Government is shoring up the coffers of the National Insurance Scheme’s (NIS) Unemployment Benefit Fund to the tune of $180 million over the next three years, with the first tranche of $50 million now being made available.
The measure was announced during Tuesday afternoon’s session of the House of Assembly. Member of Parliament for St Michael South Central and Minister in the Ministry of Economic Affairs, Marsha Caddle, said it was essential to replenish the coffers of the island’s social security system, following the five-fold increase in unemployment benefit claims coming out of the COVID-19 pandemic over the past year.
“COVID caused a complete standstill in the private sector. The National Insurance Scheme received 52 282 unemployment benefit claims from over 32 000 people following the lockdown. The annual average is 11 000. Now, when the NIS was created, no one could have anticipated this demand on the system,” she said.
“The Unemployment Benefit Fund used up all its resources to pay these claims and borrowed from the National Insurance Fund as well as the Catastrophe Fund to help cover some of them. We had a duty to take care of our people first, and then, as we knew we could, to make sure we could recapitalise the fund, and we are here today to do just that.”
Caddle outlined how the recapitalisation process would work and also stated that an auditing process was underway to ascertain how the six funds coming under the NIS umbrella were faring.
“Cabinet agreed to recapitalisation over a three-year period: $60 million by March next year; $60 million by March 2023, and another $60 million by March 2024. This recapitalisation, in concert with contributions that will continue to come in, will give us a certainty that we can cover immediately forecasted claims given the trends we are seeing. In terms of auditing, the six funds have been urged to submit more complete information and those submissions are taking place across four of the six funds, while the 2020 audit for two of those funds is already underway.”
Minister of Labour and MP for St Peter, Colin Jordan, stated that so far this year, the number of claims had decreased when compared to 2020.
“Owing to the second shutdown in February of this year, there have been 23 455 claims on the fund. The number is declining steadily. In fact, the amount for July was the lowest we have seen in 16 months, so we are headed in the right direction,” he said.
However, the Labour Minister expressed concerns about a trend among employers of hiring people on a contractual basis, thereby making them responsible for paying their own NIS benefits.
“I want to make an appeal to employing organisations to recognise the people who work for you are human beings, not just labour. They are people who need to be protected, so attempting to find ways of moving people from being employed, referring to them as contractors, sub-contractors, or self-employed, is not appropriate and does not recognise their humanity, you need to do the right thing by the people who work for you,” Jordan said.
“We are also aware of the move to what is known as a ‘gig economy’ work arrangement, where people work for short periods of time in a variety of different places, sometimes because they don’t want to be tied to any one place of employment, but these people need protection in the form of social security as well.”
On another note, Jordan reported that several outstanding matters before the Severance Pay Tribunal were completed or would be resolved shortly.
“The first set of LIAT workers who appeared before the Severance Pay Tribunal should be getting their payments if not the end of this week, by early next week. Arbiters have been appointed to look into the matter regarding the workers who fell within the Sunset Legislation passed last year. The information I have suggests that dates have been set for those hearings, so we expect that between the end of this month and next month their issue will be resolved. The matter regarding the workers at the Accra Beach Hotel will also conclude sometime in September.”
Leader of the Opposition Bishop Joseph Atherley was pleased to see that some action was being taken regarding the LIAT and Accra Beach Hotel workers, but questioned whether another issue concerning workers at Harrison’s Cave had been addressed. That matter, he said, dated back to when the tourism attraction moved from under the auspices of the National Conservation Commission to the Caves Of Barbados state-owned enterprise.
He also called for proper governance of the NIS and other related funds.
“Government has not spoken loudly or clearly in a sustained fashion about how funds under the NIS or the Central Bank of Barbados operate. With major funds like these, we have to ensure that there are structures and mechanisms in place that counter any attempts of the political agenda to influence decision-making at these institutions. We speak of the lack of properly audited reports from state-owned entities, and since these are the two primary ones, we must ensure these are done urgently and in a timely fashion, in order to sustain people’s confidence in the integrity and future viability of the funds managed by these agencies,” Bishop Atherley said.