The National Social Security Authority (NSSA) has taken a huge step towards establishing a universal social protection system by bringing part of the extensive informal sector into the fold.
Integrating the informal sector has been on the authority’s agenda for quite some time now, but sometimes, just sometimes, it is that first step that gets things going.
Earlier this week, NSSA announced that it is moving to enforce a requirement for the transport sector – one of the largest informal sector employers – to be registered with the authority.
“Following a new policy directive to enhance safety and social security of the employees in this sector (transport), the National Social Security Authority in partnership with the Ministry of Transport and Infrastructure Development would like to advise all public and commercial road transport operators that they are now required to be holders of a valid NSSA Clearance Certificate prior to the renewal or application of an operating transport permit or licence,” said the authority.
Zimbabwe’s transport sector is a significant employer, especially the Commuter Omnibus segment.
According to Greater Harare Association of Commuter Omnibus Operators (GHACO) secretary-general Ngoni Katsvairo:
“Harare alone has over 15 000 kombis with two employees each, which translates to 30 000 direct employees who need to be formalised.
“Countrywide we have around 50 000 kombis, and that’s 100 000 direct employees plus other indirect workers. Unfortunately all these prospective employees cannot be formalised now because most kombis are on lockdown and also due to the fact that ZUPCO cannot absorb all of them.”
NSSA is already on record saying that it is in the process of developing a scheme that will cater for the Zimbabwe’s sprawling informal sector.
But implementing a universal social protection programme (and one that caters to an extensive informal sector) is certainly more complicated than the existing one for the formal sector due to the very disparate entities and knotty configuration of an informal economy.
And that is why the latest move to formalise the transport sector is key to bringing the sector’s workers into the social security scheme of things.
Social protection typically consists of policies and programmes structured to reduce poverty and vulnerability by promoting efficient labour markets, diminishing people’s exposure to risks and enhancing their capacity to protect themselves against interruption or loss of income.
The International Labour Organisation (ILO) Social Security (Minimum Standards) Convention of 1952 (No. 102) outlines the nine principal branches of social security – namely medical care, sickness, unemployment, old age, employment injury, family, maternity, invalidity and survivors’ benefits.
Within the local context, NSSA, which was constituted and established in terms of the NSSA Act of 1989 (Chapter 17: 04), is the statutory corporate body tasked by the Government to provide social security.
But the authority currently only covers four of the indicated nine principal branches of social security, although is progressively seeking to attain all the objectives set out in the convention.
The latest initiative, which sees NSSA extending social protection to informal workers in the transport sector is a step in the right direction.
Mr Katsvairo says the sector is supportive of the initiative.
“It is indeed positive that salaries and benefits for the sector be formalised so that activities of the sector benefit all involved – Government, employers and employees).
“It is a good thing as long as the contributed funds will be invested in a manner that will benefit the employees at the time of need, when injured, on retirement or passing on,” he said.
“The contributions can also be ploughed back into infrastructure and equipment used by operators, for instance ranks and loans for vehicle renewal and upgrading.
“The value of contributions need to be maintained unlike in past situations where pensions just sunk and those who contributed lost everything.”
Besides factoring in the majority of Zimbabwean workers into the social protection system, NSSA’s informal sector drive also has wider benefits, not least helping to increase the authority’s contribution base.
A November 2019 International Labour Organization (ILO) paper titled ‘Extending social security to workers in the informal economy’ reads:
“The expansion of social insurance mechanisms to larger groups of previously uncovered workers can help to achieve a better financing mix for the social protection system by mobilizing additional financing sources from categories of previously informal workers (provided that they have the necessary contributory capacity), which alleviates pressures on tax-financed social assistance benefits.
“This can also allow the burden of
financing the social protection system through contributions and taxes to be shared in a more equitable way among those who are have contributory capacity, while ensuring that contributions and taxes are in line with contributory capacities, which will in turn help to ensure the sustainability and
adequacy of the social protection system in the long run.
“More broadly, higher levels of formality also help to broaden the tax base available for public investments in economic and human development. They should also increase States’ earning capacity and international competitiveness through improved productivity of workers and enterprises, supply more employment opportunities, improve income distribution and boost inclusive growth.
“The extension of social protection coverage thus also contributes to enhancing the functioning of labour markets, thereby strengthening national economic capacity and macroeconomic stability.”
And although NSSA is yet to implement a system specific for the informal sector, the authority has continued to factor in the segment in its training programmes and other initiatives.
“We are not turning a blind eye to the sector. What we are doing is to also engage those in the informal sector as we disseminate information,” said its chief occupational safety and health officer Dr Betty Nyereyegona.
Zimbabwe can draw lessons from other countries that have developed social protection schemes for their informal workers.
According to the ILO, in France social insurance coverage of domestic workers is facilitated through a service voucher system that has significantly contributed to the formalization of the sector since 2006.
And closer to home, Kenya has the Mbao Pension for informal workers, while in recent years Tanzania has extended all contributory pension schemes to cover informal workers through voluntary contributions.