On the Road to Extending Protection coverage to informal sector:

Designing the Adaptable and Inclusive Social Security Framework for

vulnerable informal workers

By

Hmu Thadar Khin

Staff Officer, Social Security Board
 1. Introduction
As acknowledged in the ILO's Centenary Declaration for the Future of
Work, The extension of social protection to groups of workers who are still
lack of is one of the main objectives of a human-centered plan for the future
of the work. Policies for coverage extension should include newly
emerging types of informal employment, which is beyond the typical
forms of informal employment. It is necessary to close the coverage gaps
and adapting the realities of the world of work by considering the specific
situations and needs workers in new forms of employment to guarantee the
universal social protection for the future of work and right to social
security for all. Closing coverage gap will not only ensure equality and
better protection for informal workers but also enable the different forms
of employment by facilitating the labour market transitions and mobility
(Behrendt & Nguyen,2019)
According to the ILO, about 2 billion workers, which is 62% of the world
labour force, are in informal employment. The vulnerability of informal
workers has been revealed during the COVID -19 pandemic due to the
countries' containment measures such as lockdown measures. Many
informal workers need to earn their meager income to feed themselves and
their dependents.
Then, containment measures of government can affect not only the income
of informal workers but also to the livelihood of their dependents without
any social security coverage. Most Asian economies are characterized by
large informal employment. While the other countries have between 60-
70% of informal workers, Myanmar and Cambodia have over 80 % of
informal workers.
Myanmar has been hit by the COVID-19 since March 2020. 341 confirmed
cases and 6 death were reported as of 26 July 2020. The country is facing
the social and economic crisis resulting in the containment measure of
government. Lockdown measures and instruction on the temporary closure
of factories and establishments were disrupted not only the manufacturing
sector which employs over 700,000 workers and accounts for $4.6 billion
in export revenue but also the rural economy which contributes 37.8
percent of gross domestic product (GDP).
To handle the crisis, the government has implemented the various social
protection programs as follows;
Social Assistance Coverage;
✓ Provision of in-kind food transfers
✓ Emergency Rations to sections of at-risk populations
✓ Cash Transfers to vulnerable and affected households
✓ As social protection responsive measures, the government
established the emergency COVID Fund with the initial 100 billion
Myanmar Kyats (50 billion from Revolving Fund, and 50 billion
from Social Security Board Fund), equivalent to approx. EUR 64.5
million, will be managed by the Myanmar Economic Bank. The fund
is to provide support, in the form of low-interest loans, to the business
sectors that are most affected by Covid-19.
Social Insurance and Labour – Market Oriented Intervention
✓ Deferral in Payment of Social Security Contribution
✓ Exempting the defaulting fees
✓ Paid Sick Leave & Cash Benefit
✓ SSB Members who are Pregnant
✓ SSB Members who are staying at Quarantine
✓ Extension of Health Care Benefit Period from 6 months to 1 year
from the date of unemployed to the SSB Members
✓ Extension of issuing period for medical reimbursement and travel
allowance from six months to one year from the date of
unemployed to SSB Members
✓ Providing the 40 % of average wage as a Social Security Subsidy to
those who have been laid off from April 20 to 30 in accord with the
instruction of Government for temporarily shut down of factories and
establishment to control the spread of COVID -19
However, these programs do not reach all, and especially workers in
informal economies who make up over 80 % of the country’s workforce
are not protected by the specific social protection scheme put in a place.
This Technical Note will highlight challenges and barriers that keep
informal workers far from the social protection coverage; which include
design and implementation. It takes the "stand" that the Contributory
system - Social Insurance System, is the sustainable way to go, however,
it will examine how possible is this in the context of Myanmar. It will also
discuss possible courses of action and solutions, as well as suggest policy
options and recommendations to provide the accessible social security
benefit to the workers in the informal economy, especially the most
vulnerable groups who do not have a regular income.
2. Brief on Informal Labour in Myanmar
According to the Myanmar Annual Labour Force Survey 1 st semi Report
(2019), an employee working either in a formal or informal enterprise or
in a household is considered as informal workers if their employment
relationship is not subjected to existing national labour law or procedures,
income tax, social protection or entitlement to certain employment benefits
such as compensation for termination of employment, gratuity or earned
leave or sick leave. If the worker has access to at least one social security
scheme or employment benefit, they are in informal employment if he or
she is ;
- An own account worker or employer employed in own informal
sector enterprise or
- A contribution (or unpaid) family worker or
- An employee with no paid annual leave, no paid sick leave and
working in an enterprise that does not provide paid maternity
leave
In Myanmar, over 83% of workers were working the informal employment
such as wage earners or self-employed (including family business), and
seasonal labourers who are working in the Agriculture, Forestry, Fishery,
and Construction sector. The rate of informal employment is higher in rural
areas than in urban areas.
3. Overview of Social Protection Scheme in Myanmar
3.1 Current Social Protection Policy Framework in Myanmar
Myanmar Social Protection System is a mix of contributory and non-
contributory Systems. The non- contributory system is implementing by
the Ministry of Health and Sports and Ministry of Social Welfare, Relief
and Resettlement (MSWRR) with the cooperation of different stakeholders
ministries under the National Social Protection Strategic Plan. The
contributory system is conducting by the Social Security Board (SSB)
under the Ministry of Labour, Immigration and Population by
implementing the Social Security Insurance Scheme in accord with the
Social Security Law, 2012.
3.2 Coverage
Coverage of both systems is low, the non-contributory systems are
reaching less than 3.25 percent of the population compared with a mean of
44.2 percent in the East Asia Pacific region and only 0.1% of these
programs are focusing on the poorest and most vulnerable (World Bank
country data,2020). The contributory system only covers the civil servants,
salaried workers, daily-rate workers, piece-rate workers, apprentices, and
foreign migrant workers who are working in the mandatory
establishments in the formal sector and they are fully eligible for the
benefits from two active insurance systems. All the citizens and informal
workers can do voluntary insurance but they only eligible for Health and
Social Care Insurance System.

