THE Union of Clerical, Administrative and Supervisory Employees (UCASE) has urged the Government to pursue the organisations not in compliance with the National Insurance Act, rather than increase the burden on law-abiding taxpayers.

UCASE General Secretary John Levy recently said that, in light of the latest Statistical Institute of Jamaica (STATIN) Labour Force Survey, which said that at October 2018 the country’s employed labour force stood at 1,219,700 and only 470,000 people are actively contributing to the insurance scheme.

“Recently the minister of finance announced some changes to the NIS (National Insurance Scheme) structure, and that is just to keep the NIS going at the same level where it’s at. But what is it that we find? The labour force is about 1.3 million. Do you know what the contribution to the NIS is? It is about 470,000. So about 800,000 are not contributing to the NIS. I don’t know if it’s being taken from their salary and not paid over, or the company has said, ‘You pay your own NIS’, which we don’t support,” Levy said, adding that the revelation plays a major role in the country’s social challenges that need to be addressed.

Finance Minister Dr Nigel Clarke last month told Parliament that Jamaicans are to begin contributing more to the NIS.

Dr Clarke said that the contributions will move from five per cent of an employee’s salary to 5.5 per cent as of April 1, 2019, while the deductions will see a further increase to six per cent by April 1, 2020.

The increase is to be shared equally between employer and employees, with each absorbing 0.25 per cent.

Clarke cited an actuarial study in 2016, which revealed that the National Insurance Fund would have a negative cash flow by 2029 if the contributions were not increased, and by 2037 would be completely depleted.

He explained that this is due to the fund paying out more than the amount being generated.

In 2016, the NIS paid out pensions to 100,000 individuals, resulting in outflows of $14.87 billion, while inflows only amounted to $12.8 billion, the minister revealed.

“The trouble now is that when people get older and in difficulty and those that are not old but other issues come upon them where they need social security assistance and they never contributed all their lives then the ministry ends up still having to assist them. At that time, the social safety net catches everybody. People go there for death [benefit] and all kind of things and they never contributed before. That is where we have the problem, where 700,000-800,000 people not contributing.

“The Ministry of Finance should be focusing on not just improvement in the numbers in terms of employed persons, but improvement in the contribution to these different entities… You’re not seeing a commensurate improvement in those contributors, and that is cause for concern. It speaks to informal employment versus formal employment. It’s the same 470,000 formal employed, and 700,000-800,000 informal employed and that is the root of some of the problems that we facing,” Levy told the Jamaica Observer in an interview.

Part II subsections I and II of the National Insurance Act outline that a person who, on or after the appointed day, being over the age of 18 and under retirement age, and having fulfilled residence in Jamaica, is gainfully occupied in Jamaica, or is in such employment outside Jamaica as is specified in (certain instances) shall become insured under the Act and remain insured until he reaches retirement age. It said insured persons are divided into two classes employed and self-employed.

Employed persons are defined as those who work in a business, not their own. This category includes factory workers; private household workers such as butlers, chauffeurs, cooks, gardeners, general helpers, housekeepers, and nurse-maids; and all other employed persons including civil servants, teachers, nurses and members of the security forces.

Self-employed are those who work independently in their own business. Included in this category are doctors, lawyers, accountants, consultants, vendors, informal commercial importers, dressmakers, tailors, hairdressers, barbers, fisherfolk, farmers, and Jamaican nationals employed in foreign embassies in Jamaica.

“We’re not able to differentiate between formal and informal employment properly and the benefits that go with being formally employed. When more than half your employed labour force is informally employed you’re in trouble. That is really what we want to see some focus on, getting people formally employed that they contribute to all these agencies, and in particular the NIS. If the money reaching NIS could double, do you know the difference that would make? You could easily stop asking people for extra,” Levy stressed.

Minister of Labour and Social Security Shahine Robinson in her annual performance report 2017/18 noted that delinquent employers totalled $1.4 billion in outstanding contributions, though $1.3 billion of that figure was later collected.

Robinson also said that, as at March 2018, some 49,899 new people were registered with the NIS reflecting a significant decrease of 3,576 or 6.68 per cent when compared to the previous year.

A total of $16.2 billion was collected in revenue for financial year 2017/18 compared to $15.2 billion in 2016/17. This represents a 6.8 per cent increase over the previous year.

Robinson confirmed that there are some 400,000 active NIS contributors and a total of 120,000 current beneficiaries. The minister added that there are just over one million employed persons registered with the scheme.

“That would speak to the informal economy. Those people are registered but they are not active contributors. However, we are having a lot of road shows and efforts are being made to get persons [on board]. We are also having workshops to move persons from the informal economy into the formal economy. We have started with two sectors. The International Labour Organisation has been helping us with that; the household helpers and the fisherfolk to get them organised and get them registered and into the formal economy,” she told the Observer.v