Strategies for Enhancing Social Security Coverage Among Self-Employed Workers

INFORMAL SECTORPRESENT REALITIES AND STRATEGIES TO IMPACT COVERAGEPresentation for the Working Groups Meeting, of the XIV IACML San Jose Costa Rica, May 8-11, 2007Presented by: Reginald F. A. Thomas and Bernadine DublinSt. Vincent and the Grenadines

Introduction Social exclusion of a significant proportion of self-employed persons is a rapidly growing concern for individuals, families, communities and the world of social security. The self-employed persons are a unique class of workers stretching from a diverse economic background, who suffers from volatile, uncertain and in most cases low income stream. The inherent nature of their income pattern and their presumed inability to plan for retirement, clearly demonstrate the need for social protection through a system that provides a sound security for future financial stability.

Through an ISSA initiative, the NISSVG has been charged with the responsibility of designing a survey instrument geared towards assessing the needs and coverage gap within the local self-employed population. This research paper does not only reflect our commitment to ISSA but also reveals NISSVG willingness to play a lead role in guaranteeing financial stability for vulnerable members of the society.

Methodology The survey instrument used to conduct the research was in the form of a questionnaire comprising of twenty (20) comprehensive questions designed to capture data on: • Demographic and employment • Coverage gap • Benefit and Contribution Needs • Providers of Similar products

3.1 Demographic and Economic Findings • Demographic data not only forms the crux of risk management within the social security plan but also serves as a critical tool in formulating and implementing marketing strategies. To this end, the gender structure of the participants was established and is depicted in the diagram below:

Gender Distribution

Age Distribution

Type of Occupation

Age: Occupation

The levels of income earned by participants are certainly of interest in this analysis. Accordingly, a diagram is presented below showing the income brackets of the respondents:

Level of Coverage

Coverage Rate: Age groups

Coverage Rate: Occupation

Given the low coverage rates among participants, it is essential to get an idea of what are the major factors that hindered coverage. The following table shows some factors cited by non-registered participants:

Benefit and Contribution Needs • The results revealed that only 50% of participants are satisfied with the benefits provided under the self-employed program while nearly 45% are unaware of the benefits. The remaining 5% were dissatisfied with the benefits. Vendors and farmers constituted the highest percentage of those who were satisfied. On the other hand, the majority of Taxi drivers and fisher folks expressed dissatisfaction about the benefit package. • Of the 36% registered participants, 61% were satisfied with the benefits, 5% were dissatisfied and a striking 34% were unaware of the benefits.

Reasons for dissatisfaction with benefit package

Desired benefit package

Level of Importance of Contingencies

Desired monthly contribution

The following table aims to establish a relationship between the contribution bands and occupation types:

Given that the income stream for the self-employed are uncertain both in amounts and timing, respondents were asked to select their desired contribution payment frequency. The results are presented in the diagram below:

Coverage rates by Institutions

Non-Registrants of NIS with supplemental Plans

Ratings of NIS

Conclusion • The survey revealed that a significant proportion of the self-employed population is not covered under the NIS program. An overall 36% coverage rate, in an environment where there is an upsurge in the self-employment rate, is certainly not impressive. The analysis also shows that the majority of non-registered participants are within the age group 16-44 and that as one move away from the city the probability of coverage decreases. The NIS practitioners will need to look at measures that would significantly improve the coverage gap thereby securing the growing informal workers with a dignified social benefit. Deeper examination of the barriers to coverage is certainly a starting point in formulating policies to address the issue of low coverage.

The survey results also revealed that just over 50% of participants were satisfied with the current benefit package whilst a surprising 45% have no knowledge of the product. Not withstanding that the benefits that the participants showed strong desire for, are currently part of the benefit package under the self employed product; these speak of the need to further advertise the package offered by the NIS. It is worth noting that approximately 82% of participants expressed interest for two benefit types (Temporary Employment and Employment Injury) that are not included in the current package. However, only 56% believed that these benefits are very important. In effect, the benefit types offered within the self-employed program can sell the product. However, policymakers and the entire staff at NIS need to create a public platform for the product.

Recommendations ??? • This section outlines some possible steps in which NIS should embrace in order to narrow the coverage gap among the self employed sector. The following steps are open for directors discussions before the final draft is made;

Marketing Initiatives • Promotion: This speaks of public awareness campaigns geared towards building the knowledge base of NIS within the target group. Adult Literacy, Media programs, School program, Town hall meetings, NIS on wheels • Product Development- benefits • Pricing- re-examining the contribution brackets

On-going Research Drive • This involves annual assessment of the needs of the self-employed with respect to social security coverage. This address the “one model fit all” ideology. • This process also involves data coverage

Compliance Initiatives • This compliance drive should be propelled on two aspects: (1) Mandatory for professional self-employed persons e.g. lawyers, doctors (2) Voluntary or persuasion for the informal sector

Policy Initiatives • Possible amendment to legislation • Establishing convenient payment centres. This can either be in collaboration with existing financial and or institution such as GECCU, post offices, Banks, or in some cases where feasible set up an NIS sub-office. • Strategy that allow for the representation of self-employed population. Example, set up an ad-hoc marketing team that involves one or two members from the self-employed population.

Policy Initiatives Join ventures are memorandum of understanding e.g. • NIS and Fisheries Unit • NIS and the Standards Bureau • NIS and the Ministry of Finance

Discussion • OPEN FLOOR

Strategies for Enhancing Social Security Coverage Among Self-Employed Workers

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