Let’s think about the typical domestic worker that comes into Abuja, Lagos or any of our big cities from the villages or from other states in the hinterland searching for better opportunities.
They come to our homes and we take them in and at best pay them the prescribed minimum wage for the work that they do.
Most of them even though married with children and families, live away from their families, just so that they can stay close enough to us or actually live with us and serve our very important domestic needs.
Each month, they remit most of the paltry salaries they are paid to their families back home to cover the school fees of their children and sustain the livelihoods of their other dependents. They do this for many years – in fact all of their active years, never thinking about the fact that someday they will stop working, because they will be too old or incapacitated to work, or that they may be struck down by death at any time.
They complain that their income is too low, and any suggestions about saving or investing towards retirement will fall on deaf ears. Their lower levels of education and exposure make it difficult for them to grasp the issues, and even when they think about it, they console themselves that their children whom they are ‘training” will provide for them in their old age.
They fail to understand that in reality, it is more likely that their children will be too pre-occupied with their own challenges, families and worries of the life and most likely will not be able to provide for them both financially and emotionally in their old age. For most the concept of ‘retirement” is strange – they just never think about it.
The population of such people is a significant part of the workforce in Nigeria – in fact, most families in Nigeria’s growing upper middle class have upwards of four or five domestic workers supporting their families. The truth – #TheyToo Need a Pension!
With the cyclical economic downturns that have become part of our economic history lately, more Nigerians are finding work in the informal sector, as the formal sector continues to right-size and down-size in a bid to cope with these structural economic challenges.
Interestingly, most of Nigeria’s workforce is in what we describe as the informal economy – consisting of at the very highest level individual professionals across all professions who work independently or run very small sole proprietorships (accountants, lawyers, architects, media practitioners, bloggers and entertainers, etc.), all the way further down the spectrum to artisans, farmers, herdsmen, itinerant workers, traders, and the very interesting segment of domestic staff – drivers, cleaners, nannies and security men, etc.
The informal sector is the most vulnerable economic group because their work, business and vocation do not attract the stable and sustainable income that is available in the formal sector; for some, their education, exposure and reach exclude them from access to the typical financial services that people in the formal sector enjoy; and their economic circumstances are significantly worse off, creating a bigger social security burden if they have no means of a livelihood in their old age.
Clearly, providing pensions and a means of livelihood for the ever-increasing population of Nigerians in the informal sector is a matter of grave concern for policy makers and the Government, hence the recent moves by the National Pension Commission (PenCom) to introduce the Informal Sector Pension Scheme or what is also described as the Micro-Pensions Scheme to cater for the livelihood of these categories of persons when they stop work, retire and need a source of income to support them in their old age.
It’s a project that makes absolute sense, but one of its clear challenges as seen from other countries who have embarked on it, is actually getting people to see its benefits and participate actively and sustainably in it.
Already, we are struggling with the level of compliance by the formal sector, because of low levels of awareness and buy-in and some of the psychological blocks that need to be addressed in ensuring the levels of financial inclusion that we seek.
At the heart of every social campaign like informal pensions is selling the “Why” to the ultimate beneficiaries, participants and stakeholders. In this case it is simple – #TheyToo Need a Pension, and all of us who already have a steady source of income, better opportunities and a plan for our retirement must do something to ensure that the more vulnerable informal sector workers have a financial future that is safe, lest we will all pay the price of the social security crises that their “insecurity” will bring.
With the uncertainty of income and in most cases, the very low levels of income that informal sector workers have, it may seem a tall order to expect them to be able to save today to cater for their retirement in future. Yet, failing to do so is not an alternative worth considering at all!
Barrow is a Strategy and Innovation Consultant and author of “Pension Fund Administration in Nigeria” @gbitsebarrow.