This is only 2 percent of the total establishments in the country.

When KP Sharma Oli became the Prime Minister as ‘the beginning of a new era’, why did the Social Security Fund, which was introduced with pomp, go towards the path of failure? Has the Social Security Fund failed?

On the one hand, compared to the scheme provided by the social security fund, the scheme provided by the employer is better and the service facilities they are getting are reduced, so the employees are not willing to go to the fund.

On the other hand, the employers who are hiring without even paying the minimum wage have not been able to attract to the fund because they are forced to pay wages equal to that amount when they go to the fund.

“According to the scheme of the fund, 11 percent is deducted from the wages of the workers and 20 percent is added to it by the employer, but the employees working in banks and financial institutions are getting benefits equal to the salary due to various schemes, due to which the fund could not attract employees,” Nepal Financial Institution Employees Association National Committee President Padmaraj Regmi says.

According to the concept of the fund, even though the goal is to include the employees who do not get even the minimum wage in the scope of social security, the stakeholders say that if they try to make it mandatory by putting everyone in one bucket, the fund itself will fail.

Chartered Accountant (CA) Seshamani Dahal says that the “enrolment” of only 2 percent in five years in the fund which was introduced as a new era is not encouraging.

He says that such participation is not due to incentives but due to binding rules. He said that the Social Security Fund is not competitive compared to the Employees’ Provident Fund and the Citizen Investment Fund, and that the government is not paying much attention to it because its policies are made by government employees.

There was no benefit or loss to the bureaucracy from this fund. He had to sit on the board and make policies against the workers,” he said. “The government was working hard to make this fund a success. However, this has tested the credibility of the government.

Through this fund, the workers themselves keep the savings collected. It gives profit only from interest. In that case, employees and workers go to wherever the saw comes back. In other words, Dahal says that it will go to the Employees’ Provident Fund.

According to the National Economic Census 2075, there are 923 thousand 356 establishments across the country. Of these, 462,625 are registered. 460 thousand 422 establishments are not registered. The status of 329 establishments has not been revealed.

According to the data of the fund, only 18 thousand 823 employers are affiliated to the social security fund operated by Nepal, which has more than 9 lakh establishments. This is the number of employers listed as of Sunday.

With the aim of organizing and expanding Nepal’s social security, the government introduced the concept of social security tax from the financial year 2066/67. After that, the Social Security Fund was established.

The fund started a social security scheme for workers working in the formal sector from 11 November 2075. It was fully implemented from 1 July 2076.

From 8 March 2079, workers employed abroad and from 31 July 2080, informal and self-employed workers can also join the social security scheme.

Even after 6 years since the program officially started, the number of people joining the fund has not increased as expected, reaching only a few employers.

Stakeholders consider the inability to increase participation in the social security fund to be the main weakness of the government and employers. On the other hand, industrialists and businessmen argue that due to the reluctance of the workers, the contribution to the social security fund is low.

The spokesperson of the fund, Vivek Panthi, says that the participation in the fund has not increased as expected despite the attractive benefits due to the failure to enforce the labor laws.

“The government of Nepal has set a minimum wage, the establishments that hire workers for less than that are not accepting to come to the social security fund,” he says.

Vinod Shrestha, president of Nepal Trade Union Federation, agrees with his argument.

“The workers didn’t understand, the owners were selfish,” says Shrestha, “some owner hired the workers by paying them 10,000, and the workers are happy. In such a situation, sending workers to social security is a loss for the owner!”

He says that in this situation, the workers are suffering from both sides because the state is unable to show presence to enforce the labor laws.

“In the month of 9/9, ministers change, secretaries change, everyone has to work according to their own interests,” says Shrestha, “Nobody paid attention to the reform of funds.”

Chairman Shrestha says that although the concept of the fund is good, the workers have a tendency to try to make it fail by comparing it with the Employees’ Provident Fund, which was established in 2019 and collected billions of rupees from the entire state.

“Employee Provident Fund should not be compared with Social Security Fund in any way,” he says.

Moreover, there is a big difference in the structure of these two funds. Which has made the Employee Provident Fund autonomous and strong. On the other hand, the Social Security Fund is run as a part of the Ministry of Labour, Employment and Social Security.

There is a provision that the chairman of the fund will be the secretary of the ministry. Chairman Shrestha said that when the priorities of the ministry changed after the ministers were changed, none of the leaders could pay attention to strengthening the fund.

On the other hand, industrialists and businessmen say that the social security fund scheme has failed to attract workers and the expected participation has not increased and employers cannot be blamed for this.

Nepal Industry Confederation President Rajesh Kumar Agarwal says whether or not to go to the social security fund depends on the will of the workers.

“The industrialists have been blamed only for show,” he said. He argued that workers were not attracted because the social security fund schemes were not attractive.

He argues that the fund provides health insurance up to 1 lakh, but many institutions do not agree to join the fund because the workers who are paid up to 1/1.5 lakh per month are not interested in this.

How is the performance of the fund?

So far, 18 thousand 823 employers have been registered in the fund. As of Sunday, the number of registered contributors has reached 1,259,483.

So far, 52 billion 65 million rupees have been contributed to the fund. Claims of Rs 8.5 billion have been paid so far. According to the fund, out of the amount of claims made in this way, drug treatment, health and maternity claims amount to 990 million, accident and dependency protection claims amount to 110 million, dependent family protection claims amount to 130 million and the amount of housing claims has reached 7.26 billion rupees.

The fund provides various types of compensation to contributors. A total of 10 thousand 957 workers have taken the sapti facility till the first half of the current year 2080/81.

It is seen that they are running a total of Rs 1 billion 95 crore 64 lakh 29 thousand 661 rupees. Among them, there are 10 thousand 936 people who take special sapti, 18 people who take house sapti and 3 people who take educational sapti.

Preparing to introduce more schemes

The fund has prepared to bring more schemes for the beneficiaries by revising the procedures. According to Vivek Panthi, spokesperson of the fund, now preparations are being made to bring drug treatment, health and maternity protection plans for the families of the contributors in the formal sector.

According to Panthi, earlier this facility was available only to the husband or wife of the contributor, but now it will be extended to children who have not reached the age of 18.

In the case of informal sector workers, husband or wife did not have this facility before. Now it is going to be expanded and the facility will be extended to the spouse and children as well.

Currently, there is no health insurance facility for contributors who are employed abroad. Spokesperson Panthi informed that in the new procedure, this facility will be extended to contributors, their spouses and children.

Leave a Comment