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Ensuring social security in Vietnam – Issues and orientations for sustainable development in the new period
20/4/2020 10:2' Send Print
A working scene at a workshop of Vinatex Bac Lieu Garment Factory. Photo: Thanh Cuong

Achievements of social security in Vietnam and the arising issues

The achievements obtained from our country’s social security model are manifested in the following main aspects:

First, Vietnam has established a relatively complete and comprehensive social security model with 4 main pillars, which are: employment support and poverty alleviation; social insurance; social assistance; and fundamental social services. These pillars have worked harmoniously and synchronously, contributing to remarkable social security achievements in recent years, well recognized by Vietnamese people and international organizations. Whether approaching by the life cycle, the social security floor or by income risk coping, the social security model of Vietnam is likely to operate on various mechanisms, programs and policies appropriate to different groups of people, meeting relatively comprehensive welfare needs.

Second, Vietnam’s social security model has well defined the organizational structure, objectives, principles, mechanisms for mobilizing and using resources, social contribution and benefit sharing. This enables the Vietnam’s social security model to operate smoothly and guarantee the nationwide principle, sharing, fairness and sustainability. Besides the State’s vital resources, there are several voluntary contributions from the society, employers, employees, individuals, and organizations at home and abroad.

Third, Vietnam’s social security model has been continuously improved and perfected in order to expand its coverage, enhance support capacity and ensure better provisions for people’s basic security needs. Social security’s programs and policies have been effectively renewed, welfare has been expanded, and people’s lives, including disadvantaged groups, have been significantly improved.

Fourth, Vietnam’s social security model has proved the fine essence of its regime, bringing encouraging social security achievements, well recognized by the world, such as achievements on hunger eradication, poverty alleviation, education, health care, etc. Specifically, some outstanding achievements of Vietnam’s social security are listed as follow:

- Vietnam has obtained impressive. Achievements in creating jobs and reducing poverty. Along with the economic growth momentum maintained at a high level, entrepreneurs of different economic sectors are provided with favorable conditions for development, the foreign invested attraction achieves good results, so that it creates millions of jobs annually.

Poverty reduction and jobs creation are implemented via national target programmers and attract due attention of the entire political system and the whole society. Unemployment rate remains low (2% - 3%). Poverty rate in Vietnam decreases rapidly, which falls below 10% (according to Multidimensional Poverty Index).

- The coverage of social insurance has been continuously expanded and insurance regime has been improved to better meet the welfare needs of workers. The system of social insurance agencies (SI) is established with the apparatus from the central to local levels. The legal system on labor and SI has been gradually complete. The forms of insurance have expanded with the appearance of voluntary SI, unemployment insurance, family health insurance, etc. The coverage of SI, medical insurance, unemployment insurance has been significantly extended; procedures for participation and enjoyment of social insurance are increasingly favorable.

- Social assistance is paid due attention, contributing to ensuring the life for a portion of the elderly, the disable; the natural calamity-affected people, etc. Social assistance is step by step socialized, attracting voluntary participation from social communities and entrepreneurs.

- The provision of fundamental social services is paid due attention and improved. In the past years, education, healthcare, clean water, housing and information are fundamental social services provided by the State; the quality has been improved and included in the criteria of multi-dimensional poverty index. The State has provided a variety of policies for promoting the infrastructure of social services in remote, isolated and ethnic minority areas, helping to get access to schools, clinics, clean water and information. Simultaneously, the State has given preferential supporting policies on accessing healthcare and education for the poor and the children. Thanks to these aforementioned efforts, Vietnam is a country with high human development index, impressive achievements on poverty reduction in general and multi-dimensional poverty in particular; medical insurance covered up to 80% of the population.

Although Vietnam’s social security model has obtained certain achievements, there are still several issues need addressing.

Firstly, the coverage of social security model remains restricted.

This is reflected in the fact that the rate of participation in social insurance only accounts for less than 1/3 of the labor force; the rate of participation in unemployment insurance remains relatively low; social assistance can cover only a part of those in need. The new social security covers mainly the poor, the disable who have no support, no self-care ability, and the elderly over 80 years old; employees in the formal economic sectors with social insurance participation. Coverage of SI is low despite its improvement in recent years. According to the statistics of Vietnam Social Insurance, 10, 2 million people, 13, 8 million people and 14,5 million people participated in SI in 2011, 2017 and 2019, respectively. However, according to the General Department of Statistics, the social insurance coverage rate is only about one quarter of the labor force aged 15 and above, although the coverage rate has increased from 20,3 % in 2011 to 25,2% in 2017. That means a large part of the labor force has not yet participated in SI and does not get benefits from SI, now as well as in their retirement age in the time to come.

