1. Presentation: International symposium on Social Protection in Southern Africa: New Opportunities for Social Development, Johannesburg, South Africa, 24-25 May 2011 (organised by the Centre for Social Development in Africa (CSDA)) Professor Marius Olivier, Director: International Institute for Social Law and Policy

2.  Introduction  Socio-economic context  Social insurance: the current framework  Social assistance and the Social Protection Floor: the current framework  Reform challenges  Conclusions

3.  Despite prevailing socio-economic conditions, Lesotho has achieved remarkable results in relation to incrementally building a social assistance and social protection floor (SPF) edifice  Substantial progress along the road of – ◦ Developing SP initiatives aimed at providing minimum levels of protection to everyone – even before this has become an official UN initiative ◦ Introducing social assistance measures targeted at the indigent and vulnerable

4.  Some acceleration in recent years  Simultaneously Lesotho is contemplating the establishment of a contributory-based comprehensive national social security scheme ◦ Aimed at providing coverage for Lesotho workers and their families ◦ Prompted partly by insufficient protection available in certain critical social security areas

5.  A small, land-locked country, with a population of 2.2 million people  Characterised by poverty, deprivation and extreme vulnerability ◦ Life expectancy – from 56 (1997) to 35.2 (2004) ◦ Endemic poverty – 56% below the national poverty line ◦ HIV/AIDs prevalence – 23,2% ◦ Food insecurity – 25% malnourished; 352 000 affected by 2007/2008 drought  Child mortality: some improvement  Maternal mortality: worsening

6.  Children in particular affected ◦ 10% of new HIV cases – children under four years of age ◦ 2006: 220 000 orphaned and other vulnerable children  Worsening HDI trends: from 127 out of 173 countries (1998) to 149 out of 177 countries (2006)  Worsening HPI trends  Extreme vulnerability to shocks

7.  Despite improvements, gender inequality and disparities still remain, including genderised segmentation of labour market  Increasingly evident: Lesotho will not be able to meet most of the MDG goals  Economic activity is generally low and often marginal  Rapid rise in unemployment rate: from 22.7% (2008) to 29% (2009)  High informal sector activity

8.  Economic impact of world-wide crisis and of certain negative developments ◦ SACU revenues have dropped by nearly 56% in 2010/2011 over the 2009/2010 allocation ◦ Competition in textile manufacturing; Phasing out, in 2005, of the Multi-Fibre Agreement (MFA) ◦ Drastic decline in number of Lesotho mineworkers in South Africa: impact on remittances  Serious intervention required: Lesotho government responses, with international support

9.  Important role of cash transfers and harmonised approach to same ◦ E.g. the child grants programme: Orphaned and Vulnerable Children – with EU support  In some areas impressive results: E.g. the Free Primary Education (FPE) programme – 82% enrolment  Further policy development needed – e.g. in the areas of food insecurity and shelter

10.  Nature of social insurance in Lesotho: Some characteristics and deficiencies ◦ Formal sector and formal employment relationship focus ◦ Assumptions  Contributory-based system  Adequate benefits aimed at income maintenance ◦ Exceptions to contribution-based model –  Judges, parliamentarians and certain public servants  Implication: public purse liability

11.  Nature of social insurance in Lesotho: Some characteristics and deficiencies (cont) ◦ Further exception to the contribution-based model  In the absence of a comprehensive national social security scheme, the burden to provide certain social security benefits is placed on the employer – e.g.:  maternity benefits,  sickness benefits,  redundancy pay (in principle payable also in the event of retirement of a worker), and  workmen's compensation  Implication: Affordability of this regime?  Implication: Likely promotion of gender disadvantage and, in so doing, distortion of gender representation in the labour market – e.g maternity and severance benefits

12.  Private sector in Lesotho: ◦ 12 weeks' paid maternity leave generally – payment of maternity benefits = individual employer liability ◦ 2 weeks' paid maternity leave in the textile, clothing and leather manufacturing industry ◦ Restricted to two confinements per employee  Public service – two months‘ paid maternity leave  Thus: far below international and regional standards, apart from being inconsistent

13.  Employer liability, in the case of public servants, implies a fiscal liability  Current scope and level of protection ◦ Disadvantages working women, ◦ Is insufficient and inconsistent, ◦ Consideration should be given to make the payment of maternity benefits a public scheme, rather than an individual employer liability

