Social insurance policies include pension, death, unemployment, sickness, maternity, labour accident and occupational illness insurance. As a key pillar of the social security system, social insurance has received great attention of the Party and State, and is considered both a target and a motivation for the country’s sustainable development, showing the good nature of socialism. Thanks to the leadership of the Party, the management of the State and the efforts of Party Committees, local governments, ministries, sectors, socio-political organisations and business community and labourers as well as the effective support and cooperation of countries and international organisations, policies and laws on social insurance have been improved to become more suitable with the socialist-oriented market economy, contributing significantly to ensuring social security, promoting social progress and equality for sustainable development of the country in the process of renewal, development and international integration.

Deputy Prime Minister Vuong Dinh Hue (Source: VSS)

Throughout the “doi moi” (renewal) period, especially from 1995 to the present, following resolutions, directives, conclusions of the Party Central Committee and the Politburo, social insurance policies were institutionalised to become more complete in policy, management and financial mechanism. Specifically, the system of social insurance policies has been synchronous, covering most social insurance policies in accordance with international practice, including compulsory and voluntary social insurance; insurance for those having labour relations or non-labour relations, and for both formal and informal sectors. The social insurance policy system as well as the social insurance relations have been designed, regulated and operated more suitably and smoothly. With the leading role of the State and the participation of employees and employers, the Social Insurance Fund has become the largest social security fund, operating on the principle of contributing-enjoying and sharing among labourers of the same generation and among generations of those joining social insurance. The total amount spent on retirement, death, disablement and other monthly benefits and allowances in 2017 from the Social Insurance Fund was 132.140 trillion VND, an increase of nine times compared to the figure recorded in January 1, 2007, the first year of implementation of the Social Insurance Law. The total payment for retirement and survivor benefits in 2017 from the State budget was 44.88trillion VND, only 25.35 percent compared to 56.2 percent seen on January 1, 2007.

The coverage of social insurance in accordance with the law and the scale of participation in social insurance have expanded. By 2017, the total number of people participating in social insurance was 13.9 million (of which 13.6 million people participated in compulsory social insurance and 0.3 million paid voluntary social insurance), increasing by 2.3 times compared to the time when the Law on Social Insurance No. 71/2006/QH11 took effect on January 1, 2007. Meanwhile, the number of people engaging in unemployment insurance was 11.7 million. More than 3 million pensioners were enjoying with monthly pension and social insurance allowance. In 2017, 9.1 million people enjoyed benefits for sickness, maternity and health recovery, while 0.7 million people received unemployment support and some 56,000 people got monthly occupational accident and sickness benefits.

The structure of the social insurance system with the separation of the State management agency and the agency implementing the policies is on par with international practices, bringing into full play its role and effectiveness in each stage of designing, building, planning and implementing policies in collection, spending and management of social insurance fund. The capacity, efficiency and effectiveness of State management on social insurance have been strengthened. The legal system and legal documents on social insurance has been regularly amended, supplemented and refined, while the inspection, examination and supervision of the implementation of law related to social insurance have received greater attention, and foreign relations in social insurance have been promoted.

Reviewing, completing social insurance books to hand over to labourers for self-management (Source: VSS)

Besides the above-mentioned important achievements, the implementation of the guidelines to reform and increase the efficiency of social insurance policies still shows many limitations and weakness, including low coverage of social insurance which has yet to cover the entire population. The social insurance system has a single-layer design with asynchronous connectivity between social insurance policies and other policies. Compulsory social insurance still misses out several groups who have demand and ability to join.

In fact, in 2017, only nearly 29 percent of the workforce participated in social insurance. The goal of 50 percent of the workforce joining social insurance by 2020 as set in Resolution No.15-NQ/TW of the 11^th-tenure Party Central Committee’s fifth session and Resolution No.21-NQ/TW of the Politburo may not be reached.

The principles of equality, contribution-enjoyment, sharing and ensuring financial sustainability have yet to be observed thoroughly, while funds for retirement and survivor benefits are at risk of imbalance in the long term. The unemployment insurance policy only focuses on solving consequences when labourers become unemployed, but does not pay due attention to preventing and minimising unemployment. Retirement pension has yet to be adjusted independent from salary of those at working age as mentioned in Conclusion No.63-KL/TW issued on May 27, 2013 of the 11^th Party Central Committee and the Law on Social Insurance.

