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State extends social security

Update: April, 29/2009 - 00:00

State extends social security

(30-04-2009)

by Thu Hien

Doctors check ethnic minority people in Dac Lac Province. The new social security strategy will include a monthly allowance for people living below the poverty line. —VNA/VNS Photo The Anh

HA NOI — Le Van Noi, a 62-year-old retired colonel, says VND3 million out of his VND4 million monthly pension goes towards household expenses.

It is not enough for a luxurious lifestyle in the capital city, but leaves enough for extras like visiting friends or shopping for his family.

"I worked for the military for 20 years. During that time, I paid for social insurance, which accounted for 5 per cent of my salary. Now, I live on what I saved."

"I am not worried about getting sick because I have health insurance to pay for that. My wife has it also," said Noi.

Noi receives his pension and health insurance thanks to Viet Nam’s social security system.

The Government spares 3 per cent of the annual GDP to maintain and pay for this programme, according to Bui Xuan Du, head of Social Security Policy Studies at the Institute of Labour Science and Social Affairs under the Ministry of Labour, Invalids and Social Affairs

There are more than 2.4 million retired people in the country living on pensions and 37 million people who enjoy health insurance.

In Viet Nam, the social security system was upheld through creating an active labour market, social and health insurance and social aid, said Du.

These strategies have helped drive down the number of people living in poverty from 58 per cent in 1993 to 15 per cent currently and keep the Gini coefficient (measurement of inequality of income distribution) below 0.4.

However, in Viet Nam, where Ministry of Agriculture and Rural Development statistics show more than 75 per cent of the country’s mainstay is agriculture, only a certain stratum of the population gains access to social insurance, according to Kramer, chief technical advisor of GTZ’s poverty reduction project.

If small business owners and the self-employed are added to the list, the number of people not covered by social insurance makes up the majority of Viet Nam’s population.

Targets of the draft of the 2011-2020 social security system
– 70 per cent of unemployed people get job skills training
– 90 per cent of these get an allowance to find suitable jobs
– 100 per cent get access to health insurance
– 100 per cent of victims of natural disasters and other risks get support
– 100 per cent of disadvantaged people get regular relief

Tran Nguyen Minh, 49, and his family, who live in Ha Noi’s Van Chuong Street, were forced to take out VND 13 million (US$730) in loans at high interest rates over the last three months to pay for the costs of treating his lung cancer.

"My father worked in a coal-producing workshop for 12 years. However, he has no claim to any kind of social or health insurance, because his workshop is small and informal," said Minh’s daughter, Tran Huyen Trang.

Minh’s situation is not unusual for a country where the majority of the population is not eligible for social security benefits.

The answer lies in the Ministry of Labour, Invalids and Social Affairs’ new draft of a social security strategy for 2011-20, which promises to extend coverage.

"The draft is a very good starting point," said GTZ’s Ellen Kramer.

While a major institutional transition could only be achieved step by step, it was important to maintain a clear vision of the future social security system and get feedback from multiple sources, she said.

Equality

It was necessary to ensure fairness in the new social security strategy, said Du.

A person who does not give 5 per cent of his salary for social insurance should not be able to enjoy a pension like others who pay social insurance fees for decades, according to Du.

Under the new social insurance strategy, there is a voluntary social insurance option for people who are not covered at their workplace. This fund will include capital from taxes and voluntary contributions from labourers— people who pay more into the fund will benefit more.

In addition, the new strategy will include a monthly allowance for people who are disabled or old and health insurance for children.

There would be also a social fund to provide relief for unexpected occurrences like floods or other natural disasters, said Du.

"The social security system, depending on how it is designed and implemented, may play a very important role in redistributing income between advantaged people and those less advantaged," said Nguyen Tien Phong, assistant country director of the United Nations Development Programme.

To ensure the equality of the system, the new social security strategy must be systematic and clear to avoid the redundancies of the current system, said Du.

Veteran Noi said he was embarrassed that he received benefits from two insurance funds while others get nothing. "One I get from a veterans’ organisation, the other I get from the district’s war invalids organisation, they explained that their operations are separate from each other," said Noi.

Currently, the policies for providing social assistance to poor and vulnerable groups were scattered and often too small to make big changes in people’s lives, said the UN’s Phong.

The new social security strategy must build on the current system to learn from past successes and avoid mistakes, said Phong.

People’s approval

However, to create an effective social security system, which will benefit more people, the strategy needs to gain the approval of the people, according to Phong.

"For a social security system to be sustainable, it must provide a standard of service that is acceptable to the majority of the country," he said.

The current health insurance fund is an example of this dilemma. Often even those who have compulsory health insurance ignore it in favour of better service at private institutions, so the fund is not financially sustainable.

In 2007 alone, the health insurance fund experienced a deficit of VND1.6 trillion ($90 million).

"It is necessary to improve the quality and reliability of services so more and more people will be willing to contribute to the system," said Ellen Kramer.

Thanks to the new social security strategy, Noi, the retired soldier, and Minh, the coal worker, will both receive benefits, along with the majority of Viet Nam’s people. — VNS

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