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Relationship between Social Securityand the development of the Labour Market in

Vietnam

Berlin, dated 9th October 2012

Relationship between Social Securityand the development of the Labour Market in

Vietnam

Presented by: Presented by:

Dr. Bui Sy TuanDr. Bui Sy TuanInstitute of Labor Science and Social Affairs, Ministry of Labor Invalids Institute of Labor Science and Social Affairs, Ministry of Labor Invalids and Social Affairs of Vietnamand Social Affairs of Vietnam

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I. OVERVIEW OF SOCIAL SECURITY OF VIETNAM

II. RELATIONSHIP BETWEEN SOCIAL SECURITY AND LABOUR

MARKET IN VIETNAM

III. CHALLENGES

Content

Part I: OVERVIEW OF SOCIAL SECURITY OF VIETNAM

Social security: 3 pillars/components

Labor market (Training, job matching, credit, labour export)

Insurance (social insurance, health insurance, unemployement insurance, crop

insurance)

Social assistance (cash transfer, poverty

reduction, social services)

Regard to the polices on “labour market”

There are 3 components as: (i)support to access education and vocational training system, to agriculture, forestry extension services or supports for self – employment; (ii) support to access to the labour market information and; (iii) support for accessing accredit for job generation, or production expansion, or shifting to other business/ production with higher productivity or better income.

Regard to the policies on "social insurance"

This is the risk mitigation measures that are most effective for people. Insurance policies are considered as the "backbone" of social security because it creates long-term stability of the social security system. All “expenditures” of benefits are mobilized from the "contribution" of insured entities (people, businesses, and partial from the State budget)- Compulsory social insurance;- Voluntary social insurance;- Unemployment insurance;- Health Insurance

Regard to policies on "social assistance":

This is the risk mitigation interventions that support people so that they do not fall into impoverishment. The beneficiaries of these policies are mostly vulnerable groups, the poor; therefore the responsibility of ensuring social security belongs to the State.

Social support is classified into two groups as regular assistance and emergency assistance

Part II: RELATIONSHIP BETWEEN SOCIAL SECURITY AND LABOUR

MARKET IN VIETNAM

Social Security

Active Labour Market(Training, job matching,

credit, labour export)

Passive Labour Market(Social insurance

and Social assistance)

RELATIONSHIP BETWEEN SOCIAL SECURITY AND LABOUR MARKET IN VIETNAM

Social security in active labour market

More than 20 credit policies for vulnerable: poor, students, SME

enterprises

National Employment Promotion fund since 1992, creating

300,000 jobs annually

Since 2009: Vocational Training program, to support 1 million rural

workers annually

Credit policies to support 63 poorest districts on labour export

program

Increasing labour market information

Social Insurance

• Social security Law (2006): 3 types: Compulsory, voluntary & unemployment benefits• Beneficiaries from 3 schemes increased very fast: 9,6 mill, accounting for 20% of total labor force • In 2010, about 13% of retired people received pension

Health Insurance

•Health insurance Law (1/7/2009) aiming at universal coverage in 2014: • Gov support full/part support for poor, near poor, ethnic minority, farmer.. • Large investment in building heath care infrastructure•By 2010: Cover 65% of population (50% are vulnerable)

Social assistance

•2 program: Regular assistance and emergency • Regular: Decision 13/2010/NĐ-CP: cover 12 widely proportion of

population (beneficiaries increased from 416.000 (2005) to ,6 mill (2010). •Poverty reduction program: (i) increase accessibility to basic social

services; (ii) increase production capacities (land, credits.. ) and labor export; (iii) building up basic infrastructure in poorest districts

•Poverty line: 1.6-2$/day and update with CPI increase•Program to support 63 poorest districts

Overall assessment

Achievements: -State always paid attention on building and implementing the social security policies.-The legal system and social security policy is increasingly supplemented and perfected. The coverage of policies have been more and more expanded, the level of benefits raised for many schemes.-Resources for implementing social welfare policies are financed with contribution from the state budget and other social actors..The above results have contributed to the stabilization of the labor market, providing job security for workers, especially the poor, low-income workers, the unemployed, the workers of vulnerable groups, improving the quality of human resources, especially in the mountainous and ethnic minority areas.

Overall assessment

Weaknesses: - Job creation and poverty reduction is not sustainable, high percentage of poor and near - poor households falling back into poverty; - The quality of education and training fails to meet the development requirements; progresses of universal education results in many mountainous areas, ethnic minority areas took place in slowly; - Quality of protection and health care services has not met the demands of the people, especially the poor, people in remote areas, ethnic minority areas; - Rate of child malnutrition is high and the reduction took place slowly; - Low coverage of social insurance, health insurance. The difference in social welfare progress indicators between mountainous and ethnic minorities with the national average level is still great.

Overall assessment

Causes

- Still a poor country, resulting from sever war consequences and frequent

natural disasters that caused great damages.

- Social security policies have been slowly adjusted to be in line with the

economic policies.