4. Socio-Economic Impact of COVID -19

Myanmar have seen the tremendous socio-economic impact along with

the containment measures of Government;

- 5609 firms in the formal sector were reported the temporary

closure and 156321 workers were laid off as of 17 July 2020.
- Supply and demand shocks in the manufacturing sector
- Disruptions in agriculture which are the backbone of the country
- The economic burden on the informal economy by affecting the
employment of various daily wages workers, self-employed,
SMEs holders, and the small landholders.
- Inequality and discrimination on informal workers has been
exposed
- High in unemployment rate in medium and long term
 - High possibility of increasing child labor due to the closure of
school
These impacts reveal not only the disruption in economic growth and GDP
growth but also the risk of labour market by putting the majority of the
workforce into a social and economic crisis.
4. Common Risks and relevant Social Protection Responses
Usually, informal workers face higher risk than formal workers do and
more likely to work in unhealthy environments. In addition, they are more
likely to lose their income and particularly vulnerable due to common risks
such as sickness, employment injury, disabilities, and old age.
Common Risks Responses
Sickness Free medical care, Medical Reimbursement, Paid
sick leave and Cash benefits
Maternity Maternity Expense Coverage, Free Medical Care,
Paternity benefit
Death due to any reasons Funeral Expense Coverage, Survivor’s Benefit
Employment Injury and Death Employment Injury Benefit
Natural Disasters Emergency Social Assistance; cash and food
transfer
Disability Caring Services
Disability (cause by employment injury) Temporary and Permanent Disability Benefit

Old Age Old Age Pension (only eligible for civil servants)

