Saturday, 20/10/2018
Reforming social insurance policy to ensure the people’s security right, social progress and equity
27/7/2018 10:59' Send Print
Member of Politburo, Secretary of the Party Central Committee, Head of the Central Commission for Mass Mobilization Truong Thi Mai presents gifts to patients. Photo: VNA

Coming into being the late 19th century, initial social security policies were only on unemployment benefits, old-age, work accident, occupational disease, maternity benefits paid by the state budget for a limited number of the most needy people. In 1952, the International Labor Organization (ILO), at its plenary meeting, ratified Convention No.102 regulating the minimum standards of the social security system, including nine categories of health, sickness, unemployment, old-age, work accident and occupational disease, maternity, disability, death and family benefits. So far, social security policies have developed into a system, extending coverage in terms of scale and targets according to different conditions and circumstances of each country. Social insurance policy has become the most important pillar of the social security system in the world with increasing share of the community, encouraging people’s participation to ensure their own well-being to deal with risks in life in development process which may derive from sickness, illness, unemployment, work accidents, occupational diseases, old age and inability to work and earn income.

Over the past 20 years, since social security policies were developed and implemented, the Party lines and viewpoints on social security policy have been materialized in different documents, namely Directive No. 15-CT/TW, dated 26 May 1997 of the Politburo, 8th Tenure On strengthening leadership in implementing social insurance regimes, Conclusion No.23-KL/TW, dated 29 May 2012 of the Party Central Committee, 11th Tenure On some issues of salary, social insurance, preferential allowances for people with meritorious services and orientations for reform to 2020, Resolution No. 15-NQ/TW, dated 22 November 2012 of the Party Central Committee, 11th Tenure on Enhancing the Party leadership over social and health insurance in the period 2012-2020, and Resolution No. 21-NQ/TW of the Party Politburo, 11th Tenure. The Party lines and viewpoints have been institutionalized to important laws, including the 2006 Law on Social Insurance which was amended and supplemented in 2014, the 2008 Law on Health Insurance which was amended and supplemented in 2014; the 2013 Law on Employment and Unemployment Insurance Policy, the 2015 Law on Occupational Safety and Hygiene. Particularly, Article 34 of the 2013 Constitution states "Citizen have the right to social security," Article 59 states: "The State shall create equal opportunities for citizens to enjoy social welfare, develop a system of social security, and provide a policy assisting the elderly, the disabled, the poor and people with other difficult circumstances. (1) On that basis, since 1995 there have been positive changes in social insurance policy through different development stages from 1995 to 2006, from 2007 to 2015 and from 2016 to present in line with the process of amendment of concerned laws. In 2017, 13.9 million people participated in social insurance (2); more than 11.7 million participated in unemployment insurance. In particular, health insurance, the second social security pillar achieved its goals ahead of schedule, reaching 86.4% of the population in 2017. It is expected that more than 90% of the population will participate by 2020. These are important foundations for the development of social security policy in the context of limited national budget and people’s low average incomes in Vietnam.

A remarkable progress in the social insurance policy of Viet Nam is that the social security policy system is designed to be relatively comprehensive at a variety of levels of risk management, including groups of policy on risk prevention, mitigation and overcoming in line with Vietnam's conditions, and progressive world trends. The existing policy system includes pension and death, sickness, maternity; unemployment, labor accidents and occupational disease insurance. At the same time, the network has reached the grassroots level to facilitate access to policy by the people. Social insurance policies have gradually shifted from voluntary to obligatory participation and are in the process of moving towards inclusive social insurance that is organized by the State with the broad participation of people. This policy system is designed for different stakeholders and, more importantly, with sharing between the State, employers and laborers at different levels which importantly contributes to positive changes in people’s awareness, reduces reliance on the state, improves responsibility of employers and laborers and increases policy sustainability. The Social Insurance Fund has become the largest state-sponsored non-state budget financial fund with the participation of tens of millions of people to ensure their well-being at present and in the future when they reach old age.

In addition, equity in the social insurance policy system is materialized through the principle of contribution-benefit, equity, and sharing. The State does not involve scatteredly but only financially supports the disadvantaged, marginalized and vulnerable people, the poor in remote, isolated and especially difficult areas, people with meritorious services to the revolution and the armed forces so that they can participate as others. Without this support millions of poor people may fall into poverty and hunger when they suffer from illness or serious and long-term diseases. The Retirement and Death Insurance Fund in the accumulation model is a long-term fund shared between generations of laborers, while short-term insurance funds which pay out sickness, work accident, occupational disease, unemployment are shared among laborers in the same generation.

However, the social insurance policy in Vietnam is also facing difficulties and challenges, e.g. coverage is very limited, and has not yet achieved its goals and the quality of social security is low. Up to now, only 29% of the total number of employees at the insurance-participation age group have participated in social insurance. About 69.6% of the labor force have not. Unemployment insurance accounts for nearly 25% of the labor force. In the formal sector, coverage has not reached 100%, while the non-formal sector, though the Law on Social Insurance Law was issued in 2014, has not yet received support from the state budget and has not made positive progress in terms of the number of participants. At the same time, security quality is also a matter of concern; low pensions cannot change laborers’ awareness on being self-sufficient in their future lives as they get older. Thus, for those who are still working, pensions have not yet be independent from salaries, although the two systems are completely different in characteristics. In addition, there remain issues such as equality in the principle of contribution-benefits between the public and the private sectors; the minimum pension floor; the Pension Insurance Fund is gradually losing its accumulation ability and facing the risk of imbalance in the long run; the number of pensioners is increasing along with the aging population. All these challenges require breakthroughs, and reforms of social insurance policies to make them develop in a more sustainable way, ensuring real security for tens of millions of laborers at present and in the future, reducing the burden on the State in realization of the goal of ensuring social security for all people in the long run.

