INSURING THE POOR.
In 1996, I wrote a book,” The Political Economy Of Pakistan, An Agenda For Reforms and Restructuring”, in which I made some submissions and proposals in this respect. Personal Insurance is not a very popular concept in Pakistan. Mostly industrial assets and vehicles are insured against theft and fire etc., and that for banking reasons mostly. Employees Old Age Benefit Insurance (EOBI) was launched for the benefit of employees in manufacturing and services sector. To date 400,000 workers are benefiting under the scheme with health coverage and old age pension. Mostly large companies have come under the ambit of EOBI. There is massive corruption in EOBI,wherein the EOBI inspectors and officials collude with company owners to under-register and under-pay the annual dues. Still EOBI is providing some benefit and coverage to the poor workers.
Industrial workers in the organized sector form a very small part of the workforce. Bulk of the workforce is engaged in the following sector; a) agriculture, b) construction, c) service and trade, d) domestic workers, e) self employed and informal. Most of the workers in these sectors are not formally employed as company employees. They are mostly payed on contract or daily basis something should be done to cover them in some sort of Insurance scheme.
In the current economic thinking, in addition to the long drawn trickle down effect, direct support to the poor and building social safety nets have become an accepted approach. Benazir Income Support Program (BISP) has been launched and is being widely acclaimed domestically and by international donor community.
Lack of formal employer is a major constraint to expanding insurance net to the aforementioned sectors of agriculture, trade, construction etc., wherein the employers are too many to deal with. Levying a modest insurance cess (tax) on agricultural commodities and construction material could be a feasible way of mobilizing resources for this purpose ie., paying the premium for insurance. Ready candidates for such cess /taxation would be cement, steel and fertilizer. A token premium should also be collected from the participating workers ie., a ta rate of Rs. 100- 200 per month, and a premium of Rs.4000-5000 per year should be paid from the funds generated from the proposed cess. Private sector insurance companies (large and responsible ones) should be involved, otherwise the scheme would be wasted either by inefficiencies and corruption of the public sector or fraudulent practices of the small insurance companies ala third party vehicle insurance.
Voluntary schemes could also be promoted especially for the domestic workers. They should be 30-40 population clusters in Pakistan of well to do and rich families which employ bulk of the domestic workers, as maids, cooks, chowkidars, gardeners, drivers, and cleaners. At least 1 million domestic workers should be working for the well to do, who may be encouraged to pay insurance premium of Rs. 200 – 300 per month per employee. It could even be made a legal requirement as well. NGOs and large insurance companies should be employed to enlist participants- employers and employees. A token premium could also be charged to the insured workers as mentioned earlier.
Fortunately there are government plans on the anvil to introduce health insurance scheme for the workers in the informal sector. A NGO with financial support from the Clinton foundation has also started working to promote and establish workers health insurance. More of such voluntary efforts should be encouraged along with the required initiatives in this respect.