NSITF moves to improve efficiency of ECS

The Nigeria Social Insurance Trust Fund (NSITF) has moved decisively to improve the efficiency of the Employees Compensation Scheme (ECS).

To achieve this, the fund, a parastatals under the Ministry of Labour and Employment, has begun a conscious effort to expand the factors that constitute payroll.

Significantly, the NSITF began the process in conjunction with the Nigeria Employers Consultative Association (NECA), one of the very significant stakeholders in the labour sector.

In recent week, the NSITF signed a Memorandum of Understanding (MoU) which contains new additions to the payroll. Currently, the payroll constitute one per cent of workers’ basic salary, transport and housing allowance.

The new additions as contained in the MoU signed by the NSITF and NECA involves one per cent of the total payroll with exception of pension and special allowances.

Following a directive from the Federal Government to the NSITF to fully operate the Employees Compensation Act (ECA), the Director General of NECA, Olusegun Oshinowo, emphasised that five years was indeed magnanimous moratorium of excluding some aspects of workers’ pay from the payroll, upon which payment into ECS was calculated. He was speaking on the importance of re-constituting payrolls of workers in adherence to the government directive”

According to him, a joint committee’s of NSITF and NECA worked on the new definition of payroll; adding that the products of the committee’ work formed the basis for the MoU signed by the two organisations.

He explained that the MoU clearly spells out the items that constitutes payroll with pension, and special allowances exempted from the list. Oshinowo stated further that the agreement provided clarity of definition as far as items that constitute what a payroll is within an organisation.

While the definition of payroll may cause controversies, both NECA and NSITF decided to define payroll on the basis of exclusion and that the items that would be excluded are items that are irregular on the payroll such as bonus, overtime payments, items that employers bear the costs but do not translate into cash in the pocket of employees, which formed the basis for the exemption of pension contributions.

The NECA boss said: “You cannot run a scheme where there is no clarity about terminologies and concepts, which will encourage controversies about the running of the scheme. We believe that the MoU would benefit the workers that the scheme is meant for at the end of the day and as employers we have to support that. We appreciate the fact that payroll is a generic concept because the context of payroll would differ from company to company.”

He said the document would be sent to employers within the next few weeks to enable them include the costs of the new definition into their 2017 budget estimates; while he also hinted that the signed document would be sent to all employers in the country before the end of the year to enable them plan for 2017 expenditure.

Osinlowo, however, cautioned employers against flouting the newly agreed definition of payroll in the payment of the one per cent required by the ECS.

Also speaking, the Acting Managing Director of NSITF, Ismail Agaka, commended  the Director General of NECA for the supportive role of the association since the commencement of the ECS.

To him, the adoption of law is might, which has been the attitude of law enforcers. He, however, regretted that over the years the law enforcement has not achieved the desired result because it does not embed the spirit of social dialogue.

He said: “Even if the law backs the action, the operators must be able to convince those that the law is meant for of the need for compliance stressing the essence and benefits of such law to individuals as well as the society as a whole. At the NSITF, we recognize the fact that the law is there to be applied for the mutual benefit of the government and the governed.

“In applying the law, logic and wisdom must be applied in equal measure so that it does not become a toothless law. In Nigeria, there are so many laws that are un-implementable because they could not be applied. This is so because there is no buy-in of those that the laws are targeted at. for a law to achieve its purpose, there must be a sense of ownership amongst all the stakeholders to take the law as theirs. This is what this agreement is intended to achieve.”

Also, the NSITF is working hard to ensure the expansion of the ECS into the states of the federation. The move, however, got a major boost as the Governor of Rivers State, Nyesom Wike, indicated the readiness of the state to join the scheme.

The Minister of Labour and Employment, Chris Ngige, had liaised with the Rivers State government on the possible adoption of ECS by the State; the move which Wike commended.  The minister described Rivers State and Governor Wike as very strategic, to leading the way in the implementation of the Compensation Scheme.

Rivers State Governor, Nyesom Wike said such issues of development must always receive priority attention despite political differences; adding, that placing development above partisanship would enhance the partnership between the Federal and State Governments to transform the country.

Governor Wike, who declared that he did not have a prior knowledge of the ECA existence, lauded the Scheme and cautioned that it must not be taken to the other tiers of government as a strictly government programme but a programme that meant for the treatment, rehabilitation and payment of compensation to survivors of deceased workers whose death occurred in the course of work.”

He stated that the State government would study and buy into the ECS as established by the Employees Compensation Act (ECA).