Besides, the number of participants in voluntary social insurance accounts for only a small portion out of the overall number of people participating in social insurance. There have been only about 300 participants after 10-year implementation of non-compulsory social insurance policy. Meanwhile, presently, there are about 40 million employees in informal sectors. This fact shows that employees are not fully aware of the benefits of participating in non-compulsory social insurance and non-compulsory social insurance is not attractive enough or employees can’t afford to participate in non-compulsory social insurance.

Secondly, the current social security mode fails to guarantee the sustainability.

- The SI fund reveals its potential of unsustainability and imbalance in the long term under the context of population aging. In 2010, SI spending accounted for only 73,9% of SI revenue, compared to the figure of 99,5% in 2015. With the current growth rate of social insurance spending, if the model is not redesigned, social insurance spending will soon exceed revenue. Meanwhile, the status of one-time social insurance receipt tends to increase among employees, especially in enterprises and in industrial zones, affecting the insurance fund, as well as increasing the number of people without having social insurance when retire.

- One of the reasons for the increase in recurrent expenditure in recent years is the rapid increase in social security spending. Without a solution to restructuring the state budget and mobilizing social resources, it will either be unable to meet the needs of social security, or will not ensure the sustainable state budget.

- The result of poverty reduction is not stable and the rate of re-poverty is high. The rate of poverty reduction remains low among households in remote areas, especially ethnic minority groups. The social security model needs designing an effective system of poverty reduction policies for this group of residents.

Thirdly, the level of social security assistance remains low and a part of population has not yet been ensured minimum living standards.

The rate of poverty reduction in remote and ethnic minority areas remains slow, the risk of falling back into poverty is high. The poor’s resources of earning a living are limited in terms of finance, materials, natural conditions, land and social resources. The structure in remote and ethnic minority areas is weak and inefficient despite the State’s great priority, due attention and assistance for livelihood development. Assess to fundamental social services is limited, in many places there is a shortage of schools, clinics or schools, clinics are far away, and roads are difficult to access. The percentage of households with permanent houses and clean water remains low. The quality of social service delivery in many places is not high.

Fourthly, there are overlaps among social security pillars.

There is an overlap between employment support, poverty reduction and social assistance. There are a variety of different poverty reduction programs implemented and one household; one locality can enjoy many different programs. That is not to mention the local programs, programs integrated in other socio-economic development policies, poverty reduction programs and projects of socio-political organizations, national organizations. of the community. This makes resources scattered, many programs are duplicated, resulting in shortage in some places whereas redundancy in other places, etc. The evaluation of the effectiveness of each program or project is therefore difficult. In addition, there is an overlap between the provision of basic social services in social security programs, social assistance and poverty reduction with the state management on such fields as health care and education, environmental resources, information - media…

Fifthly, the state management in ensuring social security is inefficient, reducing the effectiveness of the social security model.

The management of programs and projects is sometimes not consistent, leading to cases in which the beneficiaries are wrongly supported (for example, support to non-poor households, households who are commune and village officials), the quality of vocational training and employment support is not high, there are cases of embezzlement and corruption related to social security programs... The management, mobilization and use of the SI Fund are inadequate.

Although administrative procedures related to social insurance have been improved, they are still complicated and have not created the upmost favorable conditions for participants. There remains the issue of seeking profit from social insurance, health insurance and unemployment insurance fund.

Management, use and disbursement of social assistance funds have not been effective, especially for unexpected assistance of natural disasters, floods and storms is untimely, causing many social pressing.

Sixthly, mechanisms for mobilizing and effectively using social resources for ensuring social security are inadequate.

Although mobilizing social resources for social security is always taken into consideration and emphasized in the guidelines and policies of the Party and the State, however, in practice there is a lack of mechanisms to mobilize and effectively use these resources. The mechanism has not promoted the role of local communities in supporting social security.

Orientations for social security development in the new period

In order to continue developing social security, ensuring that people are better protected against income risks and access to basic social services, it is necessary to continue renovating social security in the following directions:

First, clarify, unify awareness and perfect the multi-layer social security model, especially the basic social security floor.

