Nepal | June 25, 2019

Social security schemes on cards for private sector workers

Umesh Poudel

Kathmandu, November 14

Those who have lost a job or have failed to attend workplace because of illness, pregnancy or accident will soon be entitled to compensation, as the government has approved the Contribution-based Social Security Regulation.

The regulation, approved by the Cabinet on Sunday but yet to be made public, guarantees unemployment, maternity, health, accident, old-age and disability benefits to employees working in formal and informal sectors.

“These schemes will benefit those employed in formal and informal sectors. Staff will get compensation even if they cannot attend the workplace due to illness or accident,” Minister of Labour, Employment and Social Security Gokarna Bista told THT.

Employees working in the formal private sector will be entitled to these benefits based on the contribution made by them and their employers. It is mandatory for private formal sector employees to enrol themselves in this scheme. They may be penalised if they fail to make the contribution. The contributions they make will go to the Social Security Fund, which is operated by the Ministry of Labour, Employment and Social Security.

The government has been imposing one per cent social security tax on basic salaries of all private sector employees to raise the money required to operate the  Social Security Fund.

Very soon, private sector employees will have to contribute 10 per cent of their salary to the fund, while employers will have to contribute another 21 per cent of the employees’ salary to the fund. Once these contributions are made, they will be entitled to compensation if they lose a job or cannot attend the workplace because of pregnancy, illness or accidents.

Those who are self-employed or employed in the informal sector, however, must contribute 31 per cent of their basic salary every month to the Social Security Fund themselves if they want to benefit from the social security schemes, according to Labour Secretary Mahesh Prasad Dahal.

The contribution-based social security scheme will also cover government employees. “But they will be given an option to enrol themselves in this scheme or the one that is already in place,” said Dahal.

Nepal’s constitution promulgated in September 2015 guarantees the right to social security for senior citizens, financially disadvantaged, incapacitated and helpless persons, single women, those living with disabilities, children, citizens who cannot take care of themselves and people from endangered ethnic communities.

“The government will soon come up with a Non-contribution-based Social Security Regulation to cover this demography,” said Dahal.


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