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Social security and social equity in the current socialist-oriented market economy in Vietnam
23/11/2016 10:3' Send Print
Ensuring social security is one of the main contents in the Socio-economic Development Strategy of Vietnam. Image: vbsp.org.vn

1. In broad sense, social security - an important component of social equity - is the assurance of human rights to live in peace, the freedom of business, residence and movement, protection, equality before the law, education, employment, housing, guaranteed income to meet essential needs in case of accident, illness, and old age. And in a narrow sense, social security is the social protection of its members through a series of public measures to overcome difficulties caused by natural disasters, sickness, maternity, occupational accidents, unemployment, disability, old age, and assurance for medical care and support for families with young children, helpless elderly, orphans and homeless children.

In terms of historical origins, some social relief activities, seen as seeds of future social security, were initiated by religious organizations and charitable groups in both in Eastern and Western countries thousands of years ago. However, it is necessary to identify the thinkers and political and social activists who initiated the theory and solutions to build a number of social welfare policies first in the world.

So far, a majority of Western sociologists attributed the merit to Otto Von Bismarck as the first person in the world to issue laws on accident insurance, and old age insurance in Germany in the middle of the 80s of the 19th century; British economic reformer William Henry Beveridge was considered at the second person to suggest the Parliament to adopt some social security policies in his country in 1942. Nevertheless, 67 years before the proposal of William Henry Beveridge and almost a decade before Bismarck’s laws of social security, it was Karl Marx who raised viewpoints as a basis for building theoretical systems of social welfare policies under socialism. He considered socialism a more progressive social and equal regime which according to the law of historical evolution, would replace the then capitalist regime despite ups and downs and long trial.

Indeed, in his document Critique of the Gotha Programme wrote in 1875, after rejecting impractical notion of Lassalleans of the Social Democratic Workers’ Party of Germany that under socialism “the proceeds of labor belong undiminished with equal right to all members of society,” Marx made an overarching point on distribution and redistribution of the total social product to implement social equity and social security.

According to Marx, before distributing to the employees, from the total social product must now be deducted:

First, cover for replacement of the means of production used up.

Second, additional portion for expansion of production.

Third, reserve or insurance funds to provide against accidents, dislocations caused by natural calamities, etc.

These deductions from the “undiminished” proceeds of labor are an economic necessity, and their magnitude is to be determined according to available means and forces…

There remains the other part of the total product, intended to serve as means of consumption. Before this is divided among the individuals, there has to be deducted again, from it:

First, the general costs of administration not belonging to production.

Second, that which is intended for the common satisfaction of needs, such as schools, health services, etc.

Third, funds for those unable to work, etc., in short, for what is included under so-called official poor relief today. (1)

From the above argument of K.Marx, we can draw some perception related to issues that today's modern society categorizes as three functions of the system of social welfare policies in all countries around the world. They are risk prevention, risk mitigation and overcoming risk for citizens of each country.

First, “risk prevention” for the majority of people in society must be placed in the interactive relationship with the process of simple reproduction and expanded reproduction of each country’s national economy.

Second, “risk mitigation” for the relevant subjects should be considered and settled carefully in both social and natural aspects, not be disregarded either aspect.

Third, in addition to setting up funds for risk prevention and mitigation from the total social product, another fund must be established to “overcome risks” for those unable to work.

Due to historical conditions almost 150 years ago, Karl Marx could not predict fully the development of diversified and varied systems of social security policies as today in many countries - especially in those social democratic Scandinavian countries. In addition, as K. Marx and F. Engels opted to build the model of state socialism, they advocated the idea “to turn the full insurance for workers into the work of the state” (2) and did not foresee the necessity to mobilize revenues for social insurance funds from other sources.

2. In the first half of the 20th century, in the journey to find a way to save the country, and people, President Ho Chi Minh, the then Nguyen Ai Quoc evolved from patriotism to Marxism-Leninism. Since then, he creatively applied and developed perspectives of founders of scientific socialism to the specific circumstances of Vietnam to wage the national democracy revolution, overthrow the feudal-colonial yoke, wrest back national independence, and build people's democratic regime to gradually advance to socialism. The main aims were to achieve social progress and equity, to rid our people from extreme poverty, and provide jobs to people, so that people could lead happy life, everybody could have access to education, and healthcare when fell ill; old workers could retire; good habits and customs could be promoted, and bad practices should be gradually eliminated. President Ho Chi Minh did not only set out the right path and lofty goals of the Vietnamese revolution but also laid the foundation for exercising social policies in general and social security system particular in each specific stages of the revolutionary process in Vietnam.

