NSSF: Work-related accidents: first shaky steps for the Cambodian social security system

Work-related accidents: first shaky steps for the Cambodian social security system
Ka-Set
By Ros Dina , 26-02-2009

Posted by Chea Sophal


Chom Chao (Phnom Penh, Cambodia), 29/09/2008. In the space of three months, the National Social Security Fund registered 350 accidents among garment workers on their way to work
©John Vink/ Magnum

Close to 350,000 Cambodian workers, mainly working in the textile manufacturing sector, have been benefiting for the past three months from a brand new insurance service regarding work-related accidents. The service is funded by specific employers' social contributions and is managed by a new public institution, the National Social Security Fund (NSSF). Before, the Cambodian authorities only cited a dozen accidents at work per year, most of which were revealed by media like newspapers. Since the establishment of the system in November 2008, 350 work-related accidents have been reported, of which 20 serious cases and three cases of death, thus proving the usefulness of the service, on both sides, employers and trade unions.

More than 380 companies accepted to play the game
Adopted in March 2007, the law regarding work-related accidents requires every employer in Cambodia to have their employees registered with the National Social Security Fund (NSSF) and pay for work and health social contributions which correspond to 0.8% of the gross salary of every one of them. Sum Sophorn, deputy director of the public institution and in charge of managing the new social security system, is very pleased that this legal obligation saw 386 companies comply with it since the establishment of the NSSF in November 2008.

Textile companies constitute the main part of this first batch and therefore appear as pioneers in that field, in a country where the concept of national social insurance is timidly developing: 280 of them accepted to play the game. This finally represents slightly more than half of the textile companies who officially operate in Cambodia but, as claimed by the NSSF deputy director, others have expressed their intention to conform to the new requirement in the few months to come and simply ask for an extra delay for them to adapt to the new system, and this, in the difficult context of global financial crisis. As for the odd 100 illegal textile sweatshops still not listed on the registers of the Ministry of Commerce, their fate is not sorted yet...

Insecurity on the road, commuting from home to work: first cause of accidentsThe 350 accidents declared since November at the NSSF logically and mainly concern workers in the country's best-represented sector, i.e. the textile industry, followed by construction, hotel business, the banking sector and restaurants. This social insurance does not only cover risks related to working conditions but also those inherent to journeys to or from the working place. Indeed, most of the accidents listed happened on the road, between home and the factory.

In the event of an accident, victims can benefit from the payment of 70% of their medical expenses without having to advance any money, provided they go to a NSSF referral hospital. To this day, three hospitals are listed with the Fund: Calmette Hospital in Phnom Penh, and the provincial hospital centres of Kandal and Kampong Speu. The network will progressively extend to other provinces of Cambodia in the course of the year 2009: Siem Reap, Kampong Chhnang, Kampong Cham, Svay Rieng and Preah Sihanouk.

Medical expenses and pension
“At the beginning, we found it hard to reach an agreement with hospitals because it is something new and usually, patients have to pay in advance. But little by little, we managed to find a compromise and workers can now benefit from the service”, Sum Sophorn says, very pleased. A night in a hospital room with air-conditioning at Calmette Hospital will cost an insured worker 7.20 dollars, and the remaining 16.8 dollars are directly covered by the NSSF. However, only 35% of expenses related to home-nursing can be covered. If patients wish to be admitted to a non-referral hospital - and same goes for external consultations and the purchase of medicines prescribed as part of care linked with their work-related accident - they will have to advance payment themselves and then present an invoice to the NSSF in order to obtain the reimbursement of the 70% of their out-of-the-pocket expenses.

Besides, the system allows for the payment of incapacity benefit, if an accident has caused them a serious disability, as well as financial help to the insured person's family members, should the patient die. “If they have a spouse and children, maintenance will be provided until their children turn 18 years old, if not 21, in some cases. The payment of such spousal support will end in the event of remarriage”, Sum Sophorn details.

Social contributions limited by a ceilingFor employers, the amount of contributions to be paid out corresponds to 0.8% of the gross salary of each worker, with yet a minimum and a maximum for each: the gross salary used to calculate the amount of the monthly social contribution will have to equal at least 200,000 riels (USD 50), even when the employee receives less than this sum of money, and at most a million riels (USD250), i.e. monthly contributions amounting to 1,600 riels (0.4 dollar) and 8,000 riels (2 dollars) per employee.

Before the establishment of the system, compensations paid to employees who have been victims of work-related accidents used to be debited from the company's budget and depended much on the good will of the employer. For serious accidents, the case was generally solved through negotiations between the employer and victims' families: for example, the payment of a 1,000 or 1,500 dollar compensation in case of death.

