Saturday, 30/5/2020
Expanding coverage of social insurance policies for the informal economic sector
19/2/2020 9:20' Send Print
Expanding the State's support policies for people participating in social insurance and health insurance, especially voluntary social insurance for farmers and workers in the informal sector. Source: baogialai.com.vn

Orientation of the Party and the State

The 2013 Constitution (Article 34), Law on Social Insurance 2014 has gradually expanded the subject of social insurance to the informal sector (voluntary social insurance). In particular, Resolution No. 15/NQ-TW, June 1, 2012, the Fifth Conference of the 11th Central Committee, on Several social policy issues during the 2012-2020 period and Resolution No. 21/NQ-TW, dated November 22, 2012, of the Politburo, on Enhancing the Party's leadership on social insurance and health insurance policies in the 2012-2020 period, confirming the view: "Expanding and perfecting the social insurance and health insurance regulations and policies needs steps and roadmaps suitable to the country's socio-economic development. Developing social insurance and health insurance system must be synchronized with the development of social services, to better meet the needs of the people; create favorable conditions for everyone to participate and benefit from social insurance and health insurance systems”. The resolutions also set specific goals: Effectively implementing policies and regulations on social insurance and health insurance; quickly increasing the coverage of subjects participating in social insurance, especially voluntary social insurance; implementing the goal of universal health coverage. By 2020, striving for about 50% of the labor force participating in social insurance, 35% of the labor force participating in unemployment insurance; more than 80% of the population participating in health insurance and pointing out the orientation to amend the policy: Expanding the State's support policies for people participating in social insurance, health insurance, especially voluntary social insurance for farmers and workers in the informal sector; Health insurance for policy beneficiaries, people from near-poor households, farmers, pupils, students and people in extremely difficult areas and mountainous areas.

Most recently, Resolution No. 28 / NQ-TW, May 23, 2018, of the Seventh Conference of the 12thCentral Executive Committee, on Social Insurance Policy Reform, advocated building a Multi-level social insurance system - considered as one of the most important reforms, whereby the basic social insurance covers compulsory social insurance and voluntary social insurance. Voluntary social insurance with pension and survivorship benefits is now gradually expanded to other systems based on contributions from workers without labor relations; with appropriate support from the state budget for farmers, the poor, low-income people, informal sector workers to expand social insurance coverage; raise awareness and responsibility of employees for ensuring self-security for themselves.

Expanding social insurance coverage according to the roadmap to adjust the appropriate retirement age for each period. The Resolution also defines specific goals: In the period to 2021: Strive to reach about 35% of the labor force in the age group participating in social insurance, in which farmers and informal sector workers participate voluntary social insurance, accounting for about 1% of the labor force in the age group; about 28% of the labor force in working age are unemployed; about 45% of people after retirement age are entitled to monthly pensions, social insurance, and social pension. From now to 2025: Strive to reach about 45% of the labor force in the age group participating in social insurance, of which farmers and informal sector employees participate in voluntary social insurance, accounting for about 2,5% of the labor force in the age group; about 35% of the labor force in the age group participating in unemployment insurance; about 55% of people after retirement age are entitled to monthly pensions, social insurance, and social annuity; The index evaluating the level of satisfaction of people participating in social insurance reaches 85%. From now to 2030: Strive to reach about 60% of the labor force of the age group participating in social insurance, of which farmers and laborers in the informal sector participating in voluntary social insurance account for about 5% of the labor force in the age group; about 60% of people after retirement age will receive monthly pensions, social insurance, and social annuity; The index evaluating the level of satisfaction of people participating in social insurance reaches 90%.

The expansion of social insurance policy for informal sector workers is a matter of great concern at present, not only institutionalizing the views of the Party and the State on this sector but also contribute to ensuring social security for workers in the informal sector.

Gained results

With 18 million jobs in 2016 and increasing over the following years, the scale of informal employment in Vietnam is still large and has not decreased. Employees in the informal sector often do not have labor contracts and social insurance. They also do not join trade unions and do not have much contact with other areas of the economy, therefore receive little compensation protection of labor laws and social security. Therefore, implementing social insurance for all workers, in general, and workers in the informal sector, in particular, is considered both as a goal and a positive solution to contribute to the implementation of social justice; go along with association in the system of social security policies and ensuring that all people can participate and enjoy the social insurance regimes as prescribed by law.