Table:1 Common Risks of Informal Workers and Relevant Social Protection Responses
6. Coverage Gaps
Besides, various social protection responsive measures of the government,
the coverage gap still exists in the informal sector since most of the
particular measures are intended only to formal workers who have
registered in Social Insurance System, and also social transfer does not
reach those who needy. The groups of population in rural areas and
informal sector who do not have regular income have limited access to
health care, other social security benefits, and social assistance programs.
They are protected insufficiently by the Social Protection Schemes.
Accordingly, the informal workers who do not have sufficient contribution
capacity without identifiable legal documents have been excluded due to
lack of resources, and cooperation between different government
ministries is challenging the implementation capacity at all levels.
7. Analysis of Social Protection Problem on vulnerable informal
workers
In Myanmar, the vulnerable informal workers; wage earner or self-
employed (including family business), day and seasonal labourers who are
working in the Agriculture, Forestry, Fishery, and Construction sectors
have been hit hardest by the pandemic and suffering the social insecurity
without having any social security coverage; paid sick leave,
unemployment benefit, and health coverage. Therefore, it is necessary to
extend the coverage for vulnerable informal workers since the exclusion
of the majority of the workforce may lead to the economic turmoil in long
term. They are often marginalized and generally excluded or have no
access to social security though they are the majority of the workforce. The
informal workers are relying on the social assistance programs targeting
vulnerable groups and these are not much help to cushion their basic needs.
Economists from the IMF identify that countries should aim to provide
basic social security benefit and need to develop coherent and sustainable
policy and program for informal workers to address long-standing
inequalities and economic turmoil in long term.
8 Barriers to extend the Social Security Coverage
The exclusion of workers in the informal economy from social protection
constitutes an enormous and daunting challenge for economic and social
development (ILO, 2019). Therefore, it is necessary to identify the barriers
that keep vulnerable informal workers far from the social protection
coverage and putting them in a disproportionate health burden without
income security.
8.1 Implementation barriers
1. Inadequacy of infrastructure and Human Resource
As a developing country with limited financial capacity, SSB is
unable to establish an adequate infrastructure such as IT
infrastructure and branch offices. Up to now, SSB is providing the
social security services with the 14 States/ Regions Offices, 78
township offices, 4 district offices, 3 SSB owned hospitals, 96
clinics, 58 departmental clinics, 12 private contracted clinics, 1
oriental clinic, and 2 Medical Mobile Unit to the 1.4 million of
insured workers with the coverage of 116 townships. However,
the number of offices, hospitals, and clinics are still low and it is
 necessary to develop more offices, hospitals, and clinics where the
informal workers can easily access. Moreover, the Inadequacy of
Human resources especially the medical staff is also burdening for
SSB to extend its coverage to the informal workers.
2. Labour mobility
The country has a high proportion of internal migration. Since
some of the informal workers particularly seasonal labourers and
daily wage earners in Agriculture, Fishery, Forestry, and
Construction sector is likely to change their jobs frequently. The
high rate of labour mobility leads to statistical stability. As a result,
SSB is finding difficulties in fixing the contribution rate, payment
method, and defining benefit for such types of workers without
the identifiable legal documents though such workers normally
meet the qualification criteria are willing to do voluntary
registration in Social Insurance System.
3. Lack of integration
Likewise, other countries, Myanmar also have a high
fragmentation within the social protection system and weak
coordination and integration among the relevant ministries and
policies. Furthermore, the lack of policy coherence, between the
institutions which are carrying out the social protection programs
often leads to coverage and adequacy gaps, duplication,
inefficiencies, and distorted incentive structures (ILO, 2019). For
instance, During the COVID -19 pandemic, MSWRR is providing
the non –contributory-based social assistance for the individuals
and households if their income is lower than minimum wage and
SSB is providing contributory based social assistance to the
insured workers. Nonetheless, the informal workers whose
income is a little bit higher than minimum wage not enough to
make their livelihood have been marginalizing by both assistance.
8.2 Barriers in Vulnerable informal workers
1. Income Instability and fluctuations
Due to the nature of informal employment, many informal workers
do not have income stability. For example, although the incomes of
agricultural workers often follow seasonal patterns, which makes it
difficult for them to pay contributions monthly, they may be able to
pay contributions after selling their crops or animals. Similarly,
fluctuations in the incomes of the self-employed, particularly own-
 account workers, daily wages workers, and street vendors may make
it difficult for them to pay regular contributions. (ILO, 2019).
2. Exclusion and Limitation on Legal Framework and Strict
Administrative Procedures
The legal framework has limited the participation of certain
categories of workers to some benefits in social security schemes.
The legislation links social security coverage to an identifiable
employment relationship between an employer and a dependent
worker. This may exclude informal workers who do not have an
identifiable employment relationship. In addition, legislation is
used to define the rules based on place of work, size, and type of
the enterprise, which can effectively exclude some categories of
informal. Moreover, the strict administrative procedures in
registration and benefit claiming processes are ruled out the
informal workers who do not have identifiable legal documents
for accessing the Social Security Benefit.
3. Lack of awareness and Information
A lack of information and awareness concerning social security is
one of the factors that is leading to weak incentives to register for
social security (Bertranou, 2007; ILO, 2013a). Sometimes, the
informal workers may voluntarily do registration in Social Security
but they may reluctant since they are not well informed about the
services and entitlements, which is providing by Social Security.
4. Low - Trust
Furthermore, a lack of trust in Social Security with the cause of
fragmented implementation, poor quality benefit, inadequate
facilities, and services. These may also contribute to a reluctance to
join a social security scheme (ILO 2013d).
9. Measures taken by the Social Security Board
To overcome the barriers in administration, SSB has been undertaking the
4 reforms at once with the technical and financial support of the ILO;
 No Reforms Donors Purpose
1 IT Reform ILO – Korea Project To establish the new information
management system and
digitalized the data on SSB
members
2 Medical Reform Luxembourg Project to improve the management and
administration of health
insurance and build the capacity
of national stakeholders in the
field of social health protection
3 Administrative Reform Vision Zero Fund Project to streamline and simplify SSB
procedures for enhancing the
accessibility
4 Legal Reform ILO Labour Laws Reform and to ease the legal limitations
Migration Project and upgrade the law in line
with the international standard
to support the client-centric
social security system
Table 2: 4 Reforms undertaking by Social Security Board Source: ILO, Myanmar

