Dar es Salaam - The National Insurance Corporation Ltd. (NIC), Tanzania's largest insurance firm, is headed for a labour dispute over the planned retrenchment of half its workforce.
On November 13, the state-owned firm issued a circular letter signed
by the managing director, Ms Margaret Ikongo, asking its staff to
accept a voluntary redundancy
offer. It wants to lay off 712 of
its 1,365 workers by December 31.
But while the firm says that the retrenchment was inevitable, it promises to pay the laid off workers within six months after December 31, prompting Tuico, the workers' union, to seek urgent intervention by the Ministry of Labour.
Efforts to contact Ms Ikongo for comment were fruitless as she was said to be attending a management meeting at Mikocheni Club House ahead of the workers' council meeting scheduled for last Friday.
NIC was a monopoly from 1967, when Tanzania nationalised private firms, until two years ago when it was privatised in the wake of the liberalisation of the economy.
Two weeks ago, Tuico wrote to the Dar es Salaam labour officer, Mr.
Ashery Kyando, asking him to suspend the retrenchment until
labour issues relating to the exercise are resolved.
Mr. Kyando said last week that he was exploring ways of suspending the retrenchment, saying it was illegal to retrench workers without a binding agreement.
I expect the NIC management and the workers to find an amicable
solution to the problem, he said.
The workers say that the redundancies should not be implemented until a salary raise approved by the company's board in 1997 is effected. The new scales range from Tsh148,000 ($185) to Tsh1,984,000 ($2,480) per month.
The workers also accuse the firm of ignoring a voluntary retirement agreement that was registered on October 19, 1998. The agreement stated that those retiring would be paid terminal benefits equal to four months' pay for every year worked.
The company is instead offering one month's salary for those who have served between one and five years, two months' salary for those who worked for between six and 10 years, and three months' salary for those who have worked for over 10 years.
The company is also offering to pay workers for any pending leave, in addition to one month's house allowance and fare for the retirees to their homes. But these payments are based on the current salary levels.
An official of Tuico, Mr. G. Sozigwa, expressed hope that the NIC
management and workers would agree on
something better. It's my
hope that they will come up with an answer on the fate of NIC
When asked whether the NIC retrenchment was part of the NIC divestiture programme, under the Parastatal Sector Reform Council, its spokesman, Mr. Joseph Mapunda, said that PSRC had nothing to do with what was taking place in the insurance firm.
Those are internal issues within NIC, perhaps aimed at putting it
in line with the volume of business and the current market, but we are
not involved, he said.
The NIC's performance has slumped after the entry of private insurance companies in the market.
Last year, NIC underwrote gross premiums worth Tsh19.4 billion ($24.3 million) in non-life business although it collected premiums worth only Tsh7.8 billion ($9.7 million).
According to NIC's board chairman Dr H. Semboja, the firm also incurred abnormal costs of Tsh2.4 billion ($3 million) and Tsh1.9 billion ($2.3 million) as claims by the Demco company and in the voluntary winding up of State Insurance Brokers Ltd.
That resulted in an underwriting loss of Tsh810 million ($1 million).
However, motor claims dropped from Tsh15.2 billion ($19 million) in 1997 to Tsh4 billion ($5 million) in 1998.
That was interpreted as evidence that most claims in the previous year were fraudulent.