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Amid continued growth in foreign direct investment, foreign workers in Viet Nam are playing an increasingly important role across a wide range of sectors, from industrial manufacturing to high-quality services. Alongside this trend, the expansion of compulsory SI coverage to foreign workers is emerging as a notable policy development, not only from a social protection perspective but also in relation to the requirements of international integration and the sustainable development of the labour market.

Moving closer to international standards

Including foreign workers in the mandatory SI system is widely seen as a significant step by Viet Nam toward aligning with international labour standards. According to recommendations from the International Labour Organization (ILO), social security systems should ensure comprehensive coverage regardless of nationality, in order to protect workers against employment-related risks.

As Viet Nam participates in a growing number of new-generation free trade agreements, such as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and the EU–Viet Nam Free Trade Agreement (EVFTA), are being emphasized more strongly. The enforcement of compulsory SI for foreign workers therefore carries not only domestic significance but also helps reinforce Viet Nam’s image as a transparent labour market that adheres to international standards.

This is also an important factor in attracting highly skilled talents, particularly foreign experts, engineers and managers, who often place strong emphasis on the level of benefits and protections available in the host country.

More than an Additional Cost for Businesses

From a business perspective, compulsory SI is often viewed as an additional cost. However, many experts argue that, in the long term, the policy offers considerable benefits.

First, full compliance with SI regulations helps enterprises mitigate legal risks as inspections and enforcement become more stringent. Violations related to contribution obligations may lead to penalties, back payments, and even disruptions to business operations.

In addition, a clear and comprehensive social protection regime can serve as an advantage in attracting and retaining international talent. For foreign workers, especially those on long-term assignments, access to benefits such as work injury insurance and retirement benefits is an important consideration when choosing where to work.

Furthermore, SI implementation  contributes to the standardization of human resource management practices, helping businesses align more closely with international norms, particularly as they integrate more deeply into global supply chains.

Implementation challenges remain

Despite its significance, the implementation of this policy still faces a number of challenges in practice.

One major issue lies in differences between social security systems in Viet Nam and those in other countries. Many foreign workers have already participated in SI schemes in their home countries, raising concerns about double contributions without fully corresponding benefits.

Moreover, the nature of foreign employment in Viet Nam is often short- to medium-term, which may reduce workers’ interest in long-term benefits such as pensions, thereby affecting their willingness to participate.

From the employers’ side, some companies still face difficulties in determining eligible participants, contribution levels, and administrative procedures. Language barriers and legal differences also hinder effective communication of the policy to foreign employees.

Notably, there are cases where some enterprises attempt to circumvent their contribution obligations through flexible contract arrangements. This not only affects workers’ rights but also creates an unfair business environment in the business environment.

Lessons from international experience

In countries such as Japan and the Republic of Korea, participation in social security systems for foreign workers has long been compulsory and strictly enforced. A notable feature in these countries is the establishment of bilateral social security agreements to prevent double contributions.

Under such agreements, workers may be exempted from or have reduced contribution obligations in one country if they are already covered in another, while still while preserving their entitlement benefits. This is a valuable reference for Viet Nam as it continues to refine its policy framework.

Expanding such bilateral agreements in the future would not only help address existing challenges for both workers and businesses but also enhance the attractiveness of Viet Nam’s working environment.

Long-term impacts on the labour market

In the long run, compulsory SI for foreign workers is expected to generate several positive impacts on the labour market.

First, it helps create a level playing field between domestic and foreign workers. When social security obligations are applied uniformly, the risk of unfair competition based on cost-cutting measures is reduced.

In addition, expanding coverage contributes to increasing revenues for the SI fund, thereby strengthening its capacity and ensuring the system’s sustainability in the context of an ageing population.

Moreover, a comprehensive social security system can improve workforce quality and employee commitment. For foreign workers, it provides greater peace of mind and encourages longer-term engagement with Viet Nam’s labour market.

Further refinement needed for effectiveness

Compulsory SI for foreign workers is an inevitable policy step in the integration process. However, to ensure its effectiveness, it is necessary to continue refining the legal framework, simplifying administrative procedures, and strengthening communication so that both employers and employees fully understand their rights and obligations.

In the long term, promoting the conclusion of bilateral social security agreements, alongside enhancing implementation capacity, will be key to ensuring the policy’s effectiveness, contributing to the development of a modern, transparent, and sustainable labour market.