Employee social protection under threat . . . NSSA contribution base shrinks

THE National Social Security Authority (NSSA) says its contribution base for pension benefits and accident compensation scheme is shrinking amid growing informalisation, which is being compounded by labour migration and replacement of human skill through technological advancement.

The provision of social protection is a critical indicator in the country’s efforts towards improved livelihoods and poverty alleviation, drawing inspiration from the global 2030 Sustainable Development Goals (SDGs) and International Labour Organisation (ILO) flagship programmes.

Experts define social security as the protection, which society provides for its members through a series of public measures, against economic and social distress. These are normally caused by stoppage or substantial reduction of earnings resulting from sickness, maternity, employment injury, unemployment, old age and death, the provision of medical care; and the provision of subsidies for families.

However, the structural shift in the economy in the recent past has resulted in the pension and benefits scheme contribution base shrinking amid low compliance levels, as business operators faced numerous challenges, said NSSA acting director in charge of contributions, collections and compliance, Agnes Masiiwa.

“There is poor compliance culture across businesses. The NSSA contribution base is shrinking and we have had company closures, persistent liquidity challenges, informalisation of the economy and active labour migration — within the country and to other countries,” she told journalists during a virtual media engagement on pensions and insurance that was jointly organised by NSSA and the Insurance and Pensions Commission (IPEC) on Tuesday.

According to the Zimbabwe Congress of Trade Union (ZCTU) secretary general, Mr Japhet Moyo, the steady decline in contributions base was a reflection of job losses and informalisation of the economy.

“At the moment NSSA targets only those in formal employment while the labour force survey says a majority of the labour force is in the informal economy,” he said in an interview.

“The sad situation with this trend is that the social welfare system would be burdened when citizens don’t have pension and look upon the state to support them when they no longer able to hustle.”

The 2019 Labour Force Child Labour Survey report produced by the Zimbabwe National Statistics Agency (Zimstat), has revealed that about 76 of the working population in Zimbabwe is operating in the informal sector and that more of them do not have any social security cover.

Mr Moyo said under normal circumstances, people are supposed to work and save (insurance) for tomorrow, adding that the declining contribution base was also a threat to the long-term survival of NSSA as an entity.

“There are opportunities, however, to move this informal economy to formal and increase the contribution base. There is an ILO recommendation 204 that provides for strategies on formalisation of the informal economy,” he said.

The shrinking contribution base, coupled with inflation pressures have also meant that beneficiaries get insignificant monthly payouts as equity investment earnings also weaken, which leaves beneficiaries with very little to sustain basic needs.

“I earn about ZWL$500 NSSA pension a month and after bank deductions I remain with ZWL$320, which can’t even buy me a 10kg bag of mealie-meal or tablets when I fall sick. If it was $1 000 at least it would be better. Government should look into this issue,” said Mr Faith Sibanda, a pensioner.

Masiiwa admitted that due to the challenges, NSSA has not yet reached the desired level to adequately protect its members from all social security contingencies but said considerable strides have been made in providing protection to the labour force and families from hardships emanating from income stoppage due to sickness, employment injury, old age and death.

Economic analyst, Mr Morris Mpala, said there was very little that NSSA could do alone as he stressed the need for Government and the private sector to work together in rejuvenating the economy as a long-term solution.

This is critical given the prevailing Covid-19 disruption, which has further strained businesses and squeezed consume spending. He, however, said the few workers who are earning in forex could consider forex contributions, which will mean hard currency disbursements in future.

“It’s an avenue worth looking at. For now, it’s a difficult to manoeuvre as it is dependent on the grand macro-economic fundamentals and if they are down then everything else will go southwards,” he said.

Further, Masiiwa also said the future of physical labour was increasingly under scrutiny in view of the substitution of human labour through technological advancement. She also said the social security authority was disturbed by the growing “connivance” between employers and employees to evade payment of contributions.

NSSA, she said, was also concerned by the pattern of non-review of pensionable income by employers who opt for cushion allowances saying this trend would prejudice workers of deserved future social protection.

“This is a misnomer,” she said, adding that, “the ability of the schemes to provide services to its members is related to the degree of support it gets from employees and employers, and its success will be determined by the extent to which people comply with the social security law.”

Masiiwa urged all businesses to register for NSSA contributions for the benefit of their workers and warned that non-compliant entities risk being heavily punished by law.

The consequences for non-compliance include among others, surcharges and penalties of up to 50 percent, civil and criminal charges against directors or responsible persons, payment of fines, garnishee orders and prosecutions as well as failure to conduct business with other counterparties.

NSSA is mandated by Government through an Act of Parliament, The National Social Security Authority Act (Chapter 17:04), to establish social security schemes for the provisions of benefits for employees in Zimbabwe. It operates the Accident Prevention and Workers Compensation Scheme as well as the Pension and Other Benefits Scheme and also advises Government on all matters relating to social security.–chronicles