Karachi, October 5, 2024 – The Karachi Chamber of Commerce and Industry (KCCI) has strongly urged the Sindh government to reduce the Sindh Employees Social Security Institution’s (SESSI) social security contribution rate by at least 2%. The appeal comes amid escalating financial burdens on industries due to rising minimum wages and an increasingly high cost of doing business.
In a public statement, KCCI President Muhammad Jawed Bilwani emphasized the need for the Sindh government to reassess the current social security contribution rate, which presently stands at 6%. Bilwani noted that this rate has become unsustainable for industries that are already grappling with inflation and a crippling economic environment. “The continuous increase in social security contributions, compounded by annual minimum wage hikes, has placed an enormous strain on businesses. A 2% reduction in the contribution rate would alleviate some of this pressure,” he remarked.
Bilwani pointed out that while the business community has complied with the Sindh Minimum Wage Board’s decision to increase the minimum wage to Rs37,000 from July 1, 2024, this adjustment has inadvertently caused a sharp rise in SESSI contributions. The KCCI leader stressed that the Sindh government must recognize the difficulties industries face in absorbing these costs without passing them on to workers or cutting jobs.
He explained that, currently, industries contribute Rs2,220 per worker each month to SESSI. While this may seem a modest figure, the cumulative effect is substantial, particularly for larger industries. “For an industrialist employing 1,000 workers, the monthly contribution amounts to Rs2.22 million, and annually, it totals Rs26.64 million. In large-scale manufacturing sectors, which employ between 5,000 and 7,000 workers, these contributions become even more burdensome,” Bilwani highlighted.
Expressing concern over the precarious financial situation many businesses find themselves in, Bilwani warned that without immediate government intervention, industries may resort to drastic measures such as mass layoffs. “The government must understand the severity of the situation and take decisive action. A 2% reduction in social security contributions could save thousands of jobs, ensuring the continued livelihood of workers and their families,” he argued.
KCCI’s proposal, Bilwani added, is not just about easing the financial burden on businesses; it is also a pragmatic step towards preventing widespread unemployment. “Offering even minor relief would go a long way in sustaining industries, supporting the economy, and ultimately serving society at large,” he concluded.