Wednesday, June 22, 2011

Migrant workers pension scheme: Silent theft

By Lakshan J.S. Dias
Migrant workers are the most innocent and victimised community in Sri Lanka where there is no proper organisation for their rights or benefit. The institution created for their benefit is the Sri Lanka Bureau of Foreign Employment (SLBFE) which is a questionable entity whether they really act on behalf of the migrant workers. Now the government has triggered another problem through a pension scheme.
The Overseas Employees’ Pension Benefits Fund is a bogus scheme similar to the recently-failed private sector pension scheme. However the Government will not receive any strong opposition from migrant workers for the following reasons – the number one being that the person concerned doesn’t live in Sri Lanka and therefore is physically incapable of opposing the scheme as the bare minimum protest.

Therefore it will be easy go for the Government. Secondly the number of beneficiaries are huge but scattered all over the world and who will be dealt individually. No collective bargaining power for them.
NGOs working for migrant workers are really small. The Bill proposes that there should be a minimum contribution that’s Rs 24,000 and the contribution can be much larger and long term. Generally a migrant worker serves in a foreign country for four years and sometimes six years but those who work abroad more than six years is much less. But this scheme will encourage people to serve more years to get a larger pension. So the migrant workers will stay abroad many more years leaving their families behind, to benefit from an increased pension.

The Pension Fund is to be managed under one commissionaire - either the SLBFE Chairman or nominee of the Chairman. The Chairman (or nominee) is the authority for many decisions including the determination of pension amounts and if anyone is dissatisfied they have to follow a long legal process provided in the proposed Act, which a migrant worker won’t have the resources to do and strength to challenge. Therefore the chairperson can deprive workers of their rights by deciding lesser amounts. The fund according to the proposed Act encourages investments in government securities which shows that this will really benefit the Government to maintain its expenditure in various state projects. Losses in such investments will not apply any liability to the chairperson nor designated officers. The proposed Act has many serious gender equality violations even though the majority of the migrant workers are women. The entire proposed Act defines the beneficiaries/officials as ‘he, his, him and chairman, etc’.

At least the language need to be refined in these modern days. Very importantly the age is the main issue, similar to the private sector pension scheme. Pension entitlements for migrant workers start at 65 years. The life expectancy of Sri Lankans is 70-72 years and therefore the maximum pension can be around seven years. If someone contributes for more than seven years they might not even receive the amount that have contributed. The pension is mainly targeted to the contributor and if the contributor needs to extend the benefits to the kids then they should marry at the age of 47 or 50 years. For women that’s the age that they cannot bear children. In general Sri Lankan women have children at the age of 20-35 and none of them can think of any benefit for their children unless they are medically unfit. But even for such children its only a lump sum equivalent to 60 % of the amount lying to the credit of the member’s individual account that shall be paid to such dependent. If there is more than one dependent, such amount will be divided among the dependents in equal shares. The ‘Chairman’ has to certify the payment in every case while the dissatisfied have to go to a tribunal created under the scheme or to Court of Appeal.

The ‘Chairman’ or Minister can always maintain the interest rate at around 3% as there is only a minimum interest rate mentioned and there is no certainty in it. It’s hard to believe that migrant workers will join this scheme voluntarily; if so why should the Government introduce such a scheme and will the Government be satisfied with voluntary contributors after contributing Rs 1 billion from state funds even though that is only a bond similar to the other failed one? Recently a Minister was reported as saying that hereafter employers will meet incoming migrant workers not at the airport of the receiving country but the embassy or consulate of Sri Lanka and documents must be signed there. In such a situation, the Embassy or consulate can insist (or goad) workers (or even employers) to contribute to the pension scheme. At that stage migrant worker won’t have any option other than agreeing.

The provision:“The contributions of a member of the Fund and of his employer in respect of him and the interest on such contribution shall be credited by the Monetary Board to the individual account of such member,” clearly indicates that in future the Government will ensure that either employer or employee must contribute to the scheme or both as they have no option rather than agree since they already made the decision to start a new job in a receiving country. Sometimes employers might agree to contribute to the pension but deduct the amount from the migrant workers which prevails in Hong Kong where employers pay a levy for migrant workers and that is reduced from the salary of the migrant workers, indirectly.

While a pension scheme for migrant workers is justified, the government has neglected and marginalized this worker segment and is only interested in the earnings as a foreign exchange input. Gradually the Government will impose compulsory contributions to the migrant workers through the system of signing agreements at the Bureau and embassy involvement in employer-employee match making.

Further this contribution is apart from the levy of the SLBFE.If a worker earns Rs 20,000 a month the contribution is 5% and this is huge for them as well as output will be very small if someone contributes for five years. The full amount lying in his/her individual account will be around Rs 120,000 and if that person receives a pension at the age of 65, it will be around Rs 2000 or a little more while the worker has to wait 10 years to get the pension. On the other hand, the minimum funds (available to the Government) would be Rs 2 billion per month if every worker contributes.

There are around two million migrant workers living abroad with nearly 1.7 million registered under the SLFBE. The annual input would be Rs 24 billion of which the Fund gets a 10-year definite investment time as anyone has to wait 10 years or more to receive benefits. The pension amount is also unclear and is to be determined by the ‘Chairman’. Accountability of the chairman and the officers and Monetary Board is vague even though the Government auditor audits it and everyone is well aware of how other state institutions respond to government audits. The decision of getting the support of Grama Sevakas, AGAs and other village officers into the decision -making of verifying the payment holders existing can lead to corruption and conflict.

(The writer is a lawyer and campaigner for the rights of migrant workers. He could be reached at

1 comment:

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