Purna Chandra Bhattarai: Social Security Blueprint of Nepal

Purna Chandra Bhattarai is a former government secretary who has gained vital experience and expertise while serving in various ministries and their subordinate bodies, especially relating to social security programs, poverty alleviation, labor market, and employment. He was also part of the Social Security Plan Study Committee, whose report formed the basis for the Social Security Fund. He also served in the National Employment Program Study Committee that helped shape the current Prime Minister’s Employment Program. Here is how he sees Nepal’s social security program. 

Social security

Humans face crises in various stages of their life cycle. And, it is the duty of the state to provide security from risks to citizens who are in economic and social crises for the protection of their human dignity. Social security is an important tool that a state can employ to protect its citizens from various crises. The scope of social security may vary depending on the political system and the concept of welfare state adopted by the country. 

Citizens could face difficulties in maintaining minimum livelihood due to poverty, illness, disasters, disabilities, old age, or other reasons. Under such circumstances, social security schemes can be vital to ease their troubles. That’s why social security and protection are perceived as rights of citizens and as human rights. 

Scenarios 

Take recurring events like floods, landslides, and fire that cause significant financial losses to many people for example. Or consider events like the 2015 earthquakes and the Covid-19 pandemic that pushed a large population below the poverty line. The poverty rate has been observed at 20.27 percent, according to the third Living Standards Survey. Likewise, according to the latest census, 27.83 percent of the population is below 14 years of age, 10.21 percent are over 60 years old, and 2.2 percent are disabled. Similarly, more than six percent of the total female population are widows. Single women and at risk communities need to be covered by the state's social security umbrella. Disasters and crises can strike anyone, anytime, and in any way. Thus, social security is necessary to protect citizens from such risky situations and to guarantee them dignified living conditions.

Nepali context

In Nepal, the concept of social security is formally seen through the Army Welfare Fund (current Employees Provident Fund), which has been established since the Rana regime. It has been a subject of much discussion in Nepali society since the distribution of pensions started with a rate of Rs 100 per month from 1994 (approximately 30 years ago). Currently, various social security programs such as scholarships, daily meals, free textbook distribution, elderly citizen allowances, support for the disabled, Prime Minister’s Employment Program, and more than 80 other social security programs are being implemented in Nepal.

Types of social security

Social security programs are primarily of three types: first, social assistance; second, social security based on contributions; and third, labor market interventionist programs. Social assistance is provided to individuals and families who are economically and socially vulnerable or do not have access to basic services. This includes cash and in-kind support, social security benefits, primary health care services such as maternity security programs, free basic health care, scholarships, daily meals, etc. The second type is contributory social security and social insurance programs for livelihood protection and protection from risks. These programs provide benefits based on contributions made by relevant individuals and institutions. Such programs include retirement benefits, social security schemes (health insurance, accident insurance, dependent family security, children's education grants, various facilities related to safe maternity), employee provident funds, national health insurance programs, citizen investment funds, foreign employment welfare funds, etc. Third, labor market-related programs are aimed at increasing employment and productivity in the labor market, including skill development training programs such as vocational training, youth self-employment, Prime Minister's Employment Program, food or cash for work scheme, employment support, unemployment facilitation program, etc.

Guidelines

It is the responsibility of the state to support citizens facing difficult situations. Social security is recognized as a human right under Articles 22 and 25 of the International Declaration of Human Rights. Article 34 and 43 of the Constitution of Nepal also include social security as a fundamental right. Article 34 mentions the right to social security based on contributions for every worker, while Article 43 mentions the right to social security as a fundamental right for economically and socially vulnerable, disabled single women, disabled, orphaned children, those unable to fulfill their own aspirations, and backward caste citizens. Additionally, the concept of ‘Leaving No One Behind’ has been adopted as a commitment to inclusive development. Nepal has adopted national commitments to achieve sustainable development through social protection mechanisms, including establishing a nationally appropriate social protection system that helps vulnerable and at-risk communities, and developing resilient, flexible, and effective systems to prevent, reduce, respond to, and build resilience against risks. Nepal has also made international commitments in this regard.

Challenges

The foremost challenge today is to create a common understanding of the need for social security and related concepts. In recent times, all three tiers of government—federal, provincial, and local—have been competing in cash distribution programs in the name of social security. Maintaining a balance between significant political ambitions, the state's unlimited responsibilities, and limited financial capacity is crucial to establish an autonomous, contributory, sustainable, and productive social security plan. Once a social security assistance program starts, the likelihood of its withdrawal decreases significantly. Therefore, it is essential to conduct in-depth studies and analysis before making a decision.