Article 34 of the 2013 Constitution defines the social security of citizens, ensuring social security for all citizens, but up to now, informal sector workers still have limited access social security policies, especially social insurance policies.

It must be affirmed that social insurance is a guarantee to replace or compensate for a part of workers' income, which might be reduced or lost due to illness, maternity, labor accident or occupational disease, unemployment, out of working age or death, based on their contribution to the Social Insurance Fund. The implementation process of the law on voluntary social insurance in Vietnam has also achieved certain results, such as the number of people participating in voluntary social insurance is constantly increasing over the years, from over 6 thousands of participants in 2008 have more than 231 thousand people paid voluntary social insurance, the total revenue from 10-year contributions to over 6,416 billion. The average contribution level in 2013 was 2.7 million VND / person/year, but now it has increased to over 5.7 million VND, showing that the contribution value and response of the people has increased significantly. The number of retirees increased rapidly yearly, as of 2017, there were more than 35,000 people enjoying pension of voluntary social insurance, the average pension reached nearly 1.9 million VND / person/month, equivalence to 138% compared to the base salary, 3 times higher than the national poverty reduction allowance. In addition, the fact that pensioners are granted health insurance cards, payment of medical examination and treatment costs has helped them to overcome difficulties, risks, and diseases when their health is getting worse.

Voluntary social insurance initially meets the needs of ensuring long-term benefit, such as retirement and survivorship for workers in the informal sector; Management and implementation have also been focused, enhancing the application of information technology to ensure the effectiveness of this type of social insurance.

However, there are still many difficulties and limitations in both the provisions of law and the practice of applying voluntary social insurance in Vietnam. The number of people participating in voluntary social insurance is only 1.7% of the compulsory social insurance and 2% of the unemployment insurance and accounts for less than 0.6% of the labor force eligible for participation. However, it is easy to see that the coverage of voluntary social insurance is very low and still over 99% of the labor, or potential customers, is not yet involved. With the average annual revenue of over 642 billion dongs, if the average divided by the provinces/cities is only 10.2 billion per year, this number is not significant compared to other insurance revenues and still very humble. The growth rate over the years of voluntary social insurance is not stable; the number of participants increased rapidly in 2012 and 2013 respectively 38% and 26% but from 2014 onwards has gradually decreased.

These difficulties and limitations, according to many experts, on the one hand, due to the limited awareness of employees about social insurance; On the other hand, the current voluntary social insurance systems are not attractive to workers and the law dissemination activities have not been carried out synchronously and effectively. These are challenges in the implementation of the State's set targets and opportunities for people to have pensions, health care when they are getting old.

The voluntary social insurance policy has shown its positive effects, the number of pensioners has increased rapidly over the years, on average; the period of 2014 - 2017 has increased by 51%. The pension that voluntary social insurance participants receive has a direct impact on the lives of workers, helps them improve their lives when they reach retirement age. Compared to the national average living standard, the average pension has affected the lives of people participating in voluntary social insurance in 2016 and 2017, respectively 107% and 111%.

However, among the 35,000 people currently receiving pension benefits, most are still those who have paid an additional few years to qualify for the period to receive a pension. Thus, if calculating the number of participants from the beginning to enjoy the pension, no one is entitled, due to lack of years of contribution or lack of age conditions. Meanwhile, the number of people entitled to one-time social insurance (including voluntary social insurance and compulsory social insurance) continuously increases over the years, over 600,000 people pay one-time social insurance each year. This shows that the number of employees who do not want to continue contributing but have the need to enjoy the one-time social insurance is very large.

Causes and solutions

Based on the recent assessment of the status of social insurance coverage in Vietnam, the reasons for the slow increase in coverage can be grouped into causes of policy design and the causes ofpolicyimplementation.

Firstly, the causes of policy design.

Firstly, the Law on Social Insurance does not cover all subjects likely to participate in compulsory social insurance: 1 - Business household owners are not subject to compulsory social insurance. In fact, this group of people with over 5 million business household heads, of which about 3.7 million households have business registration, by September 30, 2016, there are more than 4,240 registered business household heads and in fact, the social insurance agency has organized the collection and settlement of social insurance benefits; 2 - The manager of the enterprise, the manager and executive of the cooperative are not entitled to salary.

