EDITORIAL: Ambitious scheme
While SSF will provide lifelong benefit to private sector employees, the business community may find it hard to sustain its growth
This scheme will hopefully bridge the yawning gulf between the government and private sector employees as the latter will also be entitled to lifelong pension 15 years after their regular contribution to the fund. This scheme will definitely ensure social security to all. As the constitution has envisaged developing a “socialism-oriented society” this scheme will largely address the concerns faced by the private sector employees who have to retire empty-handed even after working hard in the nation-building process through the private sector. After this scheme comes into force six months later, as many as 3.5 million people from the private sector will be contributing to the SSF regularly, generating around Rs 2.5 billion every month. The Finance Ministry has already raised Rs 19.33 billion as it had started collecting one per cent as contributory fund from the private sector employees.The government yesterday unveiled the much-hyped contributory Social Security Fund (SSF). A law to this effect was enacted last year and related regulations and procedures were endorsed this fiscal. Under this scheme, formal private sector employees also will be entitled to medical treatment, health and maternity security, accident and disability security and lifelong pension after retirement. The SSF scheme will compulsorily come into force from May 22 next year. As per the provision, a private sector employee has to mandatorily contribute 11 per cent of basic salary to the fund while an employer will have to contribute 18.33 per cent (10 per cent as provident fund and 8.33 per cent as gratuity) in the employee’s account to be handled by the SSF. Out of the total fund collected, an employee is entitled to 91.39 for old age security and the rest will be spent for three other categories. To avail the medical treatment facility, one has to regularly contribute to SSF at least for six months; s/he should have worked for 18 months and should have regularly contributed to the fund for at least 12 months to avail health and maternity security. The accident and disability security however can be availed by the workers after they posted the first installment.
However, there is a caveat: Will the private sector be able to sustain after this scheme is rolled out? Was the private sector’s informed consent taken before launching the SSF? As the employer has to contribute a whopping 18.33 per cent of the basic salary of an employee as provident fund and gratuity, besides bearing expenses for medical, accident and disability security, the employers’ overhead cost will be too high to sustain. In this case, the employer either has to lay-off its staff or shut its business. This scenario should have been taken into consideration before rolling out the plan. Considering the size of private sector’s economy, the mandatory contributory provision may force the business community out of business for want of sustainability. As the scheme has already been unveiled, the government should address employers’ concerns too by creating enabling environment for their steady growth. This is an ambitious scheme and its success will be determined by the government’s capacity to take moral, legal and administrative responsibilities of this plan.
Fix bourse glitches
It looks like they were right about their concerns. Technical glitches on a daily basis in the online trading system are affecting the country’s sole secondary bourse. On Monday, share investors even staged a protest calling on the management to take immediate measures to fix the glitches. Immediately after going digital also NEPSE’s online trading system had encountered technical glitches. Technical problems cannot be ruled out, but authorities must take measures to fix them promptly. Technology should facilitate the work. What use it has if it makes the work even more cumbersome?Digital technology, e-governance, paperless Cabinet are the buzzwords these days. As part of its bid to strengthen e-governance, Nepal Stock Exchange (NEPSE) on November 6 switched to online trading system. While inaugurating the online trading system, Finance Minister YubarajKhatiwada termed it “a milestone for the government as the country heads towards e-governance”. But some stockbrokers had expressed reservations as to whether the online trading system will be systematic and reliable.