In some situations, lengthy administrative processes have hindered the inclusion of at-risk groups in the social security scheme. These excluded groups include individuals without citizenship, single women, Dalit children, and persons with disabilities. There are also several incidents of some people presenting fraudulent records to take social security benefits.

Similarly, federal, provincial, and local levels have begun implementing identical social security programs independently. Some local levels have even increased the distribution amount of federal grants. Different bodies operating similar programs in the same place are also seen. The Government of Nepal has implemented programs such as the Prime Minister's Employment Program, while provinces have their Chief Minister’s Employment Programs, and some local levels have Chairperson/Chief Employment Programs.

Moreover, another significant challenge in social security and protection-related programs is financial sustainability. Currently, the number of people receiving social security benefits is much higher than before. In fiscal year 2080/81 BS, social security allocation was Rs 258bn. This amount accounts for 14.8 percent of the national budget. The development budget allocated to the social security sector is larger than before.

Another challenge is to make social security contributions-based systems inclusive for all. In addition to the formal sector, informal sectors, self-employment, and foreign employment should also be included in the social security system. Individuals included in this system receive benefits related to sickness, accidents, or disabilities, ensuring security for dependent families and elderly individuals. Making social security a necessity ensures that individuals can benefit, while reducing the burden on the state. In the last five years, there has been no increase in the participation of employers and contributors as expected. Similarly, health insurance programs are also very sluggish. Therefore, special efforts by the state are necessary for contributing to development in this contribution-based social security sector.

Targeted group

Another challenge seen in the context of social security is the identification of targeted groups. Instead of focusing on genuine at-risk groups, social security has become excessively distributive for political gains. This makes it difficult to target social security to the most needed groups. Currently, it is estimated that only around 32 percent of the population benefits from social security and protection programs, while the country aims to include 80 percent of the population in such assistance by 2030 as part of the sustainable development goal.

Effective measures 

It is necessary to prepare social security policies and structures (floor) related to social security in an integrated manner to bring them into a unified system. In addition, it is essential to expand the reach of programs to targeted groups by managing economic expenditure efficiently within the state's financial system. Moreover, it is necessary to develop a system where individuals can manage their own arrangements by increasing participation in social security based on contributions. Currently, around 35 percent of employee expenditure is spent on pensions, and it is necessary to include government employees in contributory pension programs. Furthermore, an integrated registry system is essential to prevent duplicate payments in social security. Similarly, effective identification of the real poor and implementing poverty identification programs is essential to make social security effective. In addition, even though the state encourages programs from time to time, special efforts are required to bring informal sectors into social security.

Social security is a joint venture between the state and citizens. Citizens themselves should be involved in social security by contributing to appropriate structures. Civil society organizations can play a role in advocating for programs related to social security, raising awareness at the grassroots level, and increasing participation. Individuals who do not need social security in society can also contribute voluntarily, inspiring and honoring social organizations. Citizen society needs to raise voice and support for the inclusion of the necessary groups, genders, and communities in social security programs and to advocate for inclusion.

These measures will not only make social security more effective but also contribute to building a more inclusive and resilient society.

Ways to strengthen it

There are three ways to strengthen the social security system: (I) Social assistance: Creating situations for people who are not able to avail themselves of necessary facilities, such as identification of targeted groups, eliminating duplicates, and creating situations for those who cannot avoid. (II) Contribution-based social security: Expanding the scope of contribution-based social security, incorporating those engaged in informal sectors, self-employment, and foreign employment into its fold, and continuously engaging them in contribution-based programs such as health insurance, contribution-based pension, etc., to make them more effective and impactful. (III) Intervention in the labor market: Engaging in employment-based campaigns and programs outside the political sphere to connect employment with skills and the market.

Achieving effective coordination 

The Constitution and the Social Security Act 2075 have entrusted the responsibility of social assistance, especially direct cash transfers for social assistance, to the federal government and the responsibility of implementation to the local level. If poverty alleviation, which falls under the responsibilities of all three levels of government, is to be achieved, then the authority area of all three levels also needs to be expanded. Therefore, it is necessary for the Nepal government to centralize policies, standards, and financial resources for social security in employment-based programs at the provincial level. In order to overcome the crisis in the citizens' life cycle that does not receive political benefits from social security, it is necessary to consider protective measures in the form of necessary protection measures. It is also essential to establish institutional mechanisms for coordination among the governments of all three levels in this regard.