The validity and efficiency of State management remains weak, while law breaking and owing social insurance premiums, especially in the business sector, are common and addressed slowly. The implementation of social and unemployment insurance showed many shortcomings. The financial and personnel management mechanisms involved in unemployment insurance still depend on the State budget, which does not conform with international practices and insurance principle, but the problems are slow to be corrected, thus preventing the policy from producing expected outcomes. Awareness of social insurance of a group of employees and employers is still insufficient, while the efficiency of law and policy dissemination remains low.

There are many reasons for the above-mentioned shortcomings and weaknesses Subjectively, (i)Vietnam’s social insurance policy has been formed and developed only recently along with the shifting of the economic structure from centralised planning to socialist-oriented market economy, while the way of thinking and theoretical study as well as understanding of the issue need time to develop. The formation and completion of social insurance policy takes more time than the past over 20-year process in Vietnam. Therefore, the making of laws and policies along with organisations and apparatus related to social insurance remains inconsistent and asynchronous. (ii) A characteristic of Vietnam’s labour structure is that a majority of the workforce work in sectors without labour relation. The income of a majority of people is low and unstable with high pressure of immediate spending. The informal social security model based on traditional family is common. Therefore, many have yet to pay attention to social insurance. (iii) The capacity to make and enforce Party and State policies on social insurance is limited as people do not consider the work an important factor for sustainable socio-economic development. The capacity of analysis and forecast is limited. The work of reviewing, drawing lesson from reality as well as inspection, supervision and violation settlement has not been done well. (iv) Information and dissemination work has yet to receive priority. The awareness of social insurance in a socialist-oriented market economy, especially the understanding about the benefits and responsibility of employers and employees, remains low.

After more than 30 years of renewal, Vietnam has risen above the underdeveloped status, with the strength of the nation improved, the tradition of solidarity promoted and intensive international integration. However, the State budget remains limited, the general level of income is low and unstable, while the proportion of labourers in the informal sector is high, and pressure put by the population aging on the social insurance system is huge. In addition, the fourth industrial revolution is also causing rapid changes in the labour structure and labour relations.

The new situation has generated many opportunities and challenges, requiring more suitable viewpoints and guidelines for the reform of social insurance policy:

Firstly, social insurance is a major pillar of the social security system in the socialist-oriented market economy, significantly contributing to achieving social progress and equality, ensuring political-social stability, people’s life and national sustainable development.

Secondly, developing a social insurance policy system in a flexible, diverse and modern manner, towards multi-layers and international integration, aiming to cover all people in a roadmap suitable with national socio-economic development, with the harmonious combination of the principles of contribution-payment, fairness, equality, sharing and sustainability.

Thirdly, reforming social insurance policy is an urgent and long-term task, which should combine inheritance and stability with renewal, development in a harmonious manner in relations with the reform and development of other social policies, especially those regarding salary, income and social assistance, in order to ensure social security for all citizens.

Fourthly, developing a professional and modern system of organisations in charge of implementing social insurance policy, towards international integration, so as to consolidate the trust and satisfaction of the people as well as participants of social insurance.

Fifthly, implementing the social insurance policy is the task of the entire political system and the responsibility of all-level Party Committees, authorities, organisations, businesses and each citizen.

On the basis of those guiding viewpoints, the overall goals for the reform of the social insurance policy in the time ahead are: reforming social insurance policies to make social insurance really a pillar of the social security system, stably expanding coverage towards social insurance coverage for all people, developing the social insurance system in a flexible, diverse and modern manner, towards multi-layers and international integration, on the principles of contribution-payment, fairness, equality, sharing and sustainability; improving the efficiency and effectiveness of the management and implementation of social insurance policy in a streamlined, professional, modern, effective, trustworthy and transparent fashion.

To realise such objectives, it is necessary to set specific targets with specific roadmaps as follows:

- By 2021, about 35 percent of labourers are expected to participate in social insurance. The figure is set to reach around 45 percent in 2025 and 60 percent in 2030.

