IN the 1960s, governments started introducing labour welfare schemes primarily comprising benefits such as medical care and cash benefits, old-age pension, housing, free school education, share in company profit and employment for differently abled persons.

The medical and pension schemes require regular interaction between employers and two institutions constituted by the government to run the schemes. In Sindh, the institution which administers the medical scheme is the Sindh Employees Social Security Institution (SESSI). The other is the Employees Old-Age Benefits Institution (EOBI). Despite paying a hefty monthly contribution to the two institutions on behalf of their employees, the employers’ dealings, especially with SESSI, have not been pleasant.

SESSI was created in July 1970 in pursuance of the Provincial Employees Social Security Ordinance, 1965, which introduced a social security scheme to provide benefits to certain employees or their dependents in the event of sickness, maternity, employment injury, or death.

In May 2005, the SESSI commissioner, with his vast powers, extended the scheme to all hospitals although some of the latter were already providing comprehensive medical care and benefits to their employees and their families. His action was unnecessary as the employees were happy with the prevailing hospital medical schemes. Although the government scheme offered medical treatment to the employees’ parents, they preferred to take care of their medical needs at their own expense, instead of facing difficulties at SESSI-run dispensaries.

SESSI has created difficulties for hospitals.

Over the last 20 years, hospitals have paid billions of rupees — two of them in Karachi have paid Rs140 million in the last year alone — to SESSI, without getting any significant benefits in return. The existing rate of the monthly contribution from July 2024 is six per cent of the prevailing minimum wage of Rs37,000 in Sindh on behalf of every secured emplo­yee, with coverage of employees drawing a salary of up to Rs42,000 per month.

Due to the yearly increase in the minimum wage, the rise in employers’ contribution to SESSI is meteoric with no relief in sight. The Sindh government should have provision of de-registration of organisations whose employees are not drawing any benefits from SESSI.

Instead of pursuing employers who flout the law, SESSI created difficulties for the hospitals in question by asking them to get their records checked to get more money. On the other hand, employers with huge manpower but paying far less contributions, are not bothered. At the same time, SESSI refuses to provide medical treatment to an employee involving high expenses.

The astronomical increase in contributions every year is causing dents in the finances of employers in general. The increase in the amount of contribution effective from July 1, 2024, was around 16pc of the previous amount. To avoid the uncontrolled and unforeseen increase in employers’ cost, SESSI should go back to the previous system of collecting contributions from employers based on the existing percentage of an amount fixed by the government, instead of minimum wages.

When there is no improvement in services provided by SESSI, why should contributions be linked with the minimum wage, which has different criteria for fixation? In fact, the EOBI’s performance is far better than SESSI’s as it keeps registering new pensioners without much difficulty and reimburses pensions with regularity, at the beginning of every calendar month. However, the institution is being run on an ad hoc basis since the devolution of labour laws after the 18th Amendment in 2010.

The EOBI was not devolved as the federal government thought it appropriate to continue managing the scheme centrally. The decision was correct as its devolution would have caused problems for KP and Balochistan in the disbursement of pensions to people returning to their hometowns after retirement.

The central status of the EOBI has not yet been regularised by the federal government; it has been embroiled in prolonged litigation with employers in the superior courts. This litigation pertains to the rate at which the monthly contribution is payable by the employers to EOBI.

There are appeals lying before the Supreme Court. Some provincial high courts state that the contributions are payable at 6pc of the prevailing minimum wage on behalf of every insured employee. On the other hand, the Islamabad High Court has decided that they are payable at 6pc of Rs3,000 per insured employee.

In view of the judgements, the EOBI should not force the employers to pay any arrears of contribution till the decision on the appeals is taken by the Supreme Court.

The writer is a consultant in human resources at the Aga Khan University Hospital.

Published in Dawn, December 31st, 2024