By Petulia Clarke, Staff ReporterTHE JAMAICA Employers Federation (JEF) and the island's trade unions have added their voices to concerns that the pending increase in contributions to the National Insurance Scheme (NIS) will devastate an already overtaxed workforce.
The news has placed the unions and employers on the alert, as concern mounts about how the increases to the mandatory social security system will be met. The increases are expected to be announced by Minister of Labour and Social Security, Horace Dalley, when he speaks in the sectoral debate which will follow the current Budget Debate in the House of Representatives.
Last week, JEF said that employers had already started to express concern about the effects of the increases in the insurance plan, although Government has not yet announced the details.
CONCERNED ABOUT THE FUTURE
Jacqueline Lloyd, executive director of the JEF, said she was already getting calls from employers who are not sure how they will be affected by the new ceiling.
"The employers are concerned that they have no idea of what this new ceiling will be and how it will be effected," Mrs. Lloyd said. "We're also concerned that, as usual, the legal (formal) sector will be covering the cost for everybody formal and informal."
Mrs. Lloyd said the JEF hoped the rate increase would not come into effect before next year, as most employers and their employees have already crafted their budgets for this year.
During the last sitting of the Standing Finance Committee of the House of Representatives earlier this month, it was announced that the Government would be raising the $250,000 ceiling on which NIS contributions are calculated, to provide money for the Health Ministry's soon-to-be established National Health Fund (NHF).
The Opposition Jamaica Labour Party (JLP) criticised the move, arguing that it would amount to an imposition of additional taxes on a struggling labour force. JLP
Member of Parliament, Dr. Ken Baugh, said that the Government should have looked to using money from the National Insurance Fund (NIF) to pay for its new initiative, rather than raise the wage ceiling for contributions. He said that the increase was, in fact, additional taxation on people who are already stressed.
The NIF, whose two main sources of income are contributions and investment income, has seen its net assets grow largely as a result of prudent investments. Described as a financial success story, at last report at the end of December 2000, it had net assets valued at $16.3 billion. The Fund's real estate sub-portfolio comprises various types of properties like the Air Jamaica Building on Harbour Street, sections of the Portmore Mall, as well as various NIS parish offices throughout the island. Tourism properties include the Grand Lido Braco Resort in Trelawny and development properties in Llandovery, St. Ann, and Montego Park.
In a release issued yesterday, the Jamaica Confederation of Trade Unions (JCTU) said that while it acknowledged the efforts of the Government through programmes like the NHF, the country needs to quickly develop a comprehensive income protection and social security system which will bring the NIS, NHF, pension and health schemes under one system.
APPREHENSION ABOUT INCREASES
JCTU vice-president, Senator Dwight Nelson, has been wary of the proposed NIS increase, expressing concern, but says that he preferred to wait until the proposal is presented "before getting worked up".
According to Senator Nelson, "We haven't got the details yet, but we are very concerned about the added increase in cost to the employee. The proposal has been in the air for some time. Workers have expressed apprehension about the possible increase in costs to them for a while now, but we'll just wait on a detailed proposal before consulting with our members."
Danny Roberts, vice-president of the National Workers Union (NWU), said that, while he supports the concept of the NHF, he was concerned about how benefits for the employee would be magnified to ensure that contributions are commensurate with the benefits to be derived.
NIS CEILING
An employee's NIS contribution is calculated at five per cent up to the first $250,000 of his salary, which is the current ceiling. This is split between the worker and the employer.
Last year, Permanent Secretary in the Ministry Alvin McIntosh hinted that the NIS ceiling could be raised, after former Minister of Labour, Donald Buchanan, said that the Government had been increasing benefits without addressing NIS contributions which were overdue for an increase. Mr. McIntosh said that the Government had no intention of interfering with the $17 billion in the NIF or its earnings.
The Government will use $800 million from the increased NIS intake to finance the NHF which is to be set up later this month. The $2.2 billion NHF, which will cater to Jamaicans suffering from any of 14 specified chronic illnesses, will also receive $400 million from the Consolidated Fund, as well as $1 billion in contribution from a 23 per cent tax imposed on tobacco products.