- By 2021, 45 percent of people at retirement ages will receive pension, monthly social insurance and social allowance (social pension). The rate is hoped to stand at 55 percent in 2025 and 60 percent in 2030.

- By 2021, all transactions are expected to be conducted online, with online public services at Level 4 and the hours of transactions between social insurance agencies and businesses equivalent to those at ASEAN 4 (Singapore, Malaysia, Thailand and the Philippines).

- By 2021, the index measuring satisfaction of social insurance participants is projected at 80 percent, 85 percent in 2025 and 90 percent in 2030.

Theoretical research and the reality in social insurance development in Vietnam since 1995, and research studies conducted at home and abroad with the participation of many agencies, units, organisations, experts and scientists, have clarified major contents of social insurance policy reform in Vietnam, which are (i) building a social insurance system of multi-layers (social pension; fundamental social insurance – comprising compulsory and voluntary insurance; supplement retirement insurance) in order to increase social insurance coverage, gearing towards all-people social insurance coverage, and create conditions for retirees to diversify their sources of pension; (ii), adjusting regulations on the minimum duration of social insurance participation in order to be eligible for pension, in the direction of allowing flexible access to pension while adjusting the way of calculating pension on the principle of fairness, contribution-payment and sharing; and expanding the coverage of compulsory social insurance to people with demand and ability to join; (iii) enhancing linkage and support among social insurance policies as well as their flexibility in order to complete the target of expanding the coverage; (iv) reforming the making and organisation of implementation of policies to consolidate confidence of social insurance participants; (v) speeding up the shift of labourers working in the informal sector to the formal sector to raise the number of labourers joining social insurance; (vi) amending and dealing with shortcomings in retirement insurance towards more flexibility in terms of conditions for benefits and stricter regulations of one-time social insurance benefit; raising the real average retirement age which is currently lower than the age stipulated by law; (vii)amending regulations on the levels of social insurance premiums and incomes to calculate premiums towards the goal of wider coverage with lower benefits instead of the current high benefits but for small coverage. (viii) adjusting the level of accumulations to be eligible for maximum ratio of pension in accordance with international practice; (ix) building a roadmap for making pension relatively independent from salaries of working persons and changing the method of adjusting pension in the direction of sharing.

Throughout several phases of development, social insurance policy has produced positive outcomes but at the same time revealed major problems that require reform and adjustment. On the basis of the major contents of social insurance reform and to achieve the set goals, the following tasks and solutions should be carried out.

1- Strengthening leadership of information work to raise awareness of social insurance policy

Strengthening the role and responsibility of all-level Party committees and authorities in disseminating policies and laws on social insurance so that cadres, Party members and the public could clearly understand the role and significance of social insurance policy to their stable lives and socio-economic stability and ensuring of social security; and the necessity and basic contents of social insurance policy reform, thus creating social consensus.

2- Completing the system of laws on labour, employment, social insurance

Refining the system of laws on labour, employment, social insurance and related laws in order to institutionalise policies on social insurance policy reform. Amending the Law on Social Insurance to expand its coverage towards covering all the people; designing a multi-layered social insurance system, and refining regulations on insurance contribution– entitlement. Reviewing and revising regulations to make it easier for Vietnamese workers overseas to join social insurance.

Requiring foreigners working in Vietnam to join compulsory social insurance will on the one hand enable them to enjoy social security while on the other hand protecting jobs for domestic workers, preventing foreign workers from having advantage over local counterparts in accessing job opportunities. Negotiating and signing bilateral social insurance agreements with other countries to help with acknowledging and handling social insurance benefits for Vietnamese workers and workers in countries that sign such agreements.

Amending the Law on Employment and policies on unemployment insurance and employment in the direction of helping enterprises and workers maintain jobs and avoid layoffs, ensuring their legitimate rights and helping the unemployed to quickly find jobs while dealing with the abuse of unemployment benefits.

Perfecting sanctions for violations of the social insurance law, especially the evasion and delay of social insurance payment or abuse of social insurance, in the direction of giving authorizing agencies in charge of State management of social insurance and the social insurance fund to impose punishment on violators. Firms and workers will have the rights to lodge complaints and sue insurance agencies if violations are found in the implementation of social insurance policy. Considering removing the regulation that allow trade unions to sue over social insurance delay which are not in line with international practices.

