ILO to help improve social insurance laws

Update: June, 18/2013 - 10:07

HA NOI (VNS)— A project to improve the nation's social insurance system was launched by the Ministry of Labour, Invalids and Social Affairs (MoLISA) and the International Labour Organisation (ILO) yesterday.

The project on Strengthening the performance of the social insurance system in Viet Nam through improved legislation and legal framework for social insurance supports the reform of the Social Insurance Law, which is expected to get the green light from the National Assembly next year.

"Revising and improving the Social Insurance Law is an urgent task," said ILO Viet Nam Director Gyorgy Sziraczki. "It's not only for today, but also for the future. The impact of demographics on our future social-protection system and job prospects should be taken into consideration."

Although finding jobs for more than 1 million young women and men entering the labour force every year is a priority for Viet Nam in the short term, the growing number of elderly people poses a serious long-term problem.

Last year, Viet Nam found that people over 60-years-old accounted for more than 10 per cent of the total population five years ahead of predictions.

With fewer young workers in the future and a generous pension formula, the pension fund will be in jeopardy unless urgent measures are introduced in the reform.

The new reform would need to protect workers after retirement by making sure that employers and employees contribute to the social-insurance fund based on total income instead of the basic salary, in line with the new Labour Code, said Sziraczki.

According to Vice Minister of Labour, Invalids and Social Affairs Pham Minh Huan, the amended Social Insurance Law needs to make extended coverage of social insurance and diversified types of insurance on the basis of paying and benefiting.

The Viet Nam Social Security (VSS) covers Vietnamese citizens with employment contracts of three months or longer, but the enforcement remains a challenge. Only one fifth of the total workforce has social insurance today.

Despite increases in compulsory contributions to VND89.6 trillion (US$4.2 million) last year from VND 6.3 billion ($285,000) in 2001, only 47 per cent of all registered enterprises contributed to compulsory social insurance fund in 2010.

A combination of social allowances, incentives, improvement of delivery and strong political will may be required to quickly expand coverage to 80 per cent of the workforce who remain unprotected against risks, according to the ILO.

The ILO will provide technical advice on critical issues, including the deficit pension fund, law enforcement, the improvement of short–term insurance schemes, and protecting informal workers using a combination of voluntary insurance and social allowances. — VNS