In Cambodia, rural women employed by the garment sector leave their families each day and head to work in the capital, Phnom Penh. Although the percentage of women who are employed is gradually increasing, many of these women are left vulnerable because they are not covered by labor legislation or social protection.
However, microinsurance programs such as GRETs Health Insurance Project (HIP), through which female rural workers may receive basic health insurance services such as paid sick-leave, are becoming available to assist this overlooked population. HIP is a pilot project and, if successful, will be implemented on a large scale in garment factories in all of Cambodia. GRET, a French company, is financed by Agence Française de Développement.
“Many low-income people are not entrepreneurs, but they may very well be interested in insurance coverage to reduce their vulnerability to various risks such as illness, death or disaster,” said Sarah Bel of the International Labour Organization (ILO) Microinsurance Innovation Facility. “These people are the clientele of microinsurance institutions.”
According to a report published by Swiss Re Sigma, the world’s second largest reinsurer, microinsurance has the potential to cover four billion people. In 2007, only 78.5 million people had been covered by microinsurance programs. This is due in part to the many difficulties of offering financial services to the poorest of the poor, such as clients being unable to read policy documents, doing business with people who don’t have bank accounts, and even overcoming general distrust of insurance companies.
“What makes them stand out is that they are trying to develop a blueprint for the whole country,” said Peter Wrede, project monitor from the ILO Micro insurance Innovation Facility for the HIP project, in an interview with MediaGlobal. “They have the potential to cover a whole population. That is certainly exciting.”
“The target group is garment workers who are very young, mostly female, from rural areas, coming to Phnom Penh for the first time in order to work,” Solène Favre, HIP project manager, told MediaGlobal. “Most of them are still single because they are young. These women are between 17 and 35 years old and their average monthly salary is $79.”
The overall aim of the project is to reduce the women‘s vulnerability to risk. Low-income people in developing countries are the most vulnerable to life crises. The premium is $1.6 each month, which is shared between individual employees and their employer when participation is voluntary. In the eight factories where this is being implemented, 30 percent of the workers have chosen to take part in the project.
In three factories, participation in the HIP is compulsory. “In these factories, the factory manager decided to pay for the whole premium,” Favre said. “It is very difficult to get these women involved when they have to pay 80 cents per month themselves.”
There have been difficulties implementing the project, notably the challenge of finding suitable health-care facilities for the workers at the given price. Favre said that they hoped to increase the quality of services provided by the public health-care facilities by giving them a steady income.
From the $1.60 collected per worker each month, $1.30 goes directly to the health facilities. In total, this is $6,672 per month that the HIP transfers to health facilities.
ILO told MediaGlobal that the HIP is now undergoing process refinements so that it can be transferred to the National Social Security Fund (NSSF) of Cambodia for inclusion as part of the government’s social security provision for the formal sector.