The perfection of policies and laws on social insurance must be done in combination with refining policies and laws on salary, employment and treatment for people with meritorious contribution.  

3 – Improving efficiency of State management on social insurance

Defining a State management agency in charge of social insurance, clearly defining responsibilities of agencies concerned, strengthening coordination among State agencies in directing the implementation of social insurance, promptly handling difficulties arising in the enforcement of policies and laws. Improving the capacity of State agencies in planning social insurance development strategy and improving legal system.

Improving legal compliance by taking synchronous administrative, economic and judicial measures in order to increase the number of social insurance participants, in combination with increasing the number of social insurance beneficiaries, especially retirement pension. Strengthening inspection and supervision of the enforcement of social insurance law, promptly detecting and dealing with violations, especially acts of evading and delaying social insurance premium payment, and social insurance fraud and abuse.

Amending and supplementing legal regulations to promote decentralisation of power for  social insurance agencies, allocating quota for social insurance coverage in localities, clearly differentiating between State management and social insurance policy management.

Building an archive on social insurance and a set of criteria to assess the performance and quality of services of social insurance agencies. Enhancing collaboration and integrating databases of State management agencies on investment, finance, taxation and labour to improve the efficiency of managing social insurance participants and social insurance policy enforcement.

4 – Improving the management capacity and the efficiency of the implementation of social and unemployment insurance policies

Perfecting the organisational apparatus for implementing social and unemployment insurance policies in a streamlined and effective manner in line with the spirit of Resolution No. 18-NQ/TW dated October 25, 2017 adopted at the 6^th session of the 12th-tenure Party Central Committee on some issues related to the continued renovation and re-arrangement of the political system’s apparatus. At the same time, strengthening and improving the capacity of the Management Council of Vietnam Social Insurance, and implementing the financial, accounting, auditing and reporting regulations on social insurance in accordance with relevant legal regulations.

Accelerating administrative procedures reform, implementing four-level online public services for both social and unemployment insurance; fine-tuning and enhancing the linkage of the national database on social insurance with related database systems to well serve the implementation of policies, research and policy-making works. Continuing the modernisation of social insurance management; investing in technology development, and the application of advanced management methods in implementing social and unemployment insurance.

Intensifying communication efforts using contents and forms designed to suit each group targeted by social and unemployment insurance, in parallel with enhancing the specialised inspection work in the field of social insurance.

Strengthening and improving the functions, tasks, organisation and activities of employment service centres for the effective implementation of unemployment insurance policies, ensuring that unemployment insurance is really a labour market management tool. Expenses for organising the implementation of unemployment insurance policies will be sourced from the unemployment insurance fund, not from the State budget. Building mechanisms for recruiting and training human resources based on capacity and skills to meet the requirements and tasks, especially in the context that the labour market is rapidly changing, and the 4^th industrial revolution is likely to cause changes in the labour market structure.

Enhancing the assessment and forecast of finance and investment efficiency for the social insurance fund; diversifying the investment portfolio and structure of the social insurance fund for safety, efficiency and sustainability with priority given to investment in Government bonds, especially long-term Government bonds; and slowly expanding investment to areas with high profitability. At the same time, building roadmaps to invest idle money of the fund through investment trust in the domestic and international markets.

5 - Strengthening the leadership of the Party, and promoting the role of the people, the Vietnam Fatherland Front and social organisations

Strengthening the leadership of the Party in making policies and organising the implementation of social insurance policies in accordance with the socialist orientation.

Strengthening the leadership and the implementation organisation of Party committees at all levels and local authorities for the effective enforcement of social insurance policy, especially in increasing the number of people joining social insurance and in abiding by legal regulations.

Promoting the role of the Vietnam Fatherland Front, political and social organisations and the people in supervision and social criticism related to social insurance policies, and in educating and persuading the public to follow laws and policies on social insurance.

Social insurance is one of the major policies of the Party and State, so the reform of social insurance policy is a serious issue with direct relations with the people’s life. To complete the objectives, it is necessary to synchronously implement the above-mentioned solutions with the involvement and high determination of the entire political system, thus contributing to ensuring social progress and equality, political stability, social order and safety and promoting the national construction and defence cause.

International Cooperation Department