After the victory of the August 1945 revolution, the Democratic Republic of Vietnam came into being, President Ho Chi Minh set out the tasks for the Provisional Government and the entire people to repel hunger by launching a campaign to intensify production, and raise fund to help families suffering for food shortage. Also on the occasion, President Ho Chi Minh also launched a major campaign throughout the country to eradicate illiteracy for 95% of the population, the result of “obscurantism” policy of the colonial regime, and gradually universalize education from low to high levels to constantly increase people’s knowledge, meeting the requirements of building the country in all aspects.

During the protracted and arduous resistance war against the French colonialists, President Ho Chi Minh urged provincial people's authorities to eradicate hunger and alleviate poverty, increase wealth, expand culture and education to: “make the poor have enough to eat, those having enough to eat become wealthy, the wealthy become more rich. Everyone literate. Everyone is united and patriotic.”(3)

The war against the French colonialists won victory, northern Vietnam was liberated completely and entered the period of transition to socialism. Creatively applying Marxism-Leninism to the specific conditions of the country, President Ho Chi Minh did not presented theories on socialism with characteristics and criteria of a ideal social model already built in the mind for “reality to follow” as K. Marx and F. Engels had warned. (4) Rather, he explained about socialism in a very practical, simple way which was easy to understand, to the people in the country: “Socialism is equity and fairness: work more, earn more; work less, earn less; no work, no gain. The elderly or disabled people will be taken care of by the State,” (5) “socialism first of all is to help people get rid of extreme poverty; people have jobs, get rich and live a happy life.”(6)

Given these notions of socialism and in his capacity as the Chairman of Drafting Committee of the 1959 Constitution amendment in the early stage of the transitional period to socialist of the Democratic Republic of Vietnam, President Ho Chi Minh directed to include in the Constitution important articles on rights to basic social security of citizens, such as “the right to work,” “the right to respire,” “the right to learning,” “the right to material assistance at old age, sickness or loss of working capacity.”

The constitutionalization and gradual implementation of the fundamental rights to social security for all citizens in the North of Vietnam under Ho Chi Minh ideology contributed to encourage the whole army and people to promote patriotism and revolutionary heroism in the cause of building and defending the North, liberating the South and reunifying the country.

3. Since initiating and implementing the comprehensive renovation, the Party has always attached great importance to creatively applying and developing Marxism-Leninism, and Ho Chi Minh Thought amid new developments of the nation and of the times. Efforts have been made to change theoretical thinking on the basis of reviewing the practice in the country, while expanding outward vision, and learning international best practices. Thereby, the Party has better identified lines, and viewpoints for solving a series of basic relationship in economy, politics, culture, society during the transitional period to socialism in Vietnam.

If the 6th Congress of the Party in 1986 only referred to social equity and the 7th Congress in 1991 referred to social progress, the 8th Congress in 1996 asserted that economic growth must be linked to social progress and equity right in each step policy and during development. At the 8th Congress, though many new points of view on solving social problems, including the content of social security is frequently mentioned, the term “social security” did not officially appear in the Congress documents.

The phrase “social security” was used in official documents of the 9th Congress in 2001 with the assertion “urgently expand the social insurance and social security system. Early develop and implement policy on unemployment insurance.” The term “social security” is understood as “a notion which aims to create a multi-layer security network for all members of the community in the event of reduced or lost income, unexpected increase of costs due to “social and natural risks, in which the issues of social insurance and social assistance are major policies for social security in Vietnam.” The 9th Congress documents marked a milestone in the Party’s perspective and line on social security. Since then, social security has always been an important content in almost all of the important documents of the Party. “Social security and social policy are one of the measures to solve social problems.”

The 10th Party Congress in 2006 mapped out strategic direction for the development of social security system in Vietnam. Along with lines on development of policies aimed at solving social problems, the Congress affirmed that social security should to be developed and linked to insurance policies.

The 11th Congress in 2011 clearly defined the orientation and strategy for developing the social security system in the new period. Besides, in the Strategy on Socio-economic Development in the period of 2011-2020, our Party emphasized the role of social security in economic development objectives and socio-economic orientations. In the part on main objectives on economic, culture, society and environment development, the Congress documents emphasized that “social welfare, social security and public healthcare are guaranteed.” In the part on orientations for socio-economic development, social security and employment services are prioritized to develop in parallel with other services: “Vigorously develop services in science and technology, education and training create, culture, information, sports, employment services and social security.”

Regarding the relationship between economic growth and cultural development, social progress and equity, the Communist Party of Vietnam has set out prominent leading guidelines and points of view as follow:

First, shift the centrally-planned, bureaucratic, state-subsidized economy into the socialist-oriented market economy in order to liberate the production forces, boost economic growth, improve people’s living conditions in all aspects.

Second, employment is a decisive factor to promote the human factor, stability and economic development, a healthy society, meeting the aspirations and legitimate demands of the people. Early develop and implement social insurance policies for the unemployed.

Third, encourage people to get rich legally, while realizing policies to support the poor to rise out of poverty and strive to become wealthy.

