Bring Social Security Act, Labour Act together: Employers

The private sector has asked the government to bring Social Security Act and Labour Act together through ordinance for the effective implementation.
“In an absence of Labour Act, the Social Security Act may not be effective, as they are related to each other,” said chairperson of Employers Council and vice president of Federation of Nepalese Chambers of Commerce and Industry (FNCCI) Pashupati Muraraka, at an interaction on Social Security Fund (SSF) organised by Nepal Business Forum, a public private dialogue forum promoted by the International Finance Corporation (IFC), here today.
However, a draft of Social Security Act is ready and draft Labour Act needs more amendment and could be delayed, according to the Ministry of Labour.
“If the government cannot bring both the Acts through ordinance together, the Labour Act must be brought before the employers start contributing to the Social Security Fund,” he said, adding that the two Acts complement each other.
The Social Security Fund has envisioned some 20 per cent contribution from employers and 11 per cent from the employees making it to a 31 per cent. But it has yet to be finalised.

Social Security Act will not only help increase productivity of the employees and mitigate the dispute among the employers and employees but also help attract investments, as the employees feel secure,” Muraraka added. “Smooth relations between the employees and employers will send a positive message to the investors, who are interested in investing in Nepal.”
Labour dispute, lack of skilled manpower, and over politicisation of trade unions have hurt the investment climate in the country, said executive director of Social Security Fund secretariat Kewal Bhandari, on the occasion.
The social security schemes will help manage labour market boosting their confidence and increasing their productivity, he said, adding that the Fund that has Rs 4.40 billion is planning to launch atleast one social security scheme – medical scheme – from the next fiscal year.
The government has been charging one per cent social security tax to the employees since 2011.
 “Though, the Fund has prepared four social security schemes.”
The Fund is planning to collect data of the some 1.2 million employees – that are estimated to be working in the private sector in the country – sectorwise. “By now the Fund has registered some 80,000 employees, he said, adding that data collection, policy level confusion, rate of contribution of the employers and providing Social security card are some of the challenges for the Fund, though the Fund is committed to implement the contribution based pension.
“The contribution based pension can sustain for a long time, as the government could not manage the public expenditure on social security that has been rising by around 20 per cent annually.
 “Providing social security is not only the state’s responsibility but it will also help reduce poverty and attract investments,” Bhandari added.
The workforce should be secure, said senior private sector development specialist at the IFC, a private sector lending arm of the World Bank, Laura Watson.
Social Security Fund is the solution to the critical labour issue that has been making the investments shy away, she said, adding that it will help create good working environment.
Nepal Business Forum had been pushing the government to implement the social security – since 2010 – that would help create investment friendly environment in the country.