The Resolution of the 7th Plenum of the 12th Party Central Committee on Reform of Social Insurance Policy (3) further develops the guiding view of the Party towards the social insurance policy in the new situation, considering social insurance as the key pillar to develop a flexible, diversified, multifaceted, modern international integration social insurance policy system in the principle of contribution-benefits, equity, equality, sharing and sustainability. Social insurance policy reform is an urgent and long-term issue to ensure social security for all people. The Resolution also sets out the task of building a streamlined, professional, effective and modern system of implementation, stating that social insurance policy implementation is the responsibility of party committees and the political system, with the overall goal of reforming social insurance policy to turn social insurance into a key pillar of the social security system, gradually expanding social insurance coverage and achieving social insurance for all people. Develop a flexible, diversified, multi-layered, modern international integration social insurance policy system in the principle of contribution-benefits, equity, equality, sharing and sustainability. Strengthen the capacity, effectiveness and efficiency of state management and develop a streamlined, professional, modern, reliable and transparent system to implement social insurance policies.

With the roadmap to 2021, 2025 and 2030, it is expected that about 60% of the labor force will participate in social insurance, of which the non-formal sector will account for 5%; 45% of laborers will participate in unemployment insurance, 60% of the elderly people are entitled to pension, monthly social insurance, social pension allowance.

The reform of the social insurance policy in Vietnam focuses on the following core issues:

First, build a multi-layered social insurance system; at level 1 the State is responsible for developing policy on social pension assistance for the elderly in difficulties who do not have monthly pension, or social insurance; at level 2, the State, employers and laborers jointly participate in basic social insurance, including compulsory and voluntary social insurance, which is gradually shifting to compulsory social insurance towards social insurance for all people; at level 3, employers and laborers take part in voluntary supplementary pension insurance, enabling higher income laborers to participate.

Second, the duration of social insurance participation is more flexible; pension is calculated on the basis of contribution-benefits, equity, sharing and sustainability.

Third, link and provide support between social insurance policies, paying attention to market factors in the unemployment insurance policy; design several voluntary social insurance packages so that employees have opportunities to choose from and switch to compulsory insurance when conditions allow.

Fourth, develop and implement social insurance policies while strengthening trust and level of satisfaction of the participants.

Fifth, increase the number of laborers participating in social insurance in the non-formal sector in accordance with Resolution No. 10-NQ/TW dated 2017 of the Party Central Committee, 12th Tenure on Developing private economy. At the same time, remove irrationalities in the one-time pension and social insurance, increase the actual average retirement age of laborers; adjust retirement age according to roadmap; amend the premium levels and bases so as to achieve the goal of expanding the coverage of social insurance; adjust cumulative rate to reach the maximum pensionable level; diversify the list and investment structure of the Social Insurance Fund in the principle of safety, sustainability and efficiency; adjust pensions to make them relative independent of salaries of employees, in the principle of sharing to narrow the gap for those who have too low pensions.

In order to ensure the achievement of the goal and contents of the social insurance policy reform, it is necessary to focus on the following tasks and solutions:

First, promote communication and information to raise awareness on social insurance policies.

Second, complete the legal system on labor, employment and social insurance; improve the efficiency and effectiveness of state management; raise the managerial capacity and efficiency of the implementation of social insurance and unemployment insurance policies.

Third, strengthen the leadership of the Party, and the role of people, Vietnam Fatherland Front and social organizations in implementing social insurance policies.

These tasks and solutions not only inherit the experience of more than 20 years of implementation of social insurance policy in Vietnam but also selectively absorb the progress of social security policy in the world. The social insurance policy of Vietnam will be associated with the goal of perfecting the socialist-oriented market economy, economic development, changes in economic and labor structures, and increased number of laborers in the formal sector, the governance of the State and the Viet Nam Social Insurance Organization, people’s awareness and incomes. Positive results achieved in these elements will facilitate rapid coverage as well as the quality of social insurance policies.

The successful reform of social insurance policy requires high political will from the leadership and direction of party committees, party organization and the political system, direct responsibility of the concerned State management agencies and the Vietnam Social Insurance Association, and participation of employers and laborers. The reform of social insurance also requires a rapid reform of administrative procedures, enabling people to better access security policies and be aware of the true benefits of social insurance policies to their lives and families and thus voluntarily participate in the reform process. The percentage of people participating in the social insurance policy system will be a clear answer to the success of the reform of social insurance policy in Viet Nam.

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(1) Of the more than 11 million elderly people in the country (aged 60 and over), the number of pensioners, social insurance beneficiaries accounts for about 27%, the number of regular social assistance beneficiaries accounts for about 14.5% (1.6 million people). So excluding 1.4 million people who have made meritorious services to the country and their relatives who receive monthly allowances, 58.9% of the elderly have not received pension or social assistance, and have to work to earn incomes or live on the non-formal social security network (their children, families, clans ...)

(2) Compulsory social insurance includes 13.6 million people, voluntary insurance consists of 0.3 million people and work accident and occupational disease insurance 13.6 million people

(3) Resolution No. 28-NQ/TW dated 23 May 2018, of the 7th Plenum of the 12th Party Central Committee on Reform of Social Insurance Policies

This article was published in the Communist Review, No. 908 (June 2018)

Truong Thi Mai, Member of the Politburo, Secretary of the Party Central Committee, Head of the Central Commission for Mass Mobilization