Fourth, consider education and training the primary national policy aimed at improving people's knowledge, personnel training, fostering talents, fundamental factors for social development, and rapid and sustainable economic growth.

Fifth, implement synchronously policy on healthcare and protection. Renovate hospital fee mechanism and policy. Adopt policy to provide healthcare assistance and insurance to the poor, moving towards universal health insurance.

Implementing the viewpoint to closely associate economic growth with cultural development, social progress and social equity within each step and each policy, the Political Report of the 11th Party Congress on January 2011 emphasized: “Continue to revise and improve the system of social insurance, health insurance, unemployment insurance, social assistance and relief with diversity and flexibility to protect and assist all members of the society, especially vulnerable and disadvantaged groups to overcome difficulties or risks in life. Ensure broader participation of employees in different forms of insurance. Promote social participation of social insurance services, transferring various types of social assistance and relief to community-based social protection services based. Ensure that people under social protection have a stable life, better integration into the community, access to essential economic resources and public services… Mobilize all social resources to together with the State care for the material and spiritual life of the people and families who have rendered great services to the country.”(7).

With functions stipulated by the Constitution, the National Assembly and the Government of Vietnam have institutionalized the Party’s lines and viewpoints into legal document, strategies, policies, plans, programs, and projects to put into life. Thus, along with economic growth, social progress and equity, encouraging achievements have been made in social security in recent decades:

- The number of people having jobs increased steadily year after year: in 10 years from 1991 to 2001, nearly 12 million people got jobs; in the following years, the number of employment increased, 6.5 million in in 2001-2005, 7.2 million in 2006-2010 and 7.8 million in 2011-2015.

- Prominent results were recorded in hunger elimination and poverty reduction: According to the poverty line developed by the World Bank in collaboration with Vietnam’s General Statistics Office, the overall poverty rate in Vietnam dropped from 58% in 1991 to about 4.5% in 2015. In recent years, the domestic economy met with difficulties due to the global financial crisis and economic downturn, the Government has timely rolled out the Programme on sustainable poverty reduction in more than 60 especially difficult districts with over 50% of poor households. By the end of 2015, the percentage of poor households in these districts decreased to 28%.

- Obvious changes were recorded in the implementation of social insurance policies: Since renovation, social insurance has been gradually extended to enterprises of non-state economic sector. Thus, the number people having compulsory social insurance rose from 4.8 million in 2001 to 12 million by 2015.

- Health insurance coverage increased rapidly: After the Government issued the Decrees on health insurance in 1992, 1998 and 2005, the health insurance coverage in the country has increasingly expanded. Besides the increase of compulsory health insurance, voluntary health insurance has also gradually spread to farmers, and students. In all, the number of health insurance holders went up from 11.34 million in 2001 to 69 million in 2015, or about 75% of the national population. (8)

- The implementation of social assistance has been gradually improved: People who are entitled to social assistance are those affected by disasters and those who fall into difficult situation due to old age, disability, and serious illnesses. Social assistance to them comes from the official channel of the State and informal channel of community. Therefore, assistance from the state budget increased from VND 113 billion for 180,000 people in 2001, and VND 4,500 billion for more than 1.6 million people in 2010. In addition, the country has around 580 nursery homes caring for 20,000 single old people, people with disabilities, orphans, and helpless children.

- Attention has been given to social incentives to people who have made great merit to the country: According to the review of the Ministry of Labor, Invalids and Social Affairs in the two years from 2014 to 2015, social incentives were provided to 1.98 million people.

Along with the process of renovation over the past 30 years, the system of diversified social security policy has been set great store by the Party and State and thus has brought about increasingly obvious effectiveness. However, in recent years, due to unstable macroeconomy and increasing inflation, poverty reduction rate has been slowed down with higher number of poor household relapse. Mechanism to reduce multidimensional and multipurpose poverty has not yet formed. The unemployment rate in urban areas has been lower, but still stands at 4%. In rural areas over the past ten years, as land of thousands of farmer households have been acquired for industrialization, and urbanization while the majority of them has not been supported to have new vocational training to earn their living, it is difficult for them to find jobs. The life of a part of the population, especially in ethnic minorities living in remote areas is more difficult.

There are constraints in implementation of other social security policies. Some policies have not been renovated to be on par with reality. There are no appropriate mechanisms to regulate benefits and control risks. Part of the people has not equally benefited from achievements of the renovation.

4. To bring into play the achievements while overcoming constraints and weaknesses, the Political Report of the Central Committee, 11th Tenure presented at the 12th Party Congress in January 2016 set out the following lines and policies:

“Develop sustainably culture and society; closely and harmoniously link economic development with cultural development and implement social progress and equity, and improve people's lives. Implement the Agenda 2030 of the UN, effectively mainstream the Sustainable Development Goals into the Socio-economic Development Plans of the country, each sector and locality.