Trade unions denounce the policy of free as theoreticalIn theory, the system should satisfy workers and those who defend their interests, i.e. trade unions. But the latter are already pointing at the malfunctioning of the system, which deprives many potential beneficiaries from having real access to the service. Chea Mony, president of the Free Trade Union of Workers of the Kingdom of Cambodia (FTUWKC), the main union in the textile industry, says the system is too complex and does not protect workers from abuse and corruption. The FTUWKC president cites an example: in order to assert their rights after a road accident, the insured person must provide the NSSF with a statement and a letter in which the employer acknowledges the facts. But obtaining the first one from police services can cost a lot (at least 10 dollars) when companies do not necessarily find any interest in drafting the second one. “If that system was implemented in a correct way, it would really benefit workers' health. But I do not trust that social security system, because there is still far too much corruption and because we do not consider the interest of workers as a top priority”, FTUWKC president says.

The young insurance system also suffers from a lack of transparency, Chea Mony criticises, and most union representatives have only managed to obtain very little information on the way it works. Nuon Veasna, a coordinator at the International Labour Organisation (ILO) in Cambodia, in charge of trade unions and workers, acknowledges there is a lack of information, but nevertheless stresses that these are only the beginnings.

Employers: too slow, too expensive
On the other side, that of bosses and employers, the system was also greeted with lukewarm feelings. Cheat Khemara, a high-ranking representative in charge of labour conflicts at the Garment Manufacturers Association in Cambodia (GMAC) is rather positive about the establishment of an insurance system, which should clarify their responsibilities. But the situation has not changed in three months: in the event of a work-related accident, although he has paid contributions, his company keeps paying compensations to victims as it used to do before, since the NSSF reimbursements are far too slow. And he is not the only one in that situation, he claims. “These are therefore extra difficulties for employers”, he says, yet hoping for improvement: “Problems are usual at the beginnings.”

Times unfavourable to social progressThe unfavourable economical context adds up to these administrative complexities, the GMAC representative also argues. These times of economical turmoil are not appropriate for the establishment of such a system, when employers, he says, are in a “very difficult situation”, faced with a drop in orders and financial difficulties. “Some entrepreneurs in the textile industry balk at complying with that system. They are unhappy. They were not given the choice. If we were in a period of strong growth, like in 2007, it would not be a problem. But now... Sure, this is the law, but what can we do?” Cheat Khemara wonders.

The GMAC representative hopes the government will soon answer employers' concerns: according to him, authorities said they were ready to pay for some of the employers' social contributions - 0.3% of gross salaries - which will leave employers to pay for the remaining 0.5%. However, that decision has not yet been officialised by the government.

For their part, representatives in charge of the NSSF say they will welcome criticism rather than object to it. To this day, only two seminars gathering spokespersons for employers and trade unions have been organised to explain in detail the functioning of the work-related social insurance. “It is true that some unions have only received little information on the subject”, the deputy director of the public fund admits. “We are going to launch a hotline so that workers can directly get information and know their rights. But circulating all this information is expensive and for the time being we must limit our expenses as we have already spent an important amount of money in administrative functioning.” Before launching a more ambitious information campaign, the NSSF organises small informative meetings every Thursday, during which workers' and employers' representatives can share comments about the problems they are faced with regarding the implementation of the system.

Planned sanctions
Private companies who do not conform to these new obligations face sanctions, in theory: along the lines of the day-fine system, the fine will be ten days per worker, with a basis of 8,000 riels (2 dollars) per day, i.e. USD20 per person, when the average annual social contribution per employee only amounts to 7.60 dollars. But until now, no company has been punished. “We are trying to explain first [to lawbreakers] the good of that system, by presenting clear arguments to them, to avoid fines”, Sum Sophorn justifies. “First, we must draw the attention of investors. If they refuse to understand that principle, then we will enforce sanctions”.

The National Social Security Fund therefore favours a smooth approach: first, it urges the concerned entrepreneurs to take part in meetings about the new insurance system. Bosses then have a month to fulfil their duty and obtain more information. If by the end of that “reflection” time they haven't satisfied requirements, they will receive within fifteen days a notice from the NSSF telling them they have a month to register their employees and pay out contributions.

An extensive patternAfter the launching of the social insurance system for work-related accidents, the NSSF hopes to bring two other projects to the surface: a health insurance system in 2010 and two years later, a pension fund. Social contributions are put into a bank account with the private bank Acleda, and they will possibly be invested into the property sector or into government bonds. “If we manage to collect a lot of money, we will invest above all into the state, which offers long-term security. But each placement must be decided by the Council of Administration”, Sum Suphorn insists on saying. Useful precision, given these times of financial turmoil.