Tiếng Việt
中文 (中国)
When there have been a large number of negative public opinions from the people and businesses, employers and employees in Vietnam about the contents of the Draft Law on Vietnam Social Insurance, we also should take another look at the case from a different angle to explain why the State Management Agency, the Draft Drafting Board made such proposals.
From the perspective of state management, the Vietnamese State Administration for Social Insurance Policy has provided many explanations over the years in the media, official announcements and resolutions on the reason why it is necessary to tighten social insurance policies.
The basic purpose provided is not to make people reduce the benefits they deserve, but actually to increase the benefits of people in the long term, to ensure a standard pension so that they do not have to experience financial difficulties when not of working age.
However, as Vietnam is gradually entering the age of population aging, people and employees will live older due to improved living conditions, more effective medicine, cleaner, safer food, purified air and climate, better shelter from rain and wind infrastructure, etc.
All factors associated with the advancement of science and technology have led to a longer life expectancy of Vietnamese people. Not only Vietnam but most countries in the world have experienced a sharp increase in life expectancy in recent decades.
Because of the aging population, the Government is forced to change the current policy on social insurance to ensure enough funds to cover arising fees such as monthly pension, health insurance, etc.
In particular, when people have a long-term disease that needs medical treatment, the amount is often very high, even having to requisition an entire hospital bed and continuously use ventilators and expensive medical equipment for a long time. If the people have health insurance, that cost will depend on the health insurance fund to cover.
This is also one of the main reasons (health insurance) that employees and people participate in the social insurance and health insurance fund.
As the population ages, insurance policy requirements also need to change. One of the most obvious moves of the change in the social insurance regime is the sharp increase in the retirement age for male and female employees until they reach the age of 62 in 2028 for employees and reach 60 in 2035 for female employees (Every year from now, the retirement age increases by 3 months for male employees and 4 months for female employees)
This is due to the fact that Vietnam and every other countries in the world cannot afford the large number of employees reaching retirement age in an aging population.
According to statistics of the Ministry of Labor, by the end of January 2023, the whole country has more than 17.2 million people participating in social insurance, of which about 15.8 million people are in the compulsory sector and 1.4 million are paying voluntary social insurance and approximate statistics show that Vietnam currently has about 5 million elderly people who are retired and enjoy monthly pensions, social insurance benefits, and social benefits.
Thereby, the ratio of employees who pay social insurance contributions to those who retire and receive social benefits is about 3.44:1. On an international scale, this ratio is not too low, but it is not outstanding, only moderate (the US currently has a ratio of about 3:1).
However, with increasing population aging, this rate will become lower and lower and will reach an unbalanced level, young employees of working age are too low to support the social system where there are too many people of retirement age.
From another perspective, another factor affecting the social imbalance in this field is that more and more employees who are paying social insurance contributions decide to withdraw once from the fund. Accordingly, they not only stopped paying more money to the fund but even withdrew money from the fund, thereby causing the social insurance fund to face more and more problems with its ability to pay benefits such as pensions and health insurance, funeral allowance, etc. even though it is their legitimate right.
To minimize people withdrawing money from the fund, the Draft Law on Social Insurance of Vietnam has proposed to only allow employees to withdraw up to 50% of the time they participate in the social insurance regime.
However, most employees are not too interested in the macro story or the management agency’s perspective. They can’t pay attention to the rights and living standards of the old men and women who are not related to them because they themselves are still struggling with life, to the point of sacrificing pension benefits, health insurance, funeral allowances, maternity benefits, sickness benefits, etc. to withdraw lump sum social insurance.
Solution
Basically, each side has their reasons. However, contrary to the regulation to increase the retirement age, the proposal to split the benefits of employees in working age has encountered many objections and thereby, is unlikely to be approved.
To solve the problem of the social insurance fund in danger, it is best that the Vietnam Social Security (VSS) offer practical solutions rather than suppressing the interests of employees because this will certainly not be successful. If forced, it is likely that all employees will withdraw from the social insurance fund through legal or illegal means.
One of the methods the fund should focus on is to have a more transparent mechanism in fund management, public disclosure of transparent information about the fund as well as difficulties encountered, restrictions on risky investments, difficult to determine the outcome. In particular, while not gaining support and confidence of the people, the insurance withdrawal mechanism should be set up in a more ‘generous’ direction, rather than reducing or suppressing benefits to preserve funds. For example, allowing the employees to withdraw in more emergency cases such as when they need money for medical treatment, debt repayment, investment in education, buying a house for real living purposes, not for business,…
In terms of practical methods, it is possible to consider introducing stricter management measures to limit the situation of enterprises evading and delaying payment of social insurance when this situation is happening a lot in large manufacturing enterprises, causing damage to the fund and not ensuring the rights of employees (Employees who are owed social insurance contributions by the enterprise’s fault according to current regulations will not be eligible for unemployment benefits).
According to statistics of VSS, by the end of January 2023, enterprises late in paying social insurance contributions were VND 25,940 billion, an increase of nearly VND 3,900 billion over the same period according to Vietnam Social Insurance. Late payment interest to be calculated is at nearly VND 14,100 billion.
As of February 2023, more than 206,000 employees had their benefits “suspended” because businesses owed and evaded social insurance contributions. They are employees in nearly 30,000 businesses that have disappeared, gone bankrupt, dissolved, foreign owners have fled, have arrears for many years with a social insurance debt of about 3,500 billion VND (until September 2022) and almost cannot be recovered.
To solve this problem, one solution that the Vietnam Social Insurance Security can consider is to increase the number of employees of the Social Insurance Department with inspection functions and duties to ensure that enterprises pay the correct and sufficient numbers prescribed social insurance contributions.
Currently, the whole VSS has about 1500 officers on duty of inspection, on average each officer is in charge of 100,000 employees. With such a number of employees in need of supervision and their respective businesses, it’s impossible to keep up. The International Labor Organization (ILO) once recommended that this ratio should be between 1,000 and 2,000 employees per officer.
One of the other issues that can be solved but not yet resolved in this Draft Law on Social Insurance is the confusion, misconception and complexity of administrative procedures. Currently, in order to withdraw lump sum social insurance, individuals and organizations need to go through a lot of procedures, which is clearly reflected in the long lines of people waiting to get lump sum social insurance at local social insurance agencies.
It should be noted that social insurance is first and foremost the rights of employees. Instead of focusing on arguing about whether to keep or withdraw, reduce or other measures applied to limit and preserve the fund, it is recommended to amend and propose options so that employees feel that they have the right to decide with the amount they contribute to the fund, making them feel secure to continue participating in the social insurance system.
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