Informal workers yet to participate in social insurance due to low incomes

June 13, 2024 - 08:12
Phí Duy Phong, an informal worker in the craft village of Chàng Sơn Commune, Thạch Thất District, Hà Nội said the main reason for not participating in any form of insurance was the unstable nature of the job, with income fluctuating.
A small trader at Đồng Xuân Market in Hà Nội. — VNA/VNS Photo Đinh Thuận

HÀ NỘI — Phí Duy Phong has been working as an informal worker in the craft village of Chàng Sơn Commune, Thạch Thất District, Hà Nội for decades, but he has never participated in any form of insurance.

Phong said the main reason for that was the unstable nature of the job, with his income fluctuating but he also admitted that he simply did not clearly see the benefits of insurance.

He is among thousands of informal workers, who work on verbal agreements or with day-to-day contracts producing furniture in the craft village.

Phạm Quang Hải, director of Hải Dương Manufacturing and Trading Services Joint Stock Company, which specialises in producing clean bottled drinking water, said when he suggested he could buy social insurance for his employees, they refused because they feared deductions from their salaries.

Moreover, due to the temporary nature of the work, workers did not feel the need to sign labour contracts and the need to buy insurance, especially social insurance.

According to the Management Board of Đồng Xuân Market in Hà Nội, there are 2,200 households engaged in regular trading, with people aged 60-70 accounting for over 70 per cent of those running stalls.

Chử Thị Ánh Tuyết, a small trader at the market said "We just think social insurances are only needed by Government employees or workers. I just buy health insurance to prepare for illness.”

Meanwhile, at Long Biên wholesale market in Hà Nội, there are hundreds of daily workers assisting at fruit stalls.

They say they are just looking for temporary work to tide them over, so buying social insurance seems something removed from their needs something not even worth considering, the Nhân dân (People) online newspaper reported.

Statistics from the Ministry of Labour, Invalids and Social Affairs showed that there are currently over 33 million informal workers nationwide.

However, only 0.2 per cent of them participated in compulsory social insurance, 1.9 per cent participate in voluntary social insurance and the remaining 97.9 per cent do not participate in any form of insurance at all.


Labour experts believe that there are three main reasons why informal workers are not enthusiastic about social insurance.

According to the experts, low income, unstable and precarious jobs, where you live 'hand to mouth' were blamed for the situation. The non-compulsory nature of social insurance also worsened the situation.

Moreover, they have not received full information about the benefits of social security policies such as social insurance, unemployment insurance, occupational accident and disease insurance, or leave and sickness pay.

Resolution No. 28-NQ/TW on social insurance policy reform sets a target of 60 per cent of the eligible workforce taking out insurance by 2030 and that should include five per cent of farmers and part-time workers.

The draft amended Law on Social Insurance closely follows the five orientations, consisting of building a multi-tiered, flexible social insurance system; expanding coverage of social insurance beneficiaries (pensions, monthly social insurance allowances, and social insurance retirement allowances); supplementing provisions on social insurance contribution and collection management; diversifying the investment structure of the social insurance fund according to the principles of safety, sustainability and efficiency.

One of the solutions proposed as a way of expanding the coverage of social security network is to require informal workers to participate in social insurance.

However, according to experts, it was very difficult to implement because informal labour income was low, while the State lacks the resources to boost worker contributions.


Phạm Thị Thu Lan, deputy director of the Institute of Workers and Trade Unions under the Việt Nam General Confederation of Labour said that it was necessary to study and amend the system of laws and policies and instead of following the current approach of two groups, formal and informal workers, it should redesign the policy system towards equality and coverage for all workers.

For example, all workers participating in social insurance in the labour market should be guaranteed equal rights, on the principle of contributions-benefits, they would receive accordingly, she said.

Lê Đình Quảng, deputy head of the Law and Policy Department under Việt Nam General Confederation of Labour said the confederation's opinion was that all workers must have the right to participate in and benefit from social insurance policies.

“Our direction is to expand the scope of social insurance participation, moving towards universal social insurance,” he said.

Currently, the number of social insurance participants in the informal sector is very low.

To prevent informal workers from 'falling through the safety net' it needs to gradually abolish the gap between formal and informal workers by changing the labour structure, he said.

Also needed are policies to expand voluntary social insurance, especially voluntary social insurance, amending the Law on Social Insurance towards a more flexible, diverse and multi layered system to attract greater participation.

Đinh Thị Thu Hiền, deputy director of the Department of Social Insurance Implementation under the Việt Nam Social Security said they needed to communicate better so that social insurance participants fully understand their rights when taking part, so there would be more voluntary participation in taking care of their own and their families' future.

The communication about the draft amended Law on Social Insurance with many new policies and benefits should be promoted so that informal workers know, actively participate in and stay in the network sustainably.— VNS