Govt to introduce unemployment insurance scheme
The government plans to introduce an unemployment insurance scheme (UIS) in the next fiscal year. Under the UIS, workers in the formal sector will receive unemployment benefits in cash for the period they are without work.
To participate in the scheme, employees will be required to make periodic payments to which the employer will add its contribution in the ratio of 1:2.5, as per a draft of the Unemployment Insurance Act (UIA). The Ministry of Labour and Transport Management (MoLTM) has been working on the act with technical assistance from the International Labour Organization (ILO).
“The amount to be contributed by the worker and the employer is yet to be finalised,” said Nabin Pokharel, under secretary at the MoLTM. He added that following discussions with the private sector including the employers and trade unions, the ministry will finalise the amount of the contribution and the allowance.
He also said that unemployment benefits would be paid for a minimum of three months and a maximum of nine months. “The minimum amount of the monthly unemployment benefit will be 60 percent of the minimum wage or the average monthly insurable earnings of the worker during the last six months preceding the termination of employment,” he added.
“The programme is being introduced so that workers who have been laid off won’t have to face financial problems until they find another job,” said an MoLTM official. According to him, all the formal workers in the private sector can benefit from the scheme.
Mahesh Baral, director of the social security fund management committee, said the ministry was discussing if the UIS should be introduced as a separate scheme or as part of a social security package. “If the UIS is developed as a social security scheme, the contribution of 1 percent of a worker’s monthly salary won’t be sufficient to implement the programme.”
He said that the contribution of the workers and the employers should amount to at least 21 percent of the basic salary. “After the modality is set and the scheme is implemented, it will work as a temporary relief package to the workers,” added Baral. Other ministry officials said that the scheme would be extended to workers in the informal sector in the future.
Meanwhile, stakeholders including trade union officials have criticised the government for the delay in bringing the scheme. Ramesh Badal, secretary of the General Federation of Nepalese Trade Unions (GEFONT), said that the proposed UIS was not a new idea and that the major trade unions had been demanding it for a long time.
“As the government has already taken some three years to implement it, there is no point in implementing the programme by itself. The government should implement the scheme as a complete social security package.”
Published on: 30 November 2011 | The Kathmandu Post
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