Secondly, for a long time, we have not had a policy to support people to participate in voluntary social insurance. According to the Law on Social Insurance, since 2018, there has been a policy to support people participating in voluntary social insurance from the state budget, which is also the reason why the number of people participating in voluntary social insurance increases slowly.

Thirdly, the regulations on eligibility for pension are quite strict: In terms of time, it takes 20 years to get a pension, leading to the situation that many people have a long time of social insurance payment, even to 18-19 years but still leave the system, receive one-time social insurance instead of pension.

Fourthly, the voluntary social insurance policy is not very attractive due to the bases: retirement and survivorship, while many people have the need to join more regimes but their demands have not been met.

Fifthly, the connection and mutual support between social insurance regimes are still small. For example, in many countries, unemployment insurance policies really support workers not to leave the social insurance system through very specific supports. Middle-aged workers are vulnerable to layoffs, unemployment insurance fund can provide part of the salary to help businesses reduce financial pressure when employing workers who are not as productive as young workers; or deducting part of the cost of paying social insurance premiums from the unemployment insurance fund to pay for the enterprise; As a result, businesses continue to use workers, workers continue to have jobs and continue to be part of the social insurance system, continuing to contribute to the growth. Vietnam's social insurance policy system does not yet have such regulations. In the context that workers aged 35 and over are at risk of being fired now, these policies are very necessary.

Secondly, the causes of implementation organization.

Firstly, the form of assigning targets to develop social insurance participants is not suitable for localities. This is not an easy problem because with flexible labor market nature, labor movement between localities is very different; norms of labors with labor relations should be assigned according to the participation rate in compulsory social insurance; norms of labors without labor relations and subject to voluntary social insurance should be assigned according to the growth rate. The current way of assigning targets is to assign total revenue targets financially instead of object-oriented development.

Secondly, the compliance with the law on social insurance is not high: Many units and enterprises intentionally evade or pay inadequate numbers of people subject to compulsory social insurance.

Thirdly, the inspection and examination of the implementation of social insurance policies have been strengthened but still face difficulties in implementation.

Fourthly, although the social insurance agency has actively promoted modernization and application of information technology in management, it is still in the process of completion andremains some unresolved issues; thus it does not meet the needs and desires of employees.

In order to expand the coverage of social insurance, especially for informal-sector workers, it is necessary to synchronously implement many solutions to both goals of developing new subjects and maintaining, restricting participants from leaving the system. Specifically:

Firstly, the solution to developing new participants will focus on reviewing and expanding the compulsory social insurance participants for business owners, business managers, managers and administrators of cooperatives without wages, laborers working under flexible regimes. Study amendments and supplements to the direction of increasing the attractiveness and flexibility of voluntary social insurance regimes, such as appropriate supports from the state budget for farmers, poor people and low-income people, informal sector labor to expand social insurance coverage; study and design flexible short-term social insurance packages so that employees have many choices to participate and enjoy.

Secondly, expanding the voluntary social insurance regimes, facilitating the smooth transition between voluntary social insurance and compulsory social insurance, amending the conditions for pension entitlement in the direction of gradually reducing the number of years of minimum social insurance payment to enjoy the pension regime from 20 years to 15 years, heading to 10 years with the level of benefits calculated appropriately to create conditions for elderly laborers and people with social insurance years to access and receive social insurance benefits.

Thirdly, innovating communication methods to suit the specific characteristics of each target group, region, and area; attaching importance to and promoting the role of reputable organizations and individuals in the population community to mobilize people to participate in voluntary social insurance.

Fourthly, to strengthen administrative reform, to apply information technology, to simplify processes and procedures for registration, payment, and enjoyment of social insurance, to improve the quality of providing social insurance services according to user-friendly, open and transparent approach to facilitate people and businesses.

Fifthly, creating the most favorable conditions for employees to access social insurance services, especially for participating in voluntary social insurance with the variety of social insurance services through telecommunication service system, banking service. . .

Sixth, strengthening inspection and examination of social insurance, in which focuses on inspecting, examining and strictly handling units and enterprises that intentionally evade payment and debt-paying social insurance premiums./.

-------------------

This article was published in the Communist Review, No. 926 (October 2019)

Nguyen Thi Minh General Director of Vietnam Social Insurance