Social security is mainly thought vertically with the pillars of social security that are mainly social insurance, social protection and poverty reduction. On the other hand, although it is easy to imagine the 3 social security layers, especially the basic social security, it is still necessary to continue researching, perfecting and developing a roadmap for implementation in accordance with financial capability.

Second, continue renewing the growth model towards inclusion, restructuring the economy in order to grow fast, inclusive and sustainable.

Growth is the basis for ensuring social security because it helps create jobs and income for households, increasing contributions to social security funds, contributing to increasing state budget revenues, leading to the support for social security system.

However, growth does not necessarily address social security if it is not inclusive and sustainable growth, it should go along with social and environmental progress.

Therefore, the most fundamental solution to addressing social security is to ensure rapid, sustainable and inclusive growth, in which all people contribute to and enjoy the fruits of that growth.

Third, besides promoting rapid and sustainable growth, it is necessary to continue promoting and improving the efficiency of job creation and poverty reduction programs. Lack of income for people of working age is often associated with lack of employment.

Therefore, it is necessary to continue job creation programs associated with socio-economic development and economic restructuring. Poverty alleviation in the coming years will face many challenges, as poor households are concentrated in mountainous, remote and ethnic minority areas with limited resources and access to livelihoods. The welfare model must include these poor households in value chains, so that they can have a stable and sustainable source of income without relying on direct subsidies in cash or materials.

Fourth, strengthen and promote the social insurance system, extend the coverage of social insurance, health insurance and unemployment insurance as the main pillars of the social security system.

Currently, except for health insurance, coverage of social insurance and unemployment insurance remains low and mostly in the formal economic sector.

The informal economic sector with the large number of employees in our country has largely not yet participated in social insurance. This, on the one hand, has made social insurance not promote its superiority in ensuring social security, while creating a great social burden when these people are over the working age; on the other hand, it puts the social insurance fund at risk of unsustainability. Therefore, it is essential to expand the coverage of social insurance, heading towards the goal of universal social insurance.

Fifth, rationally adjusting the mobilization and efficient use of the social insurance fund to ensure the satisfaction of the participants’ beneficiary needs, while ensuring the safety and sustainability of the social insurance fund in the context of the aging population.

Sixth, prepare to cope with the trend of population aging. Population aging is a common trend in the world as well as in and Vietnam.

Vietnam's population is aging at a fast pace, thus creating a huge welfare demand for the elderly on the main welfare pillars, including the pension system; health care system for the elderly, nursing homes; social protection with lonely elderly people, etc. Without proper preparation, the social security system will not be able to respond to these changes.

Seventh, promote socialization of social security. Social security requires huge financial resources. Besides the contribution of the social insurance participants, in many cases, social security must rely on the state budget, such as social protection, support for the poor, the disabled ...

In the context of limited state budget, it is vital to mobilize financial resources from society for social security. Socialization not only helps solve financial problems in social security, but also contributes to improving the quality of social security services. Socialization in social security needs to focus on the following pillars: 1- Employment and poverty alleviation; 2. Social protection; 3- Basic social service provisions.

Eighth, complete the legal system related to social security. Currently, the legal basis for the social security system has been formed sufficiently, such as the Constitution, the Labor Code, the Law on Social Insurance ... In the coming time, it is necessary to continue editing, perfecting the legal basis, especially handling the arising problems, so that it can be effective and consistent with reality, creating favorable conditions for businesses, attracting and ensuring the rights of participants. In particular, it is essential to develop a legal basis for the model of multi-layer social security, especially the provisions related to the basic social security floor, such as the basic pension regulations.

Ninth, combining the system of social security policies and programs into a unified, transparent, avoiding duplication, dispersion and inefficiency.

Currently, there are many social security programs and activities of all levels from the central to local levels, organized by many agencies and units, including foreign organizations and non-governmental organizations leading to overlap, duplication, inefficiency. The whole program needs being redesigned in a way that is simple, transparent, easy to implement and easy to manage, focusing on programs on employment, poverty alleviation, social protection and basic social services provision./.


This article was published in the Communist Review No. 927 (October 2019)

Bui Van HuyenAssociate Professor, Dr. Economic Institute Ho Chi Minh National Academy of Politics