How Nepal’s bold new social security system inspired a delegation from Bangladesh
Impressions from a study tour
The comprehensive social security measures Nepal introduced for formal sector workers raised the interest of neighbouring Bangladesh, a country on the brink of reaching middle-income status. With the support of German development cooperation, a Bangladeshi delegation undertook a study tour to Nepal and this resulted in rich learnings, for both sides.
At Kiran ‘Goldstar’ Shoe factory in Nepal, the Bangladeshi delegation was greeted by six people: three from top management and three trade union representatives. The way top managers and trade unionists stood together struck them as highly unusual – yet this was just the beginning. Over the next few hours, they learnt how the Social Security Fund had taken over financial liability from the management and how it facilitates social benefit payments for workers – a social security system in action. For the Bangladeshi delegation, these were revelatory moments. If this can work in Nepal, they wondered, why not in Bangladesh?
Bangladesh has become a global player in the readymade garments industry
Supported by a young population and a stable economy, Bangladesh is well on track to becoming a middle-income country. This fast development has relied on its vibrant industrial sector and expanding exports base: Over the past decade Bangladesh has become a global player in the readymade garments industry. Yet in 2012 and 2013, Bangladesh suffered two major industrial disasters, Tazreen and Rana Plaza, the latter being among the largest industrial disasters in history. These tragedies brought international attention to the lack of safety protocols for factory workers. As a consequence, occupational health and safety measures were pushed to the forefront of the government’s political agenda.
First steps towards employment injury protection
The Bangladeshi-German social protection project implemented by Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) on behalf of the German Federal Ministry for Economic Cooperation and Development (BMZ) has been supporting the Ministry of Labour and Employment in setting up accident/injury insurance for workers in accordance with ILO convention 121. The support encompasses all three pillars of accident insurance, i.e. prevention, rehabilitation and compensation. With regards to compensation, however, the idea of social insurance has been a particularly difficult sell. It faces stiff resistance from employers who feel overburdened after they have just been asked to increase investments for improving safety conditions. In many cases this involved re-building factories and entrepreneurs had to take heavy loans to do so. The idea of additional contributions to an insurance fund is not one that they were ready to accept easily.
The Government of Bangladesh, however, has been pushing the issue to improve the health and safety standards of workers and bring them in line with international standards. Clearly, a balance between business interests and the social needs of the working population has to be struck. This is why partners in Bangladesh were keen to learn from the experience of neighbouring Nepal, a country with similar cultural dynamics, but where a comprehensive social protection scheme seemed to be in place.
How Nepal, despite its smaller economy, is on the right path
Nepal, with a significantly smaller economy than Bangladesh and 17.4% of its population listed as being multidimensionally poor (UNICEF, 2021), has taken bold steps towards social security for its formal sector workers. Nepal’s Constitution guarantees social protection as a fundamental right and the Social Security Act 2017 mandates the provision of social insurance to all workers. In line with ILO’s Social Security Convention 102, the state-owned Social Security Fund has four contribution-based schemes for workers in the formal sector in which workers contribute 11% of their basic salary and employers contribute 20%. Although the informal sector, which constitutes almost 85% of the labour force (NFLS, 2017/18) is not covered, the country is on the right path with a foundation for social protection that is functioning and holds the ability to be scaled up to the informal sector in the future.
A component of the Nepali-German Support to the Health Sector Support project supports the Government of Nepal in the implementation of two different contribution-based social health protection schemes: The first encompasses secondary level healthcare for households enrolled in a scheme run by the National Health Insurance; the second healthcare as well as a separate accident and disability security scheme for workers in the formal sector, run by the Social Security Fund (SSF). The primary focus of the German support is on guiding the partners in the use of openIMIS, a digital open-source management information system for health and social protection schemes. In addition, they support the development of its standard operating procedures.
A digital solution for social protection schemes: openIMIS
Developed with German and Swiss support and having been granted the status of a public good from the Digital Public Good Alliance openIMIS has emerged as a game changer in managing health and social protection systems in many countries across the world. According to S2HSS Social Health Protection Advisor, Suraj Bhattarai, the Social Security Fund in Nepal, although still new in its operations, has been witnessing a large influx of new contributors. openIMIS offers an easily scalable solution to manage complex insurance processes such as enrolment of beneficiaries and contributors and claims management.
According to GIZ openIMIS Advisor, Saurav Bhattarai, what really appealed to Nepal was that the openIMIS model allows the ownership for the digitalisation process to be with the institution using it, enabling them to customise it based on their needs and requirements. According to Saurav Bhattarai what makes openIMIS stand out is the community of practice built around it. With support from GIZ Nepal, local IT teams have been trained on how to use and further develop the software so the SSF can continue to customise it, tapping into the expertise of a global community of users and developers who are all contributing to continuous upgrades the software.
Bangladesh, still in the process of designing its own social protection mechanism, was curious to learn more about openIMIS, its potential to be customised to the local context and to be integrated into their existing systems. The first step, however, was to observe it in action, and Nepal presented an ideal model.
A promising South-South exchange
The Bangladeshi study tour to Nepal in December 2021 was a success on many levels. At face value, it was an attempt to show the Bangladeshi delegation how a social protection scheme can be digitally implemented in a lower-middle income country. But more importantly, it was an opportunity to witness first-hand how Nepal, a country on a similar trajectory yet smaller in terms of its size and economy, had been able to roll out an accident and injury insurance for workers so successfully.
The type of questions from the Bangladeshi delegation to their Nepali counterparts showed just how deeply interested they were and how eager to learn not just about the successes but also about the challenges. According to GIZ’s Social Health Protection Advisor Helen Witte ‘The Bangladeshi delegation was great at asking questions – they just kept asking until they really got the answers.’
For the Nepalis, it was a boost of confidence to present their success story to their larger neighbour. Conversely, there was an opportunity to learn from Bangladesh regarding their robust industry inspection mechanisms, and possible options for expanding their social protection scheme to the informal sector, an option Bangladesh is pondering.
The highlights of the tour
In many ways this study tour testified to the power of mutual learning. GIZ’s Moazzem Hussain thinks that the visit to the factory was the highlight of the tour. Bangladeshi delegates, who currently face many questions by the industries about the implications of the social protection schemes, were able to witness how this can work on the ground with both management and workers supporting it. According to another delegation member Tawhid Hasan of the Government of Bangladesh, ‘what made this tour special is how it combined theory and practice. A powerpoint presentation alone cannot give you the true picture. We were able to see how Nepal was doing it in reality – we saw the implementation’.
For both countries, challenges remain. In Nepal, the digitalised employment injury insurance system has to be taken to scale and the interest by the Bangladesh delegation enhanced the motivation and momentum to do that. For Bangladesh, the idea has been incepted, doubts have been allayed and a plan of action can now be envisioned. Learning processes are underway in both countries and the openIMIS provides a facilitated community of practice to them for continued exchange.
‘We felt very proud to share our experience with our colleagues from Bangladesh,’ says Roshan Koju of Nepal’s Social Security Fund. ‘I hope that this exchange will continue – and that at some point we can return the visit and learn from their achievements in Bangladesh.’
Shahmir Hamid, March 2022