Ramla Khalidi, UNDP Resident Representative in Việt Nam. Photo Courtesy of UNDP

Ramla Khalidi, UNDP Resident Representative in Việt Nam

October 17 commemorates the 31st International Day for the Eradication of Poverty, a day marked in the United Nations calendar to remind us of our collective responsibility to eliminate poverty, hunger and other forms of deprivation in our communities.

The theme of this year’s commemoration is “Decent Work and Social Protection: Putting Dignity in Practice for All,” a timely reminder of the close relationship between poverty reduction and decent pay and working conditions.

By all accounts, Việt Nam has made significant progress in poverty reduction and eradication of hunger. Yet poverty reduction has been uneven across population groups and regions. High levels of chronic poverty persist in ethnic minority (EM) communities and groups such as children, older persons, persons with disabilities and non-registered migrants. Despite accounting for just 15 per cent of the population, EM comprise more than 50 per cent of the country’s poor. And while multi-dimensional poverty rate was 9.35 per cent in 2022, the average poverty rate of EM was 35.5 per cent. Child poverty is majorly concentrated among EM children (46.4 per cent in 2018) and the youngest children aged 0-4 (according to the Ministry of Labour, Invalids and Social Affairs - MOLISA, 2023).

Equally concerning is that a high proportion of Vietnamese remain just above the poverty line, with almost 75 per cent in the near poor and low middle income groups. They are at risk of falling back into poverty in the event of economic or other shocks. New forms of urban poverty have emerged among migrants and informal sector workers, due to rapid urbanisation and social change.

Vulnerability of informal workers

The International Labour Organisation (ILO) estimates that almost two-thirds of the world’s working population—over two billion people—are informal workers. Most of these workers do not benefit from any form of legal protection, including minimum wages, hours of work, health, safety or insurance covering workplace accidents or job loss. Fifty-eight per cent of informal workers are women, who are also the lowest paid and subject to gender-based discrimination and sexual harassment. The absence of legal protections leaves informal workers vulnerable to economic insecurity and exploitation.

UNICEF estimates that in the developing world, one in four children aged 5 to 17 are engaged in labour that is detrimental to their health and development.

In Việt Nam, the General Statistics Office (GSO) reports a staggering 68.5 per cent of all employed people are informal workers, earning half as much as formal workers and often falling short of the legal minimum wage. More than one-third worked more than 48 hours per week, many more hours than their formal sector counterparts.

High informality levels persist in Việt Nam despite rapid urbanisation and industrialisation. Informal work spans various sectors, with 42 per cent in agriculture and a third in manufacturing, construction or transportation. Notably six million informal workers are employed by formal sector firms.

Nor are informal jobs short-term or precarious. Four out of five informal employees have been in their current job for at least three years.

Within the context of climate change and global economic turmoil, Việt Nam’s informal workers face increased vulnerability. Effective policy responses are necessary to mitigate the impact of economic and environmental shocks.

Promoting formal sector growth and job quality

Creating productive, formal sector jobs will reduce the degree of informality over the long-term. Integration into regional and global value chains has created millions of steady jobs in manufacturing and services. However, most of these jobs are in labour-intensive activities like final assembly of electronics, furniture, garments and footwear. More investment is needed in education and training, research and development to help Vietnamese firms to compete in upstream, higher value-added activities.

Upgrading existing jobs in agriculture and small businesses will also decrease the prevalence of informality in the labour force. Programmes that link technical and financial assistance to workforce formalisation would give rural and small businesses an incentive to improve the quality of jobs. Small farms need help acquiring new technologies to produce export-quality fruit, vegetables and processed foods and to reduce the carbon footprint of exports.

Modernising social assistance: adapting to an evolving workforce and economy

Việt Nam’s social assistance programmes need modernisation. These programmes were designed when the country was predominantly rural and when most people worked on the family farm or for household businesses. Now more than half of the workforce consists of employees, and forty per cent of the population lives in urban areas. One of the important lessons of the COVID-19 pandemic was that the government lacked adequate and adaptable instruments to support informal workers, especially migrants, who are vulnerable to a sudden loss of income.

An important constraint on existing programmes is that they are administered and implemented locally, whereas people in modern, urbanising economies are highly mobile. Basing access to social assistance on national citizenship rather than locality is a vital first step toward modernising the social protection system.

Another important step forward in the draft Law on Social Insurance, which will be submitted to the National Assembly this month, is the proposed reduction of the minimum age for social pensions from 80 to 75 years of age. This change recognises the principle of universal pensions and collective responsibility to help households manage lifecycle risks.

UNICEF and UNDP have proposed a universal child grant for all children under six to eliminate child poverty, ensure that all children have the resources they need to go to school and access health care, and therefore break the cycle of intergenerational poverty. A universal child benefit would be affordable, costing less than two per cent of GDP, and could be delivered electronically to mothers quickly and at low cost.

Việt Nam has made tremendous strides in reducing extreme and multidimensional poverty over the past three decades. Other countries in the region and beyond are studying Việt Nam’s experience to learn from this success.

Ensuring that all Vietnamese workers can earn a living wage, enjoy safe and healthy conditions, or work and are protected from exploitation, discrimination and the risks of job and income is the next stage in the country’s journey from poverty to universal prosperity. VNS