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the employers of insured employees;
the State or other public authorities.
In addition, where the mechanism of financing is such as to lead to the accumulation of reserve funds, income from the investment of these reserves would also accrue to the scheme.
The decision in a particular case as to the sources of revenue and the proportion of the revenue to be derived from each source is a complex problem, and does not depend on actuarial considerations, but on a series of considerations of a social, economic against financial participation by the various sources in the financing of social security schemes are summarised below.
a nd political nature. The main arguments often advanced for or
The principle of contributions from the insured persons is based on the conception that the remuneration of the workers has a part to play in the provision of cover for their risks, and that it offers the soundest basis for the right to benefits which distinguishes social insurance from assistance, justifies the right of the insured person to share in the management of social security institutions, and constitutes the most effective safeguard against extravagance and abuse.
On the other hand, it has often been held that the remuneration of labour is generally inadequate, being barely sufficient to meet the worker's immediate needs, and that the industrial system should provide workers and their dependants with the means of subsistence not only during their working lives, but also during periods when they suffer loss or reduction of income due to a contingency beyond their control. In other words, it is held that the depreciation of labour should be allowed for in the overhead expenses of production. This line of thinking leads to the view that insured employees should be exempted from contributing to the social security scheme which should rather be financed by their employers.
Other arguments in favour of employers' contribution to social security schemes are that social security helps to enhance the quality and increase the stability of the labour force which is beneficial to the employer, and that a contribution on the part of the employer would only be equitable on the grounds that working conditions have a certain deleterious effect on the health of workers. Cn the other hand, it may be argued that an employer's contribution is really a tax cn employment as such, and takes no account of the profit of undertakings, so that it may have the effect of curtailing employment.
The principle of contributions from public authorities is held to be justified by the inadequacy of the financial resources which can be obtained from insured persons and employers, by the responsibility of the State for the health and safety of its citizens and by the fact that the community as a whole derives certain advantages from social security.
However, where the scheme is exclusively financed by the State much of the advantages of employer and employee participation will disappear. The principle that the protected person is absolutely entitled to a prescribed benefit as a matter of right would no longer hold, and a means or income test night well be required. Again, the scheme would be subject to the hazards of the general fiscal position the government, whereas an autonomous scheme largely independent of government financing may be able to tide over periods of economic depression more smoothly.
cf
way
Where the social security scheme is limited to a small group, which in no is the least fav cured group which is the case, for example, in many developing countries where only employed persons, who represent a small portion of the economically-active population, are covered
a contribution from the public authorities may not be required.
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In the final analysis, it appears that there is some justification for the participation of all the three parties - insured persons, employers and the State in the financing of social security schemes. However, a further consideration is the nature of the benefits which are provided by the scheme.
So far as benefits of employment injury and family allowances are concerned, it is the almost invariable practice that employees do not contribute at all. The idea that the nature and conditions of the employment are directly responsible for work injuries has led to the practice whereby the obligation tc contribute
to
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