SSF enforces a new guideline for workers

The Annapurna Express

The Annapurna Express

SSF enforces a new guideline for workers

Out of the 3.22 million individuals employed in the country, 25.8 percent or 832,187 individuals are employed in the informal sector

The Social Security Fund (SSF) on Tuesday enforced a new working guideline to provide coverage to workers from the informal sector, foreign employment, and self-employed people.

Kapil Mani Gyawali, Executive Director at SSF, said the rule is aimed at managing funds for pension and security against accident and physical disability for the workers of the three categories. “Workers from these sectors will receive similar benefits as those from formal sectors,” he said.

This is the first time that SSF is making an official attempt to bring migrant workers into its cover. Gyawali said these workers will be provided with long-term pensions after they are included in the social security scheme. “We will include migrant workers under the scheme while they receive the permit for employment abroad,” he added.

While considering the informal and outbound workers, SSF will maintain the minimum wage fixed by the government for the contributions of the workers in the fund. “They will have to pay a certain percentage of the minimum wage as defined by our guideline,” mentioned Gyawali.

For the workers from domestic informal sectors, SSF has categorized them into four types—household, agriculture, construction and transport. Those falling under these categories will be identified as recommended by local governments.

An analytical report on the informal sector published by the Central Bureau of Statistics shows that out of the total of 923,027 business establishments operating in Nepal, about half (460,422 firms) are not registered, and have been kept under informal enterprises.

According to the report, out of the 3.22 million individuals employed in the country, 25.8 percent or 832,187 individuals are employed in the informal sector.

The contribution-based Social Security Scheme is one of the most ambitious programs launched by the government in 2019. Under this, a contributor will receive cash in social security on a monthly basis after s/he retires at the age of 60.

According to Gyawali, apart from the pension, the contributors’ spouse will also get medical expenses and the contributors will also get medical expenses for chronic disease.

In the past three years, many public sector companies have joined the SSF. By enacting Social Security Act 2018, the government has made it mandatory also for private firms to join SSF.

However, a large number of private organizations in particular are still reluctant in joining SSF, claiming a number of provisions in the SSF law are ‘impractical.’ According to them, the scheme is still not clear in terms of double taxation and the payment mechanism, among others.

In July 2021, employees of banks and financial institutions even launched protests after SSF’s attempt to force banks to join the fund. Later on, the trade unions of 22 commercial banks filed a case at the Supreme Court against the SSF. According to Gyawali, the case is now under the purview of the apex court.

Citing the low participation of the private sector, the government revised the SSF working guideline for the first time in December 2020.

As of now, the SSF has incorporated 381,000 employees from around 18,000 formal sector organizations and has collected over Rs 26 billion in contributions from them.