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Firms fail to pay social insurance

Update: October, 21/2014 - 08:55

Delayed social insurance payments are a burden on the Viet Nam Social Insurance Fund, Hoang Van Dung, vice chairman of the Viet Nam Chamber of Commerce, told Thoi bao Ngan hang (Banking Times).

In your opinion, why do enterprises delay payments, sometimes for years?

The total amount of unpaid social-security payments in 1997 was VND 307 billion (US$14.6 million), about 8 per cent of the total due for collection. In 2007, the figure was VND1.7 trillion (US$82.5 million), or 6.8 per cent of the total sum. According to Viet Nam Social Security, at present of the more than 300,000 enterprises nationwide, only about 150,000 have paid their workers' health and social insurance.

Of course, delays can be attributed to various factors. Firstly, there are economic difficulties. In recent years, many enterprises have acquired large stocks of unsold goods and also late payments from their clients. As a result, a shortage of investment capital has forced many of them to cut down production.

Meanwhile, paying salaries, paying insurance, paying off debts and other tasks have put a lot of pressure on businesses. All in all, weak financial capacity has forced many employers to delay their social-security duties.

Secondly, there is also often a low awareness by employers about their duty to pay for social security. However, I have to concede that there is a loophole in our law on doling out administrative penalties to those who violate the Law on Social Security in Insurance. Some employers deliberately delay their social security payments to have more money to invest in their business, or use for other purposes.

Are there any mechanisms to solve the payment delays?

Our present administrative penalty policy is not strong enough. Under the law, the maximum penalty is lower than the bank's lending interest rate. That's one of the reasons employers delay payments.

Under the law, if an enterprise has failed to pay the penalty, Viet Nam Social Security can ask its bank to deduct the money. But in reality, legal procedures to deduct the money this way are cumbersome. In addition, the banks themselves don't want to do things that will harm their relationships. This big hurdle needs to be jumped if Viet Nam Social Security is to be able to operate successfully.

Can Viet Nam Social Security access data about enterprises that have gone bankrupt or been created recently so that checks can be made?

In Viet Nam, the management of such data is assigned to various agencies. For example, in one locality it is assigned to the People's Committee, while in another, it is assigned to the Department of Planning and Investment or the Department of Trade and Industry. This is one of our weaknesses in enterprise management.

I think it is imperative to introduce IT in business registration so that all management offices, particularly the health insurance and social insurance offices, will know how many enterprises have declared bankruptcy and how many enterprises have been recently established.

As far as I know, the Viet Nam Chamber of Commerce and Industry has asked the Government to continue its administrative reforms to help enterprises improve their competitiveness. This is a matter of life or death for companies. Another point I want to emphasise is the need to impose tough sanctions on enterprises that deliberately delay social insurance payments for their employees.

Finally, we have to launch a communication campaign to raise the awareness of employers and employees regarding their rights and obligations in participating in the health and social insurance scheme.

To help businesses overcome their current financial difficulties, I support the idea that employers can pay social security for their employees in several instalments or every quarter in the year. However, this will add administrative costs. — VNS

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