14.  Lesotho  Private sector:12 days on full pay and 24 days on half pay  Public service: three months on full pay and three months on half pay  Individual employer liability – fiscal implications where the State as employer is involved

15.  Shortcomings ◦ Inadequate benefit period ◦ Absence of leave for purposes of family responsibilities  Relevant ILO instruments  Lesotho Labour Court judgment ◦ Impact of labour law-based exclusive employer liability  Discrimination against workers with poor health  Options to address same  Inclusion in public scheme contributory framework could reduce reliance on public purse  Stakeholder support for this

16.  Current provision (section 79 Labour Code) goes much further than ILO standard (Convention 158 of 1982) ◦ Employer and employee terminations included ◦ Retirement apparently also included ◦ Even where improved alternative benefit is payable, affected employee must be heard (Labour Appeal Court)

17.  Shortcomings ◦ Undue employer burden:  Employee resignations not to be covered  Retirement not to be covered, on condition that appropriate retirement benefits are available  Establishment of comprehensive national scheme would strengthen removal of retirement from severance benefits obligation  Stakeholder support for this

18.  Overall evaluation of current Lesotho WC system: underdeveloped and deeply fragmented; riddled with inconsistencies  Private sector (and non-pensionable public servants?): insured individual employer liability  Pensionable public servants appointed permanently ◦ Covered by the Public Officers' Defined Contribution Pension Fund Act, 2008 ◦ No separate WC scheme, but general disability benefit framework applies – permanent and total disability required (more restricted than WC framework)  Impact of Pensions Proclamation of 1964 ◦ Benefits payable on retirement ◦ Lack of detailed regulation

19.  Several shortcomings  Unduly fragmented, confusing, incoherent and inconsistent ◦ Different legal regimes – six legal instruments ◦ Public service/private sector disparity: Qualifying for benefits and available benefits ◦ Within public service: far-reaching distinctions re different categories of public servants ◦ Inchoate treatment of employee negligence – disentitlement (public service); entitlement (private sector) ◦ Institutionally: different Ministries

20.  Several shortcomings (cont)  Adequacy of benefits questionable – e.g. ◦ Lump sum payments a disadvantage ◦ Double capping – WCA of 1977  Long time delays  Compliance and dispute resolution problems  Narrow framework applicable to occupational diseases – list approach followed  Urgent need to streamline, co-ordinate and integrate provision ◦ Inclusion in public scheme framework recommended

21.  Several shortcomings (cont)  Links with OHS weakly developed (prevention)  Need to introduce proper rehabilitative and re-integrative framework ◦ Constitutional policy ◦ UN Disability Convention impact ◦ Development of a Return-to-Work framework

22.  Differential treatment: public service and private sector  Private sector: private and occupational schemes ◦ No general legal obligation to belong – bulk of Lesotho workforce excluded  Public service ◦ Pensions Proclamation: Non-contributory DB benefit – charge against public revenue ◦ New defined contribution (DC) scheme for all public officers/public servants (pensionable; permanent) ◦ Covering retirement, death/survivors‘, disability and withdrawal benefits

23.  Deficiencies and shortcomings  Private sector disadvantage: no general legal framework supporting compulsion to belong  Lack of preservation  Lack of intra-scheme and cross-border transfer  Different retirement age provisions (in public service context)  No accommodation of breaks in employment  Disadvantage of lump sum payments, where applicable

24.  Incorporation in a new public scheme framework? ◦ Advantages – e.g. economies of scale; no disparate treatment ◦ Transitional arrangements ◦ Accommodating fears of private pension industry

25.  Comprehensive public revenue/purse liability  Extensive employer burden  Gender and disability disadvantage, as well as nationality discrimination  Non-alignment with minimum international and regional standards  Inconsistent treatment ◦ Private sector and public service ◦ Within public service  Inadequacy of current provision of benefits/ protection

26.  Lack of overarching and consistent policy framework  Important contingencies not sufficiently covered ◦ Disability/Invalidity ◦ Medical care/insurance ◦ Unemployment ◦ Family responsibilities

27.  Institutional fragmentation  Inadequate, inchoate and insufficient legal regulation ◦ Important areas & issues not covered ◦ Inappropriate regimes ◦ Too extensive provision in some cases  Exclusion entrenched by non-compulsory arrangements in core areas of social security, with particular reference to the private sector  Inclusion in public scheme framework recommended

28.  Old Age Grant & African Pioneer Corps ◦ Extent of current regulation and take-up ◦ Shortcomings  Many vulnerable older people excluded due to 70 years threshold  Inconsistent treatment of those drawing a government pension vis-à-vis those drawing a private pension  Long-term affordability, especially if Grant were to be extended  Non-alignment with social insurance framework  Overall impact evaluation?