Continuing to improve policy, improve the living standards of entitled people. Review and improve the law, and efficiency of state management of social security. Promote sustainable poverty reduction, particularly in especially difficult areas and develop specific policies to reduce poverty faster in ethnic minorities. Pay attention to solutions that facilitate and encourage the poor, and near poor households to strive to get out of poverty in a sustainable manner. Encourage people to enhance their ability to ensure social security. Well implement of public employment policy, unemployment insurance policy, and time-limited support to the unemployed in public sector. Support production, job creation, vocational training, send laborers to work abroad, and ensure sustainable development of the social insurance fund. Continue to improve policies, encourage community participation, and improve the effectiveness of social assistance. Apply the multi-dimensional poverty line, ensure a minimum level of income and basic social services to people such as education, healthcare, housing, clean water, and information.” (9) The Political Report of the Party at the 12th Congress mapped out major orientations: complete policy system, closely link the objectives of economic policy with the objectives of social policy; improve people’s incomes and quality of life; develop diversified, expanded and effective social security system.

To realize the orientation above, in the coming years, namely from now until 2020, following major viewpoints must be followed:

First, harmoniously combine economic growth with social progress and equity to ensure social security in each step and each policy. In view of this, each policy must help generate material resources and human resources to continuously expand and improve the system of social security. Conversely, each step taken to expand and complete the social security system must contribute to effectively preventing, minimizing and overcoming risks for people in difficulties, thereby reassuring the people, strengthening community cohesion, an important factor for humane social development to, on the one hand, ensure progress and equity, on the other hand push up rapid and sustainable economic growth for people’s prosperity, freedom, happiness.

Second, while continuing to improve the socialist-oriented market economy, the combination of socio-economic development with social security must not follow the outdated egalitarian and state-subsidized distribution mechanism. It is not possible to spend the majority of resources on social security beyond material and human capacity. Thus, in each step, each particular moment in the cause of national construction, it is important to create compatibility between economic growth and social security, so that neither of them can prevent the other but support each other.

Third, enhance economic and social development programs, in association with generating employment for laborers to ensure their stable minimum income, and right to security. Therefore, it is necessary to continue improving the system of labor law and employment, create safe conditions and environment for employees, strengthen inspection and supervision and strong sanctions to guarantee full implementation of social insurance in all types of enterprises, especially enterprises with foreign direct investment (FDI) and private enterprises.

Fourth, improve the efficiency of the National Target Program on sustainable hunger eradication and poverty reduction. Beside allocation from the state budget, continue to mobilize the business community and the entire society, reduce multi-dimensional poverty in the 2016-2020 period in districts with high poverty rate. Continue implementing the project to build houses for the poor and workers in industrial parks, people in areas which are frequently hit by flood, landslide and in riverine and coastal areas. Ensure clean water supply to rural and urban areas and people’s access to education, healthcare and basic information. Improve and accelerate the implementation of the National Target Program on building new rural areas. Strongly develop handicraft industry, services and craft villages associated with environmental protection, social security, and sustainable rural development. In short, provide basic social services for people, with special attention to the poor and near poor.

Fifth, in general, social security in combination with social equity requires a fast growing, effective and sustainable economy, a culture imbued with humanism, democracy and progress.

Only with that economy and that culture can Vietnam be able to mobilize sufficient physical and spiritual resources for realizing social security policies and social welfare for all people. There is no adequate social security with a weak economy. There is no fast growing, efficient and sustainable economy when people have low level of knowledge, or are physically weak, morally degrade, unemployed, poor or marginalized. As Karl Marx put it: “Right can never be higher than the economic structure of society and its cultural development conditioned thereby.”(10)

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Notes:

(1) Karl Marx and F. Engels: Complete Works, the National Political Publishing House, Ha Noi, 1995, Vol. 19, p.p. 31-32

(2) Karl Marx and F. Engels: Complete Works, Ibid, p. 22, p. 350

(3) Ho Chi Minh: Complete Works, the National Political Publishing House, Ha Noi, 1995, Vol.5, p. 65

(4) Karl Marx and F. Engels: Complete Works, Ibid, p. 3, p. 51

(5) Ho Chi Minh: Complete Works, Ibid, p. 9, p. 175

(6) Ho Chi Minh: Complete Works, Ibid, Vol.10, p. 17

(7) Document of the 11th National Congress, the National Political Publishing House. The Truth, Ha Noi, 2011, p.p. 228-229

(8) According to data from the Ministry of Labour, Invalids and Social Affairs

(9) Document of the 12th National Congress, Party Central Office, Ha Noi, 2016, p.p. 299-301

(10) Karl Marx and F. Engels: Complete Works, Ibid, p. 19, p. 36

This article was published in Communists Review No 886 (August 2016)

Prof. Pham Xuan Nam, PhDVietnam Academy of Social Sciences