July 14, 2021 Sujeev Shakya

Social insecurity

Nepal’s social security schemes do not work for the intended beneficiaries and are a burden for honest businesspersons.

One of the vivid images that keep popping up in my mind, from a time before the political crisis began, is the particular picture of Prime Minister KP Oli that was splashed across billboards in cities, cover jackets in leading newspapers, advertisements in televisions and on social media. This was the launch of the Social Security Fund in late 2018. The International Labour Organisation hailed it as a ‘historical step towards achieving decent work for all’. This day was also decided to be marked as Social Security Day in Nepal, but a year later in 2019, this day was forgotten. Like many religious, cultural and project-based events in Nepal, it was a one-time affair that fizzled out. The concept was full of flaws; but like many other regulations in Nepal, we do not believe in corrective action. Surely, nothing is perfect when it is launched, but through feedback and amendments, policies that benefit citizens are made palatable. However, in this case, both the intended target segments—the employer and employee—have suffered.

Impediment to rules

When we are pitching for investments with foreign investors, they ask for the overall labour and work landscape; the guidelines on the Social Security Fund (SSF) then become a red flag to potential investors. The Nepali cartel-driven private sector always finds ways to get around such regulations. When I asked a business person in Birgunj very much involved with business association politics on how the sectoral associations agree to such half baked rules, his answer was clear. He said that you can only do good business in Nepal if you can beat the system. ‘I have my workers come across from India to work in my factory, so the issue of SSF does not apply to me’, he said.

While it is fair to blame Nepal’s weak economic progress on the problems created by labour through unions and other political bodies, the Nepali private sector is equally to be blamed. There is an Employers’ Council at the Federation of Nepalese Chambers of Commerce & Industries (FNCCI), but the website has been inactive since August 2017. Presumably, the donor funding for the project that looked at this Employers’ Council must be depleted.

In 2000, when I was working at the Soaltee Hotel and was part of a team that was trying to negotiate with labour unions on the issue of service charges in hotels, I was trying to explain to the public why the service charge was such a bad idea. Little did I know that the employers were keen for this also, as they saw an opportunity to make some extra money. In most cases where sales revenue records were not maintained in a transparent manner, it gave proprietors the opportunity to rake in the entire 10 percent by paying off some of the key labour folks. In the case of SSF also, the private sector bodies continued to emphasise on the necessity of making the fund work. For businesses, this is an additional cost on top of the high taxes that one pays in the country and high wages when compared with productivity.

Nepal’s history of labour post-1990 has been a contentious one, with shutdowns and strikes forming a part of the action backed by political forces. When we used to negotiate with the workers in the companies I was engaged earlier with, we did not meet with our own staff but with external political leaders. There was a pseudo-militant attitude among the representatives that turned for the worst during the decade long insurgency. Nepali labour does not want payments based on productivity and, in negotiations, the aim has been to get the maximum by doing the minimum. The current SSF, however, hits them hard, too, as employees have to lock in money for 30 years before they can get the money out. In today’s working culture, who thinks of being in one job for 30 years? The workers also know very well that money collected by the government will never reach them, like in the case of the National Level Welfare Fund.

The discourse on social security is more important now than it has ever been, as people and economies reel under the impact of the pandemic. For employees, it is becoming crucial to have social security to survive through difficult times, as most employers find it easier to lay off people than help them. For firms, they are under pressure to weed out costs as revenues have dropped or disappeared. If the Nepali private sector organisations had been long term thinkers, they would have worked with the government to create social security schemes that would actually benefit all.

The pandemic has shown us that human relations go beyond contracts and obligations. If a person has worked with you for 20 years, you have to fend for them during difficult times by dipping into your own resources; many Nepalis have done exactly that. Social security schemes have to provide actual security for the beneficiaries, and not just photo-ops for megalomaniacs. Hopefully, development partners involved in the work around social security in Nepal also introspect on what is important.