TITLE:
Factors Influencing Participation of Informal Sector Workers in Formal Social Security Schemes in Dodoma City, Tanzania
AUTHORS:
Zacharia S. Masanyiwa, Erick S. Mosha, Sarah F. Mamboya
KEYWORDS:
Social Security, Informal Sector, Participation, Social Security Schemes, Tanzania
JOURNAL NAME:
Open Journal of Social Sciences,
Vol.8 No.6,
June
15,
2020
ABSTRACT: Social
security is widely recognized as a basic human right. However, in most
developing countries, majority of the population, especially in the informal
sector is not covered by existing social security schemes. This paper examines
factors influencing informal sector workers’ participation in the formal social
security schemes in Dodoma City, Tanzania. The specific objectives of the paper
are to 1) identify the type of economic activities performed by informal sector
workers, and 2) analyze the determinants of informal sector workers participation
in formal social security schemes. The paper draws on survey data collected
from 184 informal sector workers’ through structured interviews and documentary
review, and analyzed for descriptive statistics, chi-square test and binary
logistic regression. The findings revealed that a relatively higher proportion
female (56%) than male (44%) were involved in the informal economic activities,
mainly food vending (32%), selling cereals (20%) and petty shops (18%). Only about
one quarter of the informal sector workers (23%) were members of the formal
social security schemes, and a substantial proportion was involved in the relatively informal schemes, such as village community
banks (67%), savings and credit cooperative societies (59%) and rotating saving
and credit associations (6%) as alternatives to formal social security schemes.
The factors that significantly influenced informal sector workers’
participation in the formal social security schemes were sex, contribution
rates, monthly income, capital and nature of the business. Given the low
participation of informal sector workers in the formal social security schemes,
it is recommended that deliberate efforts should be put in place to educate
informal sector workers on the importance of the social security schemes,
including the benefits offered by the schemes. Similarly, social security
schemes should set their monthly contribution rates at a level that is
affordable to informal sector workers given their relatively low incomes, and
design benefits packages that fit the need of the informal sector workers.