Amended social security law draws workers’ wrath

Send to a friend

Saturday, 28 July 2012 10:59

One of the multibillion shilling housing projects owned by the National Social Security Fund (NSSF) in Dar es Salaam. Other similar projects are in various towns in the country. PHOTO | FILE By Augustine Sangi Dar es Salaam. The recent announcement by the Social Security Regulatory Authority (SSRA) that workers contributing for the National Social Security Fund (NSSF) and Parastatal Pension Fund (PPF) will not be allowed to withdraw their benefits until they attain retirement age has drawn angry reactions from workers. Many workers were of the opinion that the policy change would disrupt their life plans because they had expectations that once they somehow get out of job, they would use the money to support their families. Current levels of payment coupled with the prevailing economic hardships have caused a good number of workers to live as if they were unemployed as they increasingly find themselves unable to meet their basic needs.Above all, because most workers receive very low salaries, the culture of saving on their own is almost non-existent. This is why they received the announcement with anger, because if it is implemented and someone is forced out of his job, he would have nothing to fall on, as he would be waiting to reach the retirement age. According to SSRA, members would not be allowed to withdraw benefits any time they quit from their jobs until and unless they attain either the voluntary retirement age of 55 or mandatory age of 60 years. The change came under the move to harmonise operations of pensions schemes, whereby the amendment to the relevant laws were approved during the National Assembly meeting that met on April 13, 2012. SSRA director general Irene Isaka said the move came after members of the Tanzania Mines and Construction Workers Union (Tamico) demanded the withdrawal of the benefits contrary to the laws. “Since the amended laws have been approved and signed, withdrawal benefits cannot be provided,” she said categorically. “We are implementing the law, social security firms are not banks, and their task is to provide old-age pensions.”  Ms Isaka said the law that allowed withdrawal benefits after a worker loses or quits a job had been repealed. She noted, however, that workers leaving their jobs prematurely have a chance of engaging in other economic activities and advised them to continue being members of the respective social security funds until they qualified for the old-age pension. But workers argue that given the current high unemployment rate in the country, it’s not going to be easy to secure another job in a short time. The labour market is nowadays highly competitive. More than one million new job seekers enter the labour market every year, and only a fraction of them gets absorbed. They argued further that not all people quitting or being made to quit from their jobs may be interested to find employment elsewhere, some may opt to venture into some kind of business, and it would not be right to force them to do otherwise. Both NSSF and PPF provide crucial services to the working population. They provide various benefits to their members. Some are: retirement pension, invalidity pension, survivor’s pension, funeral grant, maternity, employment injury benefit, and health insurance benefit. The two schemes are financed through employees’ 20 per cent deductions on their salaries. The employer deducts 10 per cent from an employee’s gross salary and tops up the same amount to make a total of 20 per cent. Pension schemes maintain that the amendment that introduced the barring of making withdrawals was done in good faith in order to provide security in post-retirement age.  “Allowing members to execute withdraw pension contributions would impact negatively on their security when they retire,” says the SSRA statement. On the other hand, workers argue that when there was permanent and pensionable employment in parastatal organisations, their contributions to pension funds made sense, but when contractual employment came into the scene, it became useless in the late 1980s. When one is on a permanent and pensionable employment, he is assured of a job security. However, the changes that introduced contractual employment brought about a different scenario.Contractual employment became more famous following the privatisation of more than 350 public entities in a bid to make the private sector the main provider of employment. The changes forced many people out of jobs, some of who started engaging in some petty businesses, with a few establishing some small and medium enterprises (SMEs). These range from groceries, barbershops, salons, guesthouses, hotels, pubs, auto-garages and food vending outlets. Private companies, contrary to previous expectations, did not become major employers but some only hired a handful of workers on long-term contracts but the majority of workers were hired either on short-term contracts or as casual labourers. Employers deliberately hire people as casual labourers in order to cut down running costs such as covering pension scheme, health, annual leave, maternity leave and a host of allowances pertaining to transport and housing. In a country like Tanzania where labour laws are not strictly enforced, it is rare to find branches of trade unions in private establishments. Responding to the SSRA announcement, Trade Unions Confederation of Tanzania (Tucta) Secretary-General Nicolaus Mgaya said his organisation was strongly opposed to it because it amounted to the violation of the basic human rights. He warned that the enforcement of the law would lead many workers into poverty. He also expressed doubts whether many workers would benefit from their old-age pension when the national life expectancy stands at the average of 49 years. Besides, the emergence of health challenges such as Aids and life-style diseases or non-communicable diseases in recent years, has shortened life expectancy. Legal and Human Rights Centre director Hellen Kijo-Bisimba, who said that the era of permanent and pensionable employment was gone and its place taken by contractual arrangements reiterated Tucta’s position. She said workers who quit from their jobs have to be supported so that they can start businesses to help them eke out a living.  “The money would enable them to embark on self-employment activities,” she said. The deputy Speaker of the National Assembly, Mr Job Ndugai, observed when responding to a question posed by journalists that SSRA should not ignore views of the people regarding the matter. SSRA has, however, appealed to employers to educate their workers on the importance of accessing their benefits at the right age, that is, post-retirement life. “We again request you to educate workers on this issue, and please don’t hesitate to communicate with us when you require further clarification,” stressed the SSRA in a recent circular to employers. While workers have been angered by amendment of the laws that deny them withdrawal benefits, PPF has come up with another plan seemingly to pacify the workers, under this plan PPF will give house loans to its members. According to the Fund’s director general, Mr William Erio, the aim would be to give members more benefits. He said the plan, to be implemented soon, follows the new laws aimed at improving members’ benefits. In addition, discussions are underway with the government to start issuing houses on loans to civil servants, he added. Add this page to your favorite Social Bookmarking websites