Social security: cover for all

There is little not to like about the contribu­tion-based social security scheme unveiled by Prime Minister KP Sharma Oli on Nov 27. From now on, all working Nepalis in formal or informal sector, and both private and public enter­prises, will contribute 11 percent of their basic monthly salary to the new Social Security Fund. This will in turn be topped by another 20 percent by their employers. As workers will be entitled to nearly two times more money than they have to deposit, it will be in the interest of all working individuals, irrespective of their income size, to enlist.

Of the 31 percent, 1 percent will cover medical treat­ment; 1.4 percent will cover accidents; 0.27 percent, dependent family members; and 28.33 percent, old-age pensions. While other coverages will be activated after six months of paying into the social security pool, the old-age pensions may be claimed by those over 60 who have contributed to the fund for 15 years. Any way you see it, the start of the first-of-its-kind universal social security scheme is a landmark for Nepal. It is also perhaps the first major step towards the creation of the kind of socialist, welfare state envisioned by the new constitution.

It is indeed a monumental development for low-wage workers who heretofore had it hard, many of them unaware where their next meal would come from. Now, for a minimal contribution, they will be able to better plan their future. But first, the scheme needs to work. Questions have been raised regarding the potentially trillions of rupees that could be collected. With such gigantic sums involved, how will transparen­cy and good governance be ensured? And when that is cared for, what will be done with the money? One good idea is to invest it in big-ticket national projects.

But before all that, how will the ‘basic salary’ of each contributing worker be determined? Many industries and businesses don’t pay their workers mandated basic salary. These employers will now have to increase their salary bill, an issue over which they have tussled with successive governments. Nor was the way PM on Nov 27 Oli took nearly all the entire credit for the scheme seemly. But however the scheme was unrolled, there is no gainsaying its potentially life-changing impact on millions of Nepalis.