The government’s commitment to bring social security schemes for formal sector workers has not been implemented this fiscal too. The government had promised to enforce basic security for workers two years back.

The government has prepared a draft of the Social Security Act but it was not passed as the Constituent Assembly was dissolved on May 27, 2012. A draft of the Social Security Act is ready but it has been delayed, said executive director at the Social Security Fund Kewal Prasad Bhandari.

However, he hoped that the current government would bring the law through ordinance. Chairman of the interim election government has promised to give the law top priority. Therefore, the law will be promulgated soon, said Bhandari. Currently, the fund’s secretariat is busy maintaining records of contributors.

There are about 1.2 million contributors to the fund but the secretariat does not have a record of all of them. Private sector enterprises have not sent the details of their employees to the board.

“We have maintained a record of about 100,000 workers till date,” Bhandari said.

The fund collected around Rs 4.4 billion from the one per cent tax collected from the salary of formal sector workers in fiscal year 2010-11. However, employers have not contributed to the fund citing the lack of a governing law.

The social security schemes will help manage the labour market by boosting their confidence and increasing their productivity, he said, adding that the fund is planning to launch at least one social security scheme — medical scheme — from the next fiscal year.

The contribution based pension can sustain for a long time, as the government cannot manage the public expenditure on social security that has been rising by around 20 per cent annually. “Providing social security is not only the state’s responsibility but it will also help reduce poverty and attract investments,” Bhandari added.

Social Security Fund is the solution to the critical labour issue that has been disturbing the investment environment. The Social Security Act will not only help increase productivity of employees but also help mitigate disputes between employers and employees.

Published on: 12 July 2013 | The Himalayan Times