Online Reporter
THE informal sector, and for that matter communal lands farming, were long seen as a dumping ground for those who could not get jobs or who lost jobs in the formal sectors, public and private.
So the formal sectors, including the civil service and uniformed services as well as formal commerce and industry, had at least basic social security and usually did a lot better than just pensions by setting up medical aid schemes and insurance, and until hyperinflation destroyed currency stability, also mortgage schemes that helped many in the formal sector buy houses.
Post-independence Zimbabwe first successfully concentrated on ending the division in the formal sector benefits largely driven by race, although tending to be hidden behind managerial and skilled workers on one side and semi-skilled and unskilled staff on the other.
This was accomplished swiftly, although workers on large commercial farms and domestic workers were still excluded except for minimum wages.
For many years a decent workman’s compensation scheme had been operated, again in the formal sector, to provide support and if necessary disability pensions to those injured in the course of their duties.
This was extended, on the upgrade of the old system to the National Social Security Authority, NSSA, to include a basic pension scheme. Both injury compensation and the NSSA pension scheme required contributions from employees and employers.
The Government retained, and retains, its commitment to self-insurance for the civil and uniformed services but the benefits are generally better than many in the formal private sector. It is now moving towards a funded pension scheme for State workers, rather than just relying on annual budget commitments.
But all this left out the majority of the population who were just expected to cope, and whose only security in old age was largely a land right in a communal area or support from families, who were themselves usually quite poor. In any case, the communal areas were becoming overcrowded and there were limits over what land rights could be extended, especially to those who had zero farming experience.
This saw the dramatic expansion of the informal sector from a modest collection of skilled people who wanted to or, because of race had to, work for themselves without the backing of the sort of services regarded as normal in the formal sectors. Now that sector supports a far larger group of people than the formal sector.
The tumult in the pensions sector during hyperinflation meant NSSA was more in a survival mode, but despite acknowledged management problems that were identified still survived the meltdown rather well and kept paying pensions while building up assets.
The Second Republic brought in, as part of its wide range of reforms, a new and inclusive way of looking at the nation and the economy. For a start it created practical input schemes that allowed communal farmers and the small-scale resettled farmers to move from subsistence farming to growing crops and keeping livestock for an income. While in theory the divide between those who farmed commercially and those who farmed for subsistence had ended, it needed that practical support to turn theory into fact.
The Second Republic has now turned to working out the practical steps required to unite the formal and informal economic sectors, which has required many to stop seeing a solid wall between the two and start seeing a continuum of business from the micro-level to the industrial giants with large workforces. That follows the breaching of the wall in farming, and the introduction of the same continuum of farmers.
As part of those reforms NSSA has been figuring out how to bring in the majority previously excluded into its main compensation and pension schemes.
Technically this is possible with the advent of databases and decent software, so the administration costs can be kept right down, an important need when millions of people with lowish incomes are to be included.
NSSA has seen the need for something a bit more practical than monthly contributions based on salary from workers and employers; many in the smaller businesses are self-employed or work in a family business, which makes a split between employer and employee difficult to work out, and often incomes vary substantially between months and seasons. So we need to think outside the box.
While final details are still being worked out, it is already clear that what is to be introduced has to fit in with the needs and resources of those who will be included.
The system can be extended, but the extension has to work in the real world. The benefits, both to those to be included and the nation as a whole, are large, extending a safety net to a far larger percentage of the population. So we need to get it right from the beginning.
That is not an excuse for delay, but is instead a challenge to those who will administer the schemes to move forward properly and speedily and end yet another major division across our society.
Peter Tanyanyiwa