The layoff of some 4,000 sugar workers is expected to see a “significant” decrease in the annual income of the National Insurance Scheme (NIS), for which the Guyana Sugar Corporation (GuySuCo) has been the largest single contributor.
According to GuySuCo’s 2015 annual report, which was laid in the National Assembly in December, the company, which at that time employed about 17,000 persons, had contributed $1.28 billion to the scheme. A similar contribution of $1.288 billion had been made in 2014.
With 4,000 workers or roughly 23.5% of the GuySuCo workforce having been made redundant, the exact financial impact on the scheme is unknown but Public Relations Officer Dianne Baxter has told Stabroek News that it is expected to be significant.
“GuySuCo is and has always been NIS’ largest contributor… so a significant decrease in its contribution will have a significant impact on the scheme’s annual income,” Baxter explained.
In December, GuySuCo’s Public Relations Officer Audreyanna Thomas confirmed that around 4,000 workers across the various estates would have been made redundant before the end of last year.
While discussions have for the most part surrounded the impact these layoffs would have on the dismissed workers, it is likely to spread to other areas of Guyanese society.
Only two months before the layoffs, in October, 2017, General Manager of the NIS Holly Greaves had said that steps have to be taken to secure the future of the Scheme in light of the varied challenges it faces.
Speaking at the 48th anniversary of the NIS at its Brickdam and Winter Place offices, Greaves had said that capturing the economically active population was “paramount,” given the current economic challenges, aging population, rising life expectancy and increased pension payments.
In recent years, the NIS has faced difficult financial circumstances, with expenses exceeding income on some occasions. At the time of Greaves’ speech, the scheme had accumulated a year-to-date deficit in excess of $95 million, having collected $13.6 billion and expended $13.7 billion.
Specifically, benefit expenditure, at the end of August, 2017, totaled $12.5 billion, with a projected end of year total of $19.2 billion. The pension branch, responsible for the payout of old age, invalidity, survivor’s benefits, accounted for approximately 90% of these payments.
With the pension branch of the Scheme rapidly expanding, Greaves said that as predicted in the last actuarial review, the Scheme’s growing benefit expenditure has been consistently surpassing contribution income.
She explained that the Scheme has experienced two deficits in the previous 10 years, in 2011 and 2016.
As of September last, the Scheme had already dipped thrice into the Fund for 2017 to pay benefits and Greaves stressed that it was imperative that it generate funds in keeping with the growth in benefits.
“The other income earner for the Scheme is through its investment portfolio. However, the Scheme continues to be faced with low interest rates and no interest from some of its non-performing investments,” Greaves further noted.