All the reforms are currently in progress and SSB could see its
comprehensive result on Administrative Reform recently. Since the
purpose of Administrative Reform is to streamline and simplify the SSB
procedures, SSB conducted the EII Pilot Project on Employment Injury
Benefit Insurance System for six months in two townships of different
regions where have a high intensity of insured workers. According to the
result of the Monitoring and Evaluation Framework, 77% of the length of
time for benefit claiming process was reduced. In addition, SSB is trying
to extend the Pilot Project in other townships and Standard Operating
Procedures (SOP) for Health and Social Care Insurance System has been
developing. Moreover, SSB is planning to extend its coverage to the
dependents of SSB members as well as formal workers and an actuarial
analysis is being led by ILO experts to assess the feasibility.
10. Discussion on proposed Solutions as Policy options
It cannot be deniable that SSB is undertaking the comprehensive reforms
that will enhance the efficiency and effectiveness of the Social Security
System. At the same time, SSB also needs to consider extending its
coverage to the informal workers who make up more than 83 % of the
country's workforce. Extending coverage can promote social and political
stability by ensuring and protecting the rights of the majority workforce.
However, full coverage might not be done in the short term with limited
financial capacity. Thus, SSB should initiate the following actions to
smoothly extend its coverage to the informal economy in the medium and
long term;
(1) Ensure the Financial Sustainability: Since, SSB is practicing the
contributory-based social protection system, the main source of
funds are contributions from the employer, employee and
government and other sources might be the various forms of
investment of funds itself and donor-supported funds for
sometimes. The fund is mainly used for the service provider and
other administrative costs for the clients. As an organization,
which is implementing the Social Protection Scheme, it should
have financial sustainability in the long term to develop the basic
needs infrastructure and human resources to improve its efficiency
in providing service. Extending coverage to informal workers
means additional expense both in the forms of benefit paid out and
administrative costs. Due to the nature of their work, most of the
informal workers might not pay their contribution in monthly basic
and SSB might have difficulties to maintain its financial
sustainability. In this sense, SSB should; lower benefits level for
them but it should be above the minimum social protection floor,
Cutting Cost by removing the duplication and unnecessary cost
among the organization and Cross- Subsidies use contributions
from formal workers to subsidies informal workers. This is
common practice in taxation around the world.
(2) Integrating with a non- contributory system: Many middle and
low-income countries have been demonstrated that combining the
contributory and non- contributory system is fundamental to
extend the coverage for vulnerable informal workers who do not
have low contribution capacity. It can also guarantee minimum
social protection. Some significant examples are the extension of
health protection in Thailand (universal health Coverage scheme),
Ghana’s national health insurance, which was subsidized for
vulnerable groups and Argentina (a combination of contributory
and non-contributory social protection programs for child and
maternity benefits). This integration not only can promote the
efficiency of the system but also can avoid the fragmentation and
overlapping procedures among the social protection institutions.
Therefore, Myanmar should also step out an effort to have
effective coordination and integration framework between the
 contributory and non-contributory systems by considering the high
mobility of informal workers.
(3) Discussing with different stakeholders: The needs of informal
workers may vary depending on their social status and risks of the
working environment. Therefore, it is necessary to design the
social security benefit to meets their basic needs. The specific
mechanism for contribution payment should be designed by
adapting the financial capacity and work nature of informal
workers. For instance; In Mozambique, the informal workers as
well as wage earners can choose their payment method based on
their wage-earning time; every 3 months or 6 months and benefit
