Majority of informal sector employers, 56.3 percent do not contribute to the SSNIT’s Informal Pension Fund, a study by Friedrich Ebert Stiftung (FES) has revealed.
The study, titled ‘Understanding the Urban Informal Economy in Ghana: A survey report’ authored by Aben Tawiah Anuwa-Amarh from the National Development Commission indicated that majority of the employers and their employees’ main provisions towards old age is in the form of personal savings.
Also, 21 percent of employers indicated that they contribute to SSNIT with 15.4 percent having life insurance and 5.4 percent on private pension. The rest are retirement fund, 1.3 percent and group insurance 0.9 percent.
The informal sector is key to the country’s fortunes as 80% of economic activities takes place in this sector. This means that a large number of Ghanaians are found here, however, the sector is faced with many challenges including low income, job insecurity, lack of government support and lack of access to capital to expand.
It is within this context that the SSNIT Informal Sector Fund was introduced to cater and provide social protection to informal economy workers but after more than 10 years of the scheme’s introduction, it appears the purpose of setting it up is yet to be fully realised.
Apart from the negative repercussions this holds for workers, especially after active working period, it also shows how much investible funds SSINT has been denied of.
Aben Tawiah, Anuwa-Amarh, author of the report, said: “Such contribution to social security system such as SSNIT could have improve the stock of investible funds available to the state or pension schemes, given the fact that 80percent of employment is within the informal economy.”
Mr. Anuwa-Amarh explained that irregular and insufficient incomes coupled with ignorance of the scheme are some reasons inhibiting employers’ capabilities to contribute meaningfully towards life after work.
Going forward, he said informal employers should be seen as entrepreneurs and supported to establish their businesses and not ‘merely as people who must be put together and taxed.’
Among other things, the study recommended the need to vigorously market the Informal Sector Fund to provide informal economy workers access to social security.
Interestingly, women make up the greatest portion of the informal sector and become therefore most vulnerable, raising question marks about efforts at promoting economic equality for both men and women.
According FES, the informal economy is largely untaxed nor monitored by any form of government agency, or included in any gross national product (GNP).
In spite of the fact that about 88percent of the country’s workforce are employed in the informal sector, it is still highly not streamlined. Most workers earn less money, have irregular income and do not have access to basic protections and services of the state.
Informal businesses also lack the potential for growth, trapping employees in menial jobs indefinitely.
On the other hand, the sector is seen as a window that can allow a large proportion of the population to escape extreme poverty and earn an income that is satisfactory for survival.
In 2013, FES Ghana and the Ghana Trades Union Congress helped to create the Council of Informal Workers Associations which represents nine informal workers association in Ghana, as part of efforts to have a unified body that represents the interest of informal sector workers.
The Council seeks to express the needs and fears of the informal sector and to organise themselves and to better their livelihood. However, the council has not had the expected impact as protection for majority of the sector’s workers is far from reality.
The report, which sampled 5000 informal sector employers and employees from all 10 regions in the country was launched early this year.