HomeBusinessMixed reactions to mooted pension for informal sector

Mixed reactions to mooted pension for informal sector

Government should put mechanisms to protect informal workers prior to its mooted introduction of a pension scheme for sector employees, an umbrella association has proposed.


Last week public Service, Labour and Social Welfare minister Prisca Mupfumira said the National Social Security Authority (NSSA) would soon roll out a social security plan to enable those in the informal sector to get pensions.

The scheme is envisaged to be introduced in the second quarter of the year.

However, National Vendors’ Union of Zimbabwe chairperson Sten Zvorwadza said informal workers required protection before any pension plan could be introduced.

“This is a noble idea but before it is rolled out, government should come up with a policy to protect informal workers. If they are to introduce a scheme without a policy, it will be problematic. More than half of their working hours, vendors’ goods are confiscated by city council officials,” Zvorwadza said.

“First government should bring a Protection Bill to protect the livelihood of informal workers. In India it was introduced in 2014 and people are benefitting from it.”

He said government should put in place mechanisms on what would happen if one fails to contribute.

“The law should embrace and accept that the informal economy is now part and parcel of Zimbabwe. In the absence of protection, it becomes difficult,” Zvorwadza said.

Zvorwadza said NSSA should make strides to consult with the affected persons.

“Our biggest tragedy is that we hear about these things in the media and yet there is no consultation happening on the ground. Obviously NSSA should come to us,” he said.

The national pension scheme by NSSA is based on a 50/50 contribution from the employers and employees. It is for every working Zimbabwean above the age of 16 years and under the age of 65 years who is in permanent employment, seasonal, contract or temporary employment minus informal workers.

It provides an important cushion for Zimbabwean citizens during invalidity, retirement or death of a breadwinner who was a member of the scheme.

Economist Tapiwa Mashakada said social security contributions should be based on wage or salary income and the proposed plan was a clear admission of failure by government to create formal employment.

“The cash-strapped government is now behaving like a headless chicken. Industry has collapsed and only 300 000 people are in formal private sector jobs. Even these are not paid on time hence NSSA is feeling the cash squeeze. The panacea is industrialisation, modernisation and ease of doing business in order to attract investment and create new jobs,” he said.

“Nowhere in a modern world have you seen social security being extended to the informal sector which has no fixed income. Social security contributions are based on a wage or salary income, that’s why it is called defined contribution and defined benefit.”

Buy Zimbabwe chief economist Kipson Gundani said it was  unfortunate that state agencies were craving to bite a piece from the little being earned by struggling informal sector players, adding the whole idea was not a good social caring indicator.

“I guess there are so many insurance schemes that people in the informal sector can utilise voluntarily. The whole idea of NSSA moving for the informal sector is not necessarily a good social caring indicator. When economic fundamentals are down, it is unfortunate that we find state agencies craving to bite a piece from the little being earned by struggling informal sector players,” he said.

The informal sector provides employment to over 70% of the population. This is set to increase due to company closures caused by the harsh operating economic environment.

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