29.  Health ◦ Extent of current provision (in particular, free PHC; subsidised health services) ◦ Shortcomings:  Lack of systematic policy framework  Need to quantify coverage and to determine extent, and sufficiency, of coverage – only then can decisions on possible introduction of SHI be considered  Public health services support – need to extend this to private environment?

30.  Indigent support (“Paupers Fund”) ◦ Cash and non-cash forms of support (e.g. access to health services; food parcels; spectacles; clothes; coffin) ◦ Shortcomings:  Pure policy basis; no legal framework  Little integration with rest of social assistance/Social Protection Floor initiatives  Sufficiency?  Affordability?  Overall impact evaluation?

31.  Orphans and Vulnerable Children (OVCs) ◦ Cash grant support ◦ Non-cash benefits ◦ Increased roll-out ◦ Shortcomings:  Integration with other interventions?  Private school environments not supported  Long-term affordability?  Overall impact evaluation?

32.  People with Disabilities ◦ Ithuseng Vocational Rehabilitation ◦ Assistive devices ◦ Shortcomings:  Insufficient provisioning  Need for an overarching policy framework  Absence of legal framework  Alignment with international and regional standards, in particular the UN Disability Convention and relevant SADC instruments

33.  Education ◦ Free Primary Education (FPE) ◦ Secondary school support ◦ Tertiary (Manpower Loan Grants) support ◦ Shortcomings:  Not available in private school environment  Affordability?  Overall impact evaluation?

34.  Public housing ◦ No public housing for the indigent ◦ Special arrangements for refugees & asylum- seekers ◦ But: low-income housing (subsidy) support ◦ Shortcomings:  Finalised National Shelter Policy?  Exclusion of the most vulnerable from support?  Overall impact evaluation?

35.  Food insecurity ◦ Emergency interventions ◦ Food provisioning as part of some of the other programmes ◦ Shortcomings:  Overall policy framework?

36.  Impressive provisioning relative to Lesotho’s economic context and fiscal ability  Areas/issues and persons not covered  Sufficiency of provision?  Affordability? – currently, extensive international donor support  Need for further policy development  Need to integrate policy framework  Integration with social insurance arrangements?  Absent/insufficient legal basis in certain instances

37.  Extension of support to those using private facilities?  Institutional fragmentation  Alignment with international and regional standards framework  Impact evaluation absent

38.  Need to address institutional fragmentation  Need for consistent and systematic policy development, integration and roll-out  Inconsistent and deficient legal framework  Need for appropriate impact evaluation of, in particular social assistance/Social Protection Floor initiatives  Areas of discrimination need to be dealt with, in terms of the legal and policy framework & implementation ◦ Gender discrimination ◦ Nationality discrimination ◦ Disability discrimination

39.  Undue burden on public revenue/purse in certain instances  Comprehensive employer burden could be alleviated by re-channeling provision to a contributory public social insurance regime  Insufficient provision in core social security areas, e.g. ◦ Disability ◦ Family benefits ◦ Unemployment ◦ Retirement

40.  Need to align Lesotho’s legal and policy environment (& implementation/practice) with international and regional standards  Extending personal sphere of coverage  In relation to an envisaged public scheme, this raises issues re the inclusion of ◦ Public servants ◦ Employees belonging to a private/occupational scheme ◦ Domestic workers ◦ Employers with less than five employees ◦ Informal sector

41.  Addressing inadequacy of benefits  An incremental approach required, based on identified priorities  Required funding and financial framework  Little emphasis on prevention and on labour market integration

42.  The creation of a national social security scheme for Lesotho ◦ Some of the poorest countries, also in Africa and in SADC, have established such schemes ◦ This is possible even though contributions may be limited and initially a few benefits only are provided ◦ Previous studies confirm this is possible in Lesotho ◦ A draft policy was developed, followed by draft legislation – although in need of review ◦ Extensive political support and inclusion in Sixth National Development Plan ◦ Comprehensive ILO support, as appears from among others recent ILO studies and the DWCP programme