What are the Employer Burdens in Tanzania?

Employers in Tanzania are subject to various statutory contributions designed to support workforce development, employee welfare, and social security. These contributions are collectively known as the "employer burden" and are essential for fostering a skilled and secure workforce. Below, we explore the three main components of the employer burden in Tanzania: the Skills and Development Levy (SDL), the Workers Compensation Fund (WCF), and the National Social Security Fund (NSSF).

1. Skills and Development Levy (SDL)

Contribution Rate: 3.5% of gross pay
Purpose: The Skills and Development Levy is a mandatory contribution paid by employers to support training programs that enhance the skills of the Tanzanian workforce. The levy is designed to address skill gaps in the labor market, ensuring that workers are adequately trained to meet the evolving demands of various industries.

The SDL is crucial for Tanzania’s economic development as it helps create a more skilled and competitive workforce. By investing in employee training and development, the levy aims to improve productivity and innovation within businesses, ultimately contributing to the broader economic growth of the country.

2. Workers Compensation Fund (WCF)

Contribution Rate: 0.5% of gross pay
Purpose: The Workers Compensation Fund provides financial compensation to employees who suffer injuries or death due to work-related accidents or occupational diseases. The fund is designed to ensure that employees or their families receive adequate financial support in such unfortunate circumstances.

Employers are required to contribute to the WCF to ensure that employees are protected in case of workplace injuries or illnesses. This fund not only provides a safety net for workers but also promotes workplace safety by incentivizing employers to maintain high safety standards to reduce the risk of accidents.

3. National Social Security Fund (NSSF)

Contribution Rate: 10% of gross pay
Purpose: The National Social Security Fund (NSSF) is a comprehensive social security system that offers various benefits to employees, including retirement pensions, medical care, maternity benefits, and more. The NSSF is designed to provide financial security to employees both during their working life and after retirement.

Employers contribute to the NSSF on behalf of their employees, ensuring that they are covered by a social safety net. This system helps employees prepare for retirement and provides them with financial support during periods of unemployment, illness, or maternity leave, thus enhancing their overall well-being.