Wednesday, 26 March 2014

Social security scheme in the pipeline

Social security rules and regulations to be promulgated on April 1 will make it compulsory for most companies to cover its employees regardless of income, said U Sein Hlaing Myint, head of Kyauktada township branch of the Social Security Board.

The new law, which was passed in 2012 but will be enacted April 1, is designed to attract more contributions from companies to provide government benefits, though concerns remain that struggling businesses may try to evade making payments.

The fees will be based on employee salaries that will be submitted to the Social Security Board while vendors, students and farmers can alternatively register with the board separately to become eligible for benefits, he added.

“We will accept reports identifying the salaries of employees according to proposals made by the employers before we decide on a floor for the fees,” U Sein Hlaing Myint said.

Social security would require compulsory payments from companies employing two or more workers in the manufacturing, entertainment, transportation, ports, the extractive industries, foreign enterprises and financial sectors.

Contributions and benefits will vary depending on the kind of business, said U Sein Hlaing Myint, adding that employers should consider social security a shield to protect them from workers’ claims for compensation resulting from workplace accidents.

Economist U Hla Maung said similar systems are in place in other countries, notably Singapore, adding, “The government should survey living costs and income for each class of worker before setting the minimum payment. It is impossible to take contributions from low-income workers, even 1 percent.”

A consultant with a leading commercial bank who requested anonymity as he is not authorised to speak to the media said that most employers traditionally avoid making contributions to social security, preferring instead to negotiate directly with employees on any payments, while others did not register the true number of their staff or pay contributions regularly.

“Until the playing field is levelled, employers will be reluctant to pay,” he said.

source: The Myanmar Times
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