Lanka needs better social security system - WB

by Elmo Leonard

Fortysix percent of households in Sri Lanka receive Samurdhi benefits, meant to contain chronic poverty, but many of these families do not qualify for this scheme, World Bank's, Senior Social Protection Economist, Milan Vodopivee told the media.

Many genuine households which qualify for the Samurdhi grant do not receive it. Families which grow out of poverty, continue to get the grant, while 10 percent of Sri Lanka's budget is diverted for social protection, WB senior economist ( Human Protection) Dr. Harsha Aturupane said. WB, last week released a report termed `Sri Lanka: strengthening social protection.' The report analyses critical issues faced by these programmes so that they could be further developed and strengthened.

In focus, is the greying of the population, and with it, the state of social protection, senior citizens who do not receive a pension, could expect. In Sri Lanka, there is an annual depreciation of the rupee against international currencies. Thus, an employee who contributed towards his provident fund when seven rupees was equivalent to a dollar, would find that on retirement, the rupee has depreciated to over 100 to a dollar. Thus, the provident fund received at retirement would provide security for a few years at most.

Thereafter, the retired citizen has to find employment, often in lower paid jobs, depend on others, or become a destitute. Vodopivee said that in such economies where the currencies constantly depreciate through the years, economists had suggested that the total sums received on retirement be put into a fund, and a monthly amount be paid to the retired person, keeping him secure for a longer span of time.

The system has also been suggested for Sri Lanka. Some economies where depreciation of their currencies over a long period of years could be foreseen, adopt long term strategies for their citizens; "Some make 60-year plans," Vodopivee said. Sri Lanka lacks any such plans.

Sri Lanka has one of the most rapidly ageing populations in South Asia. Over the next 25 years, the population over 60 years will double. this demographic trend will have an aggregate impact on the economy, potentially changing patterns of labour force participation and the composition of healthcare and imposing a strain on traditional and formal income support systems.