Reluctant employers put social security planel in a fix

KATHMANDU, MAR 10 -

With a large number of employers still not furnishing the sought details, the Social Security Fund Management Committee (SSFMC) has been finding it difficult to access the size, nature and structure of social security schemes.

The employers have been asked to furnish details such as the number of their employees and their designation, among others.

Although the government has maintained a separate account for the collection of the social security fund (SSF), most of the employers are depositing their contribution in other accounts, according to the government entity formed to manage the fund and implement social security schemes. One percent of the taxable income of salaried individuals from both the public and the private sectors is collected in the social security fund.

“Some of the contributors are depositing their contribution in the SSF account, while some are depositing in the remuneration tax account,” said Kebal Bhandari, executive director of the committee. “It has also been found that some created their own accounts due to the lack of awareness.”

Only 337 employers/firms have so far been updating their status regularly by furnishing the details to the committee. “This has created difficulties in accessing the size, nature and structure of social security schemes for implementation,” said Bhandari. The government introduced one percent tax for social security purposes in 2009-10.

According to the committee estimates, around one million workers — from both public and private sectors — contributed to the fund until 2011-12, but it has no idea if the number has increased or decreased. “Because of the employers’ reluctance to furnish the details, we do not know how many employers are contributing to the fund for what number of employees,” Bhandari said.

Committee officials said despite repeated verbal/written correspondences, the employers have not shown any seriousness to furnish their details. The committee estimates around Rs 3.5 billion has been collected so far in the find. The government collected an estimated Rs 640 million in 2009-10 and Rs 740 million in 2010-11. Collection in 2011-12 had gone up to an estimated Rs 1 billion.

An official said amid policy vacuum regarding the implementation of social security schemes, employers’ negligence has further complicated the issue. The committee has not even able to start planning the implementation of the programme, the official said.

The committee had planned to launch at least three social security schemes, including insurance coverage for maternity, workplace accident, and health hazard, in the last fiscal year, but it could not do so as the draft of the Social Security Act could not be endorsed due to the dissolution of the Constituent Assembly. Two other schemes proposed by the government are unemployment insurance, insurance coverage for dependents, disability, old age, medical insurance and family insurance. Mahesh Baral, former director of the SSFMC, said the delay in implementation of the policy regarding the implementation of the social security schemes was also encouraging business firms not to furnish their details. “The government has not been able even to endorse the Social Security Act for last five years,” he said. “How could the employers be motivated to cooperate with the SSFMC?”

He also said employers are not satisfied with the Finance Ministry ‘grabbing’ the amount collected under the SSF. “The SSFMC has not received the adequate amount at least to begin the programme execution,” Baral said.

Source: The Kathmandu Post