Social Security Fund Starts New Insurance Scheme

The National Social Security Fund (NSSF) on Monday launched an initiative to provide health insurance to the nation’s workforce, a plan that the country’s largest employers’ associations said was premature.

NSSF director Ouk Samvithya said that by the middle of this year, enterprises in the country with more than seven employees will be required to pay into the fund to support the health care initiative.

The NSSF counts more than 880,000 employees at 6,107 firms as members. Mr. Samvithya said he hopes 900,000 will be part of the health care scheme.

“We have been processing workers’ compensation claims for five years in 24 provinces and Phnom Penh, and now we are moving to stage two: health insurance,” Mr. Samvithya said in a speech at NSSF headquarters in Tuol Kok district.

Phase two of the NSSF’s plan to raise social welfare standards through compulsory health insurance would hypothetically see staff covered by the fund, without limit, for all ailments that prevent them from carrying out their duties at work.

The cost of insurance would be shared evenly between companies and workers.

Ken Loo, secretary general of the Garment Manufacturers Association in Cambodia (GMAC), which represents some 450 garment and footwear factories that employ upwards of 500,000 workers, said that NSSF’s initial estimate of the cost of health insurance was exorbitant.

“The original proposal was 3 percent but we have run a pilot project in the mold of the NSSF program and found that the figure should be closer to 2 percent,” Mr. Loo said, adding that he would push for the rate to be lowered.

If employers and employees were required to pay a combined 3 percent of monthly wages toward health insurance, based on the minimum wage of $100, the NSSF would collect at least $2.64 million each month.

Mr. Samvithya declined to comment on how much employers and employees would be required to pay into the health care scheme.

In phase one of the social security plan, the NSSF dictated that employers pay 1.7 percent of workers’ salary in return for full coverage, effectively taking on all responsibility in the event of injury at work.

This figure was later revised down to 0.8 percent after lobbying from GMAC and the Cambodian Federation of Employees and Business Associations (CAMFEBA) in 2008.

The NSSF’s workers’ compensation plan pays out between 5 and 6 million riel, or about $1,250 to $1,500, in the event that an individual’s working capacity is reduced by 20 percent or more, and guarantees lifelong support should a member become completely incapacitated.

But according to Dave Welsh, country director of the Solidarity Center, a U.S.-based labor rights group, actually getting NSSF to compensate injured workers is a struggle.

When a section of the Taiwanese-owned Wing Star shoe factory in Kompong Speu province collapsed in May, killing two workers and hospitalizing nine, the NSSF was less than accommodating to its members, he said.

“When the settlement was being negotiated, it was like pulling teeth to get the NSSF to comply with its own laws,” Mr. Welsh said.

“Discussions within the NSSF were about finding a way to read the law that would put as many obstacles as possible in the way of a payout in a fairly obvious case,” he said.

ASICS, which sources from Wing Star, paid an unknown amount in compensation to the families of the two dead workers, while the NSSF, according to the wife of one of the two, finally agreed to provide $98 every three months.

“[Compulsory health insurance] is a great idea in principle, but again, as we saw in the Wing Star workers’ compensation case, holding the NSSF to its own standards is the problem,” Mr. Welsh said.

Van Sou Ieng, president of the CAMFEBA, which represents more than 1,500 firms in various industries, said not enough research had been done to support the health care plan’s implementation.

“They want to implement this year but it is too early,” Mr. Sou Ieng said.

“There is no accurate data to support the plan, it is not a clear plan and it is very dangerous because by law the employee must contribute 50 percent of the amount,” he said.

“We need to see a carefully prepared, credible program so we know where our money is going.”

In launching the health care program Monday, NSSF director Mr. Samvithya insisted that the NSSF was working for the people, and not for profit.

“Our policy does not concern profit,” he said.

“This is a state institution, a nonprofit organization, and [workers’ well-being] is the duty of the state.”

[email protected], [email protected]

Related Stories

Latest News

The Weekly DispatchA weekly newsletter from The Cambodia Daily delivering news, analysis and opinion to your inbox. Published every Friday at 11:30am. Sign up today.