Social security for all

CD Bhatta

Social protection is a broader concept which includes a number of areas where intervention of the state is required so that weakest of the weak also feel secure and can live a dignified life. In the context of Nepal, social protection is required for a majority of the people in areas like health, education, housing, food, water, energy, sanitation, old age benefits, service delivery, unemployment benefits, maternity benefits, poverty alleviation and many more. Interestingly, all these issues have taken centre stage in recent years.

The Interim Constitution has emphasised social protection and made provisions for new rights — the right to work, education, health, food, social security, social justice, and others. However, the major bone of contention is whether the state alone can fulfil them or not. Equally important is who we are going to protect; that is, are we going to protect those who live inside the ring road of Kathmandu or those who live outside of it as well; are we going to protect those who have both jobs and houses or those who do not have anything at all? These are some of the important issues to be addressed which are directly related with the financial capacity of the state. The state does not have enough money to implement these rights primarily because the total contribution of taxes to the national GDP is only 12 percent. This is insufficient to meet the administrative expenses, let alone cater demands generated by different societal forces.

Paradoxically, the political parties have been promising every right without developing a mechanism to ensure these rights. The fact is that the ambitious agenda of a welfare state floated by the political parties cannot be accomplished unless the country’s tax base is expanded. The tax base can only be expanded when we move towards industrialisation and modernisation of agriculture and other productive sectors of the economy where the country has both competitive and comparative advantages. But this has not been the case. We have been simply promoting financial capitalism which does not produce anything but consumes everything. In fact, the current process of capital formation has made us a consumer state. For example, we import more than six times what we export.

In addition to this, those who operate the financial market make hefty amounts of money by operating in both rural areas and urban centres. They are pumping in money from rural areas and diverting it to urban centres where it is invested in the real estate business or used to buy consumer goods; or it simply goes out of the country as capital flight. Had that money been utilised in production or industrialisation, it would definitely have addressed the country’s unemployment problem. The contribution of the urban economy to the GDP is four to five percent. By and large, it looks like the political leaders are caught up by what political scientist Dev Raj Dahal calls the “populist trap” as political leaders are promising everything available under the sun without realising that political rights can only be fulfilled through economic and social prosperity.

In terms of basic facilities like health and education, we have shifted into reverse gear. This is so because we are operating the media, schools and hospitals in the economic model of competition which has created a huge gap between the private and public sectors and the haves and have nots. A classic example of this is that we have been systematically dismantling public institutions (like public hospitals, schools and enterprises) and promoting private ones without understanding that a majority of the Nepali people live in rural areas, and they cannot afford to go to private school or private hospitals which offer facilities of five-star hotels and floating health packages for Kathmanduites. To our dismay, there are those who live in rural areas where even paracetamol tablets are not available. These private organisations are creating a hegemonic ideology to weaken the freedom and dignity of workers thereby undermining their contribution in society.

The old models of social protection based on voluntarism are fading out with the “monetisation” of society, while the overall reach of social protection programmes such as pensions for civil servants, cash transfers to senior citizens and widows, food for work, micro credit and micro insurance is small and insufficient. The key social policy issue is primarily that government expenditure on the social sector is low as it thinks investment in this sector is unproductive. But the reality is that investing in the social sector reduces conflicts. Whatever the social safety net we have got, it covers only those who work in the formal sector, which accounts for only 10 percent of the total workforce, and there is very little (except some cash transfer programmes) for those who are in the informal sector or who don’t work at all. The proposed new social security scheme which plans to impose a one percent tax up to the first slab of taxable income would be a good start if it is really implemented. But this alone will not address the problem unless we generate jobs by opening small scale industries and enterprises and make them accountable to the state and the citizens.

There is an urgent need to develop some sort of economic nationalism which is missing in the Nepali context. What has also to be borne in mind is that state alone cannot do the job of social protection and needs the support of the private sector including civil society and the market. But the challenge is how we engage the private sector which treats the people as “consumers”, not citizens. This is so because the private sector carries a feudalistic mindset as it simply grew from the landed feudal system and does not realise that wealth is created because of society, the people and the state. In the absence of the state, the private sector cannot function as has been proven by the recent financial crisis when the state provided stimulus packages to bail out sinking banks and business houses across the world. Likewise, NGO-led social protection activities, from their part, have failed to critically engage different social actors. It is, by contrast, fragmented and interest-laden.

In the same vein, when it comes to the point of social security in the formal sector, employers are of the view that social security can only be supported when labour laws are made flexible and trade unions also contribute to the security fund. For them, social security and flexible labour laws should go hand in hand. But it would be difficult for both parties to come to a conclusion. All said, if we really want social security for all, rather than prioritising “aid” that merely serves the interests of Kathmandu’s political elite, we have to give priority to “development” that alone can contribute significantly and liberate the state and society from the burden of political rhetoric.

Note: This article was published in The Kathmandu Post dated 6 May 2010.