Only 17% of Nepalis covered by social protection benefit: ILO

Besides a limited number of people having access to social protection schemes, the International Labour Organisation report says the available benefits are often too low to provide adequate protection.

Pawan Pandey

Pawan Pandey

The Kathmandu Post


Gender inequality remains a central characteristic of labour markets, with women receiving lower pay than men. Post

September 2, 2022

KATHMANDU – In Asia-Pacific, only 44.1 percent people on average have access to at least one social protection benefit.

Only 17 percent of Nepalis are covered by at least one social protection benefit, which puts Nepal almost at the bottom of the table in the tracker of the Sustainable Development Goals of the United Nations, according to a recent report.

Nepal scores way below the global average of 46.9 percent even though the constitution has guaranteed social protection for the poor and vulnerable.

In Asia and the Pacific, the average percentage of the population that has access to at least one social protection benefit is 44.1 percent.

The report entitled World Social Protection Report 2020-22: Regional Companion Report for Asia and the Pacific, published by the International Labour Organisation (ILO) on Tuesday, says there are stark disparities across countries in the progress that has been made.

“The majority of people in Asia and the Pacific do not have access to any social protection benefits,” the report said.

The social protection coverage for women has been utterly low, it said. Gender inequality remains a central characteristic of labour markets, with women receiving lower pay than men and spending more time in unpaid care work.

In South Asia, Nepal is above Afghanistan, Bhutan and Pakistan; and below Sri Lanka, Bangladesh, India and the Maldives.

Public spending on social protection in the Asia and the Pacific region has been found to be significantly below the global average.

Spending on social protection in the region has averaged 7.5 percent of the gross domestic product over the past two years, with half of the countries spending 2.6 percent or less, according to the report.

The figures for China and India are 70.8 percent and 24.4 percent, respectively.

Covid-19 threatens to imperil years of progress towards achieving the Sustainable Development Goals, reversing gains in poverty reduction, according to the report.

“It has also revealed the pre-existing stark protection gaps across all countries and made it impossible for policymakers to ignore the persistent social protection deficits experienced in particular by certain groups, such as informal workers, migrants and unpaid carers. This crisis has resulted in an unprecedented yet uneven global social protection response.”

In the region, some of the specific benefits include new mothers receiving paid maternity leave and unemployed workers receiving unemployment benefits, the United Nations agency said in a statement.

While the contributory social protection schemes are typically limited to those working in the formal sector, the non‑contributory schemes usually target a small group of the poorest in a society, the report says.

“A large and important group of workers is left unprotected.”

Many women, migrant workers, the self-employed, workers in micro and small enterprises, domestic workers, home-based workers and contributing family workers are the ones not being included in such schemes.

In Nepal, the number of informal workers is high and yet they are out of the social protection scheme.

Half of the business enterprises in Nepal are unregistered, unmonitored and untaxed, according to an analytical report on the informal sector published by the Central Bureau of Statistics last year.

The report showed that out of the 3.22 million persons employed in the country, 25.8 percent or 832,187 persons are employed in the informal sector.

Besides a limited number of people having access to social protection schemes, the new ILO report says the available benefits are often too low to provide adequate protection.

“This region stands at a crossroads. It faces challenges in terms of adequacy of benefits and system sustainability coupled with low public expenditure and the persistence of non-standard forms of work,” said Panudda Boonpala, deputy regional director of the ILO regional office for Asia and the Pacific.

“The Covid-19 crisis has made clear that, for most countries in the region, an urgent paradigm shift is required. The need for social protection has never been so evident.”

The report calls for countries in the region to choose between different development paths.

One is the “high-road” approach, with a significant new role for social protection, aiming to be more inclusive and leaving no one behind, while supporting greater growth, driven by domestic demand, and contributing to further development of human capabilities.

The other option is to focus on fiscal consolidation and pursue a “low-road” approach that keeps countries trapped in a “low cost-low human development” growth pattern.

“We have taken some better initiatives in providing a universal social protection scheme as compared to other countries,” said former government secretary Purna Chandra Bhattarai who once led the Labour Ministry.

“However, the majority of workers are employed in the informal sector, and they have remained out of the contribution-based social security schemes. To ensure better social protection, spending on social protection can be increased, but the move should not be a populist one,” Bhattarai said.

Nepal started its first insurance-based measures in 2019, aiming to increase the coverage of its contributory schemes.

The KP Sharma Oli administration in November 2018 launched a contribution-based social security fund targeting formal private sector workers. However, the scheme has been criticised for failing to gain momentum.

Labour rights organisations have been demanding that the coverage be extended to the informal and self-employment sectors.

Under the scheme, workers are offered financial security under four categories of support—medical treatment, health protection and maternity plan; accidents and disability plan; dependent family plan; and old-age security plan.

An amount equivalent to 31 percent of a worker’s basic monthly salary—11 percent deducted from the worker’s monthly salary and 20 percent employer’s contribution— is collected by the Social Security Fund.

Of the 31 percent, 1 percent will go for medical treatment, health protection and maternity scheme; 1.40 percent for accidents and disability plan; 0.27 percent for dependent family plan; and 28.33 percent for pension or old-age security scheme.

The scheme has a provision of providing retirement pension to workers aged over 60 who have contributed to the fund for 15 years.

“The number of contributors and employers in the fund has reached 359,373 and 17,347, respectively. Around 7,000 contributors and 100 to 200 employers are being added every month,” said Bibek Panthee, spokesperson for the Social Security Fund.

“The fund has collected Rs22.93 billion. It has provided financial assistance totalling Rs2.09 billion to 39,765 contributors so far,” said Panthee.

Though only formal sector workers can contribute to the fund currently, a procedure has been prepared to include informal sector workers too.

“We have created an implementing procedure for the inclusion of informal sector workers in the fund,” Kapil Mani Gyawali, executive director at the fund, told the Post. “We are holding discussions to implement it.”

“A key lesson from the pandemic is that economic growth without adequate investment in social protection generates unsustainable gains, mostly concentrated in a limited proportion of the population, leaving others extremely vulnerable to shocks,” according to the report.

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