Home » Industry » NSSA Insurance Schemes Progressive

PROPOSALS by the National Social Security Authority for two new insurance schemes to pay pregnant and ill workers while they are off duty have a great deal of merit and will help smaller businesses and their staff a great deal, so long as the premiums are modest. For larger employers there should be no difference in costs and this is perhaps the test that needs to be applied when premiums are being set or when the viability of the schemes are being finally examined.

Large employers, including the largest, the Public Service, know that a fairly fixed percentage of their total staff will be on maternity leave or sick leave at any one time or during any one year. The statistical sample is large enough to iron out variations and such employers budget on previous experience for the costs they have to bear.

If you have 500 people on the payroll you know that around five women will be on maternity leave every year and you can budget for this. Even if there is some sort of surge in one year and the number for some weird reason doubles, that pushes up your wage bill by less than one percent and some careful overtime might well mean no temporary staff are required. The two proposed schemes, which are designed to spread the costs over all employers and employees, should thus have almost zero effect for these large employers if the premiums meet the test that we have proposed.

The real beneficiaries will be the smaller companies and employers and their staff. If you have just five staff and one goes on maternity leave that will raise your salary costs 20 percent for three months and 5 percent over a full year, which could be an intolerable burden. The same sort of huge percentage surge in staff costs would also be seen if one employee was in hospital for four months after a car crash.

Medical aid schemes will pay the medical bills, but staff in these circumstances are entitled to pay and that is a serious extra burden. These sort of things do not happen every year, with this small employer, but when they do they can hit hard.

The result of the present legal requirements for maternity and sick leave mean that while large employers do not worry much over whether to hire younger women, small employers are sometimes reluctant to hire young women, in case they are hit by maternity leave costs, or they find themselves unable to fulfil the requirements of the Labour Act, or they go out of business when sued or the Government steps in and they are made to pay.

And it is these small businesses that we are ever more reliant on for growing our economy and increasing the numbers of people with jobs. That is a global trend as well as a Zimbabwean trend.

So the two new insurance schemes proposed by NSSA make a great deal of sense, with one major proviso, that the administrative costs of the schemes will be very low, meaning that almost all premium income will be used to pay the small fraction of the total work force on sick or maternity leave at any one time.

Our proposed test, that the combined employer and employee premiums for those with a large employer should be roughly what that large employer now has to pay out in maternity and sick leave salaries, imply that the administrative costs are a tiny fraction on total payouts.

In these circumstances the large employer could even pay all premiums since their total costs will not be rising. If that test can be met then what these two schemes will do is give the smaller employers and their staff the same benefits of large statistical samples, and the same evening out of costs, that are at present enjoyed by the largest employers.

Source : The Herald