The government’s plan to bring new laws to provide social security benefits to workers and improve labour relations have failed to make any headway. This has caused the delay in providing much talked about universal social security schemes to employees.

Schemes for workplace accident, maternity expenses and health insurance, among others are being worked out since the last three years. While the Ministry of Labour and Employment (MoLE) was previously working to introduce the Social Security Act, which would govern all social security benefits being provided by different government agencies, it is now drafting an Integrated Social Security Act that would also encompass the private and informal sectors.

Employers, too, are not happy with the existing labour law and have been demanding for a ‘flexible’ Labour Act for a long time along with a law to govern social security provisions. In the new labour law, which will be an amendment of the existing Labour Act 1992, employers have sought provisions of ‘hire and fire’, and ‘no work, no pay’. These provisions are targeted to limit political activities in industries in the name of trade unionism and increase productivity. However, labour relations in the last two years have improved comparatively.

The MoLE said that it is taking more time to introduce new legal provisions as the two Acts are interrelated and require input from all stakeholders. “We have sent a draft of the Integrated Act for feedback to all concerned ministries,” said Budhi Khadka, spokesperson of MoLE. Talking about amendment to the Labour Act, he said that there are a ‘few issues’ to be cleared with stakeholders, including the private sector and will be completed soon. 

MoLE plans to make needful changes in the draft of Integrated Social Security Act based on the suggestions of stakeholders and forward it to the Cabinet along with a proposal of amendment to the Labour Act. The government in the budget announcement for the current fiscal year had also promised of amending the Labour Act. Amid the delay in implementing social security schemes, a meeting of the Legislature Parliament two months ago had directed the government to table a new Bill for the social security of workers. 

The integrated social security law seeks to ensure schemes for all types of workers, including formal and informal sectors and government employees. To implement social security schemes, the government has been collecting one per cent of salary of government and private sector employees from fiscal year 2010-11 in the Social Security Fund (SSF). So far, the fund has collected around Rs seven billion. After the enactment of the new law on social security, employees will be mandated to contribute 11 per cent of their wage, up from the existing one per cent and employers will be responsible to chip in 20 per cent to the fund.

In the budget announcement for the current fiscal year too, the government had talked of implementing seven social security schemes from the current fiscal year. But, SSF needs legal provisions, which are still in draft phase, to implement the programmes. 

That is not all, the work on compiling information of employees who will be eligible to take benefit of social security is also not moving effectively. SSF has collected details of only around 50,000 workers from different organisations. There are more than one million public, private sector employees and other workers who are eligible to be enrolled for social security schemes to be provided by the government.

What’s new

Integrated Social Security Act

• Seeks to ensure schemes for all types of workers, including formal and informal sectors and government employees

• Employees will contribute 11pc of salary, and employers will chip in 20pc to SSF

Labour Act

• Terms for ‘hire and fire’ and ‘no work, no pay’

• Aims to limit political activities in industries in the name of trade unionism and increase productivity .

Published on: 9 October 2014 | The Himalayan Times