Rwanda: Calls Grow to Set Up Scheme for Unemployment Benefits

Advocates for workers’ rights have called for an unemployment benefit scheme that will support people who lose jobs as a result of unexpected circumstances such as the Covid-19 pandemic and through mergers and acquisition of companies or public institutions.

Also called unemployment insurance scheme, the unemployment benefit scheme, is a type of insurance that pays money to individuals when they lose their job after meeting certain eligibility requirements.

Such requirements might include being unemployed through no fault of your own, and proof that you are actively seeking work as you collect benefits to sustain your family.

Their appeal comes as some involuntarily unemployed people do not have anything to fall back on. As a result, their living conditions are much negatively affected by joblessness.

Such is the case of a communication officer who lost his job at one of the major non-governmental organisations (NGOs) operating in Rwanda.

The case occurred around mid-2020 when the Covid-19 pandemic caused financial constraints to the NGO, resulting in laying off some employees as it attempted to carry on its work with a 1thin budget.

“Losing a job has a psychological and financial impact on you. Psychological one because it happens abruptly and you have nowhere to immediately look up to for comfort; and financial one because you did not plan for the loss of income,” he told The New Times, preferring anonymity.

For him, there are some essential expenses such as rent, basic food, and school fees and health insurance which should be cushioned against involuntarily unemployed person as they look for another employment opportunity.

“If that scheme is established and supports the affected person in a precise period, say the first six months, that can be a relief; even though it is a loan that the person can pay back when they get another job for sustainability purposes,” he said.

According to the Labour Congress and Workers’ Brotherhood in Rwanda (COTRAF-Rwanda), like other schemes such as pension managed by the Rwanda Social Security Board (RSSB), the unemployment benefit scheme can get funding from employee and employer contributions as well as the Government support through the national budget, and be under the management of RSSB.

Eric Nzabandora, president of COTRAF Rwanda, told The New Times that there are cases where a worker loses employment unintentionally and has poor living conditions, which should not be the case.

“The establishment of that scheme can be helpful because even in other developing countries [where a similar scheme is available], every person who loses a job is supported by such a fund in order to get at least the minimum amount of money to help them survive and do not live miserably as they look for another employment,” he observed.

Fixing the gap in the labour sector

Teddy Kaberuka, an economist, told The New Times that the social security benefits under RSSB should be expanded to cover cases of job loss, pointing out that this scheme can be of great relief.

According to him, when a person who has been contributing [to the scheme] suffers a temporary job loss, involuntarily, they can get some living allowances as they look for another employment, and when they get it, they will continue supporting the scheme until they reach the retirement age (currently 65 years) and be entitled to pension benefits.

“We are in times when employees are unstable at work. An employee has been working for five years, and the company is merged, or a bank, an insurance firm or other company is acquired [by another]. When such merging or acquisition takes place, there are employees who lose jobs. So, when such people are still looking for another job, they need to live.

Currently, for one to be entitled to pension benefits, they should have contributed to the pension scheme for at least 15 years upon retirement. This means that a person who has contributed to the scheme for the required period, but loses a job at 55, waits for the retirement age to get any benefits.

“How can you say that you will give [pension] benefits to a person when they go into retirement (at 65), yet you do not support them when they incur temporary job loss (say at 55)? That does not make sense,” he said.

MP Frank Habineza said that the sources of funding for the scheme should be well studied, but suggested that as Rwandans pay taxes such as value added tax (VAT), the Government should be taking some amount from it to finance the fund.

Theoneste Ntagengerwa, the Spokesperson of the Rwanda Private Sector Federation (PSF), said that “it [the lack of such a scheme] was not only a gap in the labour sector, but also in the country’s economy … because when a parent loses a job, their child is unable to study, and they lack other basic needs”.

Meanwhile, Ntagengerwa said that some businesses closed because of lack of financial means as a result of Covid-19 impact.

According to the According to the Labour Force Survey Annual Report 2021 published by the National Institute of Statistics of Rwanda in March 2022, the annual unemployment rate stood at 21.1 percent, indicating that roughly, for five persons in the labour force, there was one person unemployed.

That data represents an increase of 5.9 percentage points in unemployment in the country compared to the Labour Force Survey Annual Report 2019 which showed that the annual unemployment rate stood at 15.2 percent – indicating that there was one jobless person out of roughly seven persons in the labour force.

The New Times wanted to get a comment from the Minister of Public Service and Labour on the issue but it had not yet received it upon the publication of this article.

According to “Unemployment insurance schemes around the world: Evidence and policy options,” a publication of October 2019 by the International Labour Organization (ILO), there were 40 countries with unemployment benefit schemes, including Mauritius and South Africa on the African continent.

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