Absence of effective measures to narrow the gaps in living standard and

social welfare status between regions;

- poor enforcement policies and legislation; low efficiency of coordination

between ministries and localities in practicing and function the state

management.

- Inspection and monitoring has not been taken seriously and strictly in many

provinces.

- Resources for implementing social welfare policies is still limited, mainly

from on the state budget; the resources mobilized from society is limited

Part III: CHALLENGES

• GDP growth stable >> Vietnam aims at becoming a middle-income country by 2020;

• Entering a period of Demographic bonus but also Aging population;

• Potential deficit of current Social Security Fund . • More dynamic labour market development: Moving from

rural to urban, agriculture to non agriculture; labour export require more flexible and portable social security policies.

• Support to people to cope with adverse social impacts from International economic integration

• International concept and initiative on Social Protection Floor for all.

Country context for 2012-2020

• Universal, all persons have the right to be safeguarded from social protection and have access to social protection system;

• Solidarity, means the linkage, support, sharing between individuals, between social groups and state;

• Equitability and sustainability, binding responsibilities and benefits, between contribution and benefits;

• Promoting responsibility of individuals, families and communities in ensuring the social protection;

• Special supports to the poor, vulnerable groups to ensure the minimum subsistence living level in case of risks that cause temporary or forever loss or reduction of income.

Key Principles of Social Security for year 2013-2020

• Overall objective: to gradually expand the coverage and participation of people in social security system; by 2020, basically ensuring that all people get access to and benefit from social security policies; ensuring minimum living standard for the people, contributing to sustainable poverty reduction, political and social stabilization.

• Targets: include all people, priorities are given to vulnerable groups, including the poor; people living in remote, mountainous and ethnic minority areas; workers in rural areas and informal sector; unemployed workers; the disabled; children; old-age and sick people; those affected by natural calamities, economic and social risks.

Ojective and Targets

Hanoi, 19 April 22

Main targets TT Indicators 2015 2020

1 Participation in health insurance (millions) 91,7 96,2

Of which: Fully subsidized 29,4 25,5

Partly subsidized 36,9 38,7

- Coverage rate by health insurance ( %) 80,0 90,0

2 Participation in social insurance (millions) 20,2 28,4

- Compulsory (formal sector) 16,0 22,0

- Voluntary (informal sector) 4,2 6,4

- Coverage of total labor force (%) 38,4 51,8

Hanoi, 19 April 23

Main targets (cont.)

IN

Indicators 2015 2020

3- Participate in Unemployment scheme

(million)10,0 15,7

Coverage of total labor force (%) 19,01 28,64

4 Paticipation in social assistance schemes

(million) 2,0 2,3

of which: Regular assistance 1,70 1,80

- Coverage % of population 2,2 2,4

of which, coverage of regular assistance, 1,9 1,9

Hanoi, 19 April 24

Policy measure 1: Support better job and income for vulnerable and poor

• Increasing accessibility to vocational training • Increasing labour shift from rural to non rural sector• Better policies to support mobility, especially for

rural migrants• Public work program for rural and poor• Credit policies for labour export program• Increasing labour market information and job

replacement services

Hanoi, 19 April 25

Policy measure 2: Increase coverage of social insurance

• Better implementation for formal sector• Increase associability to vulnerable groups: (i) Pilot partly

subsidized contribution for farmers to participate in crop/ agriculture insurance; (ii) creating incentive for informal sector to participate in voluntary social insurance; (iii) Pilot support voluntary social insurance program for the working poor with partly subsidized by Government

• Increase financial sustainability of Pension fund: Gradually transfer from PAYGO into the NDC financial mode

• Pilot the social pension for the elderly

Hanoi, 19 April 26

Policy Measure 3: Towards Universal coverage of health insurance and quality of health sector

Health insurance:• More incentive to target to the rest of 40% of population have not

been covered• Enhance accessibility, quality of services; • Better and more benefits to the eligible

Health care sector• Pricing model for services; • Build standard treatment procedures • Gradually withdraw from assistance projects by 2020• Enhance infrastructure, human resource of health sector.

Hanoi, 19 April 27

Policy Measure 4: Increase coverage and better targeting of social assistance

• Increase the coverage: 2-3% of population • Ensuring minimum living standard for the people, political

and social stabilization. • Pilot cash transfer to hard-core poor; children and elderly• New government program to support poor, social target

groups• Public Private Partnership in providing social services,

specially in rural, • Mainstreaming gender in designing and financing SP

assistance program • Increase accessibility of urban migrants to social services

Concerns to be sharedConcerns to be shared

1. Common languages on Social protection at International and national levels:

2. Initiative on Social Protection Floor for all and Road map for universal targeting: building Government Donor Partnership on implementation of strategy ;

3. Policy to support special groups: Cash transfer for hard core poor; conditional cash transfer for the children from poor HH to go school;

4. Community based schemes: Pilot Community Development Fund, Community Disaster prevention Fund;

5. Strategy for participation of informal sector in voluntary social insurance schemes:

Thanks for your attentionThanks for your attention