Following an almost two-year tripartite negotiation process between the labor unions, the private sector represented primarily by the Belize Chamber of Commerce and Industry (BCCI), and the Social Security Board (SSB), the long-anticipated amendment to the SSB contribution has been Gazetted, with the first phase of the changes taking effect as of July 1st 2019.

The change is effected via the “Social Security (Collection of Contributions) (Amendment) Regulations 2019”, which effects the changes to both the maximum insurable earnings (IE) and the “rate of contribution”. In terms of the former, the maximum insurable earnings increases from the almost two-decades long cap of $320 per week to a ceiling of $440.

This initial increase constitutes an almost 38% increase in the IE upper limit, a figure that is approximately four times the size of a similar IE change made in Guyana earlier this year. However, the conspicuous difference between both jurisdictions is that in Guyana the changes to the IE occur annually; therefore, affording their social security program the ability to execute much smaller increases over a longer period of time. The ceiling will be changed two more times: to $480 in January 2020 and later to $520 in January 2021.

The second aspect of the amendment involves the rate of contribution, which moves up from 8% of insurable earnings to 8.5% in the first instance. The subsequently scheduled changes for the years 2020 and 2021 will see an increase to 9% and 10%, respectively.

In terms of the impact of businesses, because the social-security contributions are shared between employees and employers, with the latter carrying a larger proportion of the cost, payroll costs have effectively been increased. Prior to the July 1st change, the employer of an employee making a weekly IE of $320 or more per week would have been paying $16.05, while the employee contributed $9.55 for a total payment of $25.60 per week. This would have been the case even if the employee was making an IE of $440. Currently, that employer would be paying $21.72, and the employee pays $15.68 for a total of $37.40.

In agreeing to the current amendments, the BCCI and other social partners demanded, inter alia, that the SSB commit to making both administrative changes and parametric reforms that could serve to improve the SSB Fund’s sustainability. Among the discussed reforms is the need for the implementation of a type of automatic adjustment mechanism that could avoid a repeat of history that saw a near two-decade delay in this type modification that other jurisdictions, such as Guyana, Canada, and the United States to name a few, make much more frequently.