level is also adjusted with their contribution. Including the
different stakeholders such as worker representatives from the
various categories of informal workers, employers, government
ministries, local and international that are dealing with informal
workers in decision - making process can make a more inclusive
mechanism.
(4) Extending Legal Coverage and simplifying the administrative
procedures: Legal Framework should be cover the workers who
are working in the informal economy by categorizing their types
of work and ensuring that the legal framework is not burdensome
for them. This is the approach used in India’s Unorganized Sector
Social Security Act of 2008, which defined different categories of
workers in the unorganized sector, including wageworkers, home-
based workers, and self-employed workers. Simplifying the
administrative procedures that are burdening for informal workers
should take as an additional measure.
(5) Raising awareness, sharing information, and enhancing trust:
Awareness-raising is important to inform both workers and
enterprises about social protection and the benefits of
formalization. This may include educational and awareness
campaigns to enhance knowledge and understanding of the
operations of social security schemes. In addition, it is important
to ensure that workers and the population at large have access to
adequate communication channels and receive information on the
level of benefits available. Information should be provided through
different channels.
 Implementation Barriers Barriers in vulnerable informal workers
Policy 1 2 3 1 2 3 4
Options/
Solutions
1 X X
2 X X
3 X
4 X
5 X X
Table:3 Barriers and Solutions to extend Social Security Coverage to the informal sector
11. Conclusion
Social protection promotes healthier, more productive, and empowered
lives for informal workers. By helping people in need, social protection
avoids the disruption, loss of productivity, and social unrest that would
otherwise occur. That benefits society as a whole. The cost to society of
not providing social protection is greater than the cost of providing such
services. (ILO 2019).
Many scholars have been proved that why contributory based systems is a
sustainable way to go for the informal sector by emphasizing the fact that
a Contributory based Social Insurance system can provide an adequate
level of protection to workers in different employment based on the
principles of risk-sharing and solidarity. It is well equipped to support
labour mobility, ensure the portability of entitlements where the Social
Protection System is integrated, and well –coordinate.
Therefore, many countries are trying to extend the social security coverage
to informal workers not only to mitigate the social hardships but also to
protect the rights of “missing –middle: vulnerable informal workers who
have been excluded from the Social Protection Scheme.
12. Policy Recommendation
No one can deny that extending the Social Security Coverage is the best
option to promote and protect the rights of vulnerable informal workers.
Nevertheless, it will become a big challenge in the case of developing
countries like Myanmar. Thus, besides the policy options presented above,
the following recommendation should be considered as additional
measures which need to be taken by the Social Security Board as a focal
organization which is conducting the contributory based Social Protection
System;
1. Identify what already exists: Extending coverage does not mean
expanding all the systems, which are implementing or extending
a new system. It can be initiate by providing such benefits, which
is quite suitable for the basic needs of informal workers by
committing the social security minimum standards prescribed in
 the Social Security (Minimum Standards) Convention, 1952 (No.
102).
2. Conducting Pilot Project: Likewise, the EII Pilot Project, SSB
should conduct the Pilot Project in the areas where have a high
intensity of informal workers with the funding support by the
donor. (Insurance Systems should be decided after discussing with
different stakeholders mentioned above)
3. Take the advantage of reforms: Since SSB has taken the right
way; 4 reforms and these all are in progress. Therefore, SSB can
consider all the necessary measures and legal frameworks for
informal workers and integrate them in the reform process. In this
way, SSB can start extending the whole coverage after the reforms
without time lapping.
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