Task Force proposes complete overhaul of EPF, ETF
June 12, 2012
Amid controversy over the questionable investments by the Employees Provident Fund (EPF) and the Employees Trust Fund (ETF), the government is considering whether to introduce a new law prohibiting such investments in poorly performing business ventures, Daily Mirror learns.

The National Human Resources and Employment Policy framework prepared by the Presidential Task Force (PTF) proposes a complete overhaul of the EPF and the ETF to enhance their effectiveness, efficiency and sustainability.Senior Minister D.E.W. Gunasekara who chaired the task force appointed by President Mahinda Rajapaksa in June last year said the task of formulating a National Human Resources and Employment Policy (NHREP) for Sri Lanka was meant to realize the objectives of promoting productive employment for people. It envisages the development of a globally competitive, multi skilled and productive work force, improved income and the quality of life of the working population across different sectors and regions and providing the fullest possible opportunity to each worker without discrimination.

Policy actions in the two areas of employment and social protection are mutually reinforcing and promote pro-poor growth. Better and more productive jobs lead to better income, allow social spending by poor workers and help finance social protection. Social protection improves the productivity and employability of poor people and helps protect the most vulnerable while also promoting long-term sustainable development.

"Action will be initiated to enhance effectiveness, efficiency and sustainability of the EPF, the ETF and other social security schemes by rationalizing the regulatory procedures and enhancing and expanding the scheme to cover all eligible workers," the minister said.

He said the existing social security system of Sri Lanka was fragmented and comprises fairly well-established schemes of old age pensions and of lump-sum payment schemes at retirement for public officers and workers in the private sector and their dependents, and voluntary schemes for workers.

The minister said except for a few schemes including the public officers' pension scheme, the social security schemes are contributory schemes and provide benefits in lump sum. Lump sum payments are unable to generate a flow of adequate income regularly after retirement, basically due to low levels of wages and therefore contribution made during the period of employment.

"Under the present schemes, there is no protection against unemployment. For the effective implementation of a Human Resources and Employment Policy, an unemployment benefit scheme which would provide not only cash or income benefits but a package of services including counselling, training and re-training, and job placement services is considered imperative," the minister said.

The NHREP has also proposed the enhancement of maternity benefits for female employees in the private and state sector through necessary legislations as at present while the payment of maternity benefits was an employer's liability and not through a social insurance scheme as set out by ILO Convention 103 on Maternity Protection which has been ratified by Sri Lanka. Sri Lanka has one of the fastest ageing societies in the world posing significant social protection challenges.

The sustainability of these schemes and the supply of appropriate conditions of well-being to people are major issues.

In view of the recent global fuel, food and financial crises, and recurrent natural disasters, the need for a strong social security system based on solid principles became more important to prevent people becoming destitute, and to provide employers with much needed labour market flexibility during such times.

Source: Daily Mirror - Sri Lanka