The issue of the introduction of mandatory pension contributions by the employer in the amount of 5% is widely discussed in society. According to the current legislation, almost all employers, both private and public organizations, will be obliged to pay 5% of the wage bill in addition to the available payments.

According to various estimates, 5% is an additional burden on employers in the amount of 500 billion tenge to 900 billion tenge per year. For comparison, this figure is comparable to the 5-year budget of the State programme of the Business Roadmap-2025 (about 500 billion tenge).

But even without this 5 %, the burden on the payroll is growing. One should not forget about the gradual increase in contributions to mandatory social health insurance. If in 2019 the employer pays 1.5% to the Compulsory Medical Insurance Fund and the employee does not pay anything, the employers will pay 2% and employees – 1% from 2020, and a year or two later the employer's contribution will increase to 3% and the employee's contribution to 2%.

"The actual burden on employers and individual entrepreneurs in terms of payment for mandatory social health insurance from the moment of introduction (from July 1, 2017 to June 30, 2019) has already amounted to 186.2 billion tenge and will grow along with the increase in rates, according to forecasts, reaching 400-500 billion tenge per year," the deputy chairman of the Board of the Atameken NCE RK Alyona Romanova said.

Thus, the total tax burden on the payroll (which includes social contributions, income tax, pension contributions and health insurance, etc.) will exceed 40% of the salary.

At the same time, the state organizations will also have to pay this fee, the corresponding expenses should be budgeted, i.e. for taxpayers.

In 2014-2015, when this issue was discussed, the Atameken National Chamber of Entrepreneurs did not support the introduction of additional contributions, indicating the probable social risks and additional burden on employers. The National Chamber sent the relevant expert opinions and initiative letters to the Government. As a result, the law was postponed from 2018 to 2020.

Less than six months are left before the norm enters into force, and now it makes sense to critically consider the feasibility of this innovation, taking into account current realities.

As of June 1, 2019, the pension savings of depositors amounted to 9.9 trillion tenge, while pension payments amounted to only 1.3 trillion tenge. There is no critical gap between the accumulated funds and payments.

We understand that this measure is necessary to ensure pension payments, it is not only an accumulative, but also a distributing component, so this money is not inherited. However, there is the State Social Insurance Fund (the SSIF) with similar functions, and the employers pay social contributions to the SSIF. This means that there is a need for unity between these payments.

Before implementing the norm, it is necessary to build and show a clear system of pension and social security, transparent and understandable. Separately, the additional burden on employers will not solve any problems.

On the contrary, the introduction of this norm entails significant risks.

The first is, of course, the shadowing of both real wages and employment. There are facts of non-payment or irregular payment of pension contributions. The introduction of additional contributions will have the opposite effect.

Incentives should be put in place to involve those actors who do not pay at all or regularly.

Second, there is an additional burden on the cost of goods and services. Where should the employer get these funds? They will be included in the price of goods and services, provoking inflation. There will be the risks of the reduction of actual salaries and dismissal of employees, which is unacceptable at all.

A separate issue is the effectiveness of the management of these funds. The employers should understand where these funds are invested in, and what effect it will have.

In general, it is necessary to recognize the obvious thing; this innovation is not integrated into the current social and economic policy. Ensuring employment and job creation, transparency of government spending, strengthening small and medium-sized businesses and increasing their share in GDP to 35% have become our priorities. There is a course on reducing the shadow economy, increasing wages, involving the self-employed in entrepreneurship. In his speech at an enlarged meeting of the Government on July 15, the Head of State noted that "the domestic business should be supported in every possible way, and those who prevent its development by unreasonable checks, extortions, raids should be strictly punished”.

The state has taken unprecedented steps to support entrepreneurship. The business, in turn, is ready to bear countervailing obligations to ensure employment and payment of taxes. A lot of work has been done to create a favorable business climate in the country. The additional financial burden on business in these conditions will shake the achieved results.

"Therefore, the Atameken NCE RK considers it unacceptable to further increase the burden on business and takes a firm position on the revision of these norms. Also, the National Chamber is ready to provide a platform for comprehensive constructive discussion with the involvement of entrepreneurs, associations, independent experts," the Deputy Chairman of the Board of the Atameken NCE RK Alyona Romanova said.