…7000 fired sugar workers by Govt a major factor
As the National Insurance Scheme (NIS) rings in its 50th anniversary of serving the nation, General Manager Holly Greaves has warned of the effects the shrinking legitimate workforce is having on the scheme’s finances and long term viability.
The General Manager was at the time speaking on Wednesday at the distribution of bursary awards that mark the 50th anniversary. According to Greaves, the scheme has had to face a shortfall in contributions during the period under review.
Greaves noted that from January to August 2019, the fund collected little more than half of the G$26.6 Billion target. And during that very period, NIS spent G$16.8 Billion or 65 per cent of the G$25.7 Billion allocated for current expenditure.
“At the end of December 2018, the fund stood at G$32.9 Billion. A brief examination of our performance over the period January to August 2019 revealed that the NIS collected G$15.8 Billion or 59 per cent of the G$26.6 Billion budgeted target for 2019.”
“A further G$9 Billion is projected to be collected between September to December 2019. As a result, the projected revenue is targeted at G$24.8 Billion,” Greaves informed the gathering, which included Finance Minister Winston Jordan.
According to Greaves, the main contributor to these escalating expenses was benefit payments which amounted to G$15.3 billion. Pension accounted for most of this, at G$14.3 Billion, while short term and industrial payments were G$960 and G$155 Million respectively.
Greaves also spoke of the recommendations from the 9th actuarial review, which includes a 2 per cent hike in the contributions rate. But for all these recommendations, the shrinking workforce is still an issue NIS has to grapple with.
Former Chairman of the Berbice Bridge Company Incorporated (BBCI), Dr Surendra Persaud, who is also the Chairman for the National Insurance Scheme (NIS), had announced steep increases to the tolls at the facility.
Guyana Times International was told that Dr Persaud was forced to push for the increase in tolls in order to protect NIS investment. NIS has majority voting rights on the BBCI Board of Directors.
NIS
NIS was started in 1969 as the main social security provider. Today, it has 14 offices across the country and over 600 permanent staff. But since the dismissal of thousands of sugar workers, late payment of their severances and the firing of about 2000 Amerindian Community Support Officers (CSOs), financial analysts have outlined worry about the financial status of NIS.
Earlier this year, Chartered Accountant Christopher Ram in an interview with this publication on Guyana’s unemployment rate had explained that this may impact payments to NIS and income tax.
According to the accountant, many persons do not see their NIS deductions in the positive light of being a contribution to their future pension, but rather, they see it as a deduction from an already small salary.
Tax collection is not the only thing taking a hit when there is large-scale unemployment, as NIS contributions are also affected. For instance, concern has been expressed that layoffs in the sugar belt could undermine the scheme’s position. This is particularly so if the scheme were to pay unemployment benefits.
Between 2017 and 2018, Government closed Wales, Enmore and Rose Hall Sugar estates and fired over 7000 workers.
Opposition Leader Bharrat Jagdeo had said that the idea of paying out these benefits did not take into account the current financial status of the Scheme and its ability to meet its current obligations.
He noted that the last actuarial report recommended that focus be placed on building the reserve to avoid a deficit. In fact, it was disclosed in that report that the life of the Scheme should come to an end by 2022 unless strategic plans for revenue earnings and expansion of the investment portfolio were effectively implemented.
“What has happened since is that this Government has fired 7000 sugar workers, many others. Let’s say maybe 20,000 more have lost their jobs. Take of the 20,000, just take another 8000 who were paying NIS, so those are people who are not contributing to NIS,” he explained.
This translates to decreased inflows for NIS and payouts that would remain constant or increase. In the last financial statement issued by the Scheme, it had showed a deficit of over G$800 million.
