Unemployment Insurance Policies: Objectives and Importance

Unemployment insurance not only supports workers with income and skills when unemployed to help them find new jobs quickly but also plays a critical role in maintaining employment and preventing unemployment.

UI significantly benefits workers, employers, and the economy at large. It stabilizes the economy and provides social security by mitigating the social strain caused by unemployment. For developed nations, unemployment insurance systems are considered "automatic shock absorbers" for the economy, evolving alongside the development of market economies and labor markets to manage unemployment risks.

The primary aim of UI is to provide workers with economic compensation in the event of unemployment, enabling them to stabilize their lives, continue seeking new employment, and contribute to societal development. For employers, UI alleviates the financial burden of compensating workers during layoffs. Furthermore, the Unemployment Insurance Fund serves as a source of capital for national economic development, addressing social issues and investing in key economic sectors, although its contribution is modest.

Importantly, UI also reduces the fiscal strain on the national budget by minimizing direct support for unemployed workers, allowing state funds to focus on long-term socio-economic stability and development.

Proposed Amendments to the Unemployment Insurance Framework

The draft revised law introduces a notable provision (Article 58, Clause 5, Paragraph 2) that allows workers to directly contribute to the Unemployment Insurance Fund in cases where employers have defaulted on their contributions. This enables workers to claim UI benefits. When the Social Insurance Agency recovers the overdue contributions from employers, the amount paid by workers is reimbursed.

However, concerns about the practical efficacy of this regulation have been raised. Legislators, such as Mr. Duong Khac Mai (Dak Nong delegation), emphasize the need for specific timeframes for reimbursement to ensure workers' rights and benefits.

Flexible Contribution Rates and Expanding Coverage

The draft proposes reducing the fixed 1% UI contribution rate for both employers and employees, introducing a flexible rate of up to 1%. The state would support up to 1% from the central budget. The government would determine specific contribution rates based on the balance of the UI Fund.

Expanding UI coverage to include informal workers and those without labor contracts has also been suggested. Ms. Thai Thu Xuong (Hau Giang delegation) highlighted the higher unemployment risks faced by these groups and the need to address them as part of social security reforms aligned with Resolution 28-NQ/TW.

Challenges and Suggestions for Improvement

Concerns about the fairness of current benefit rules, such as the uniform maximum benefit period of 12 months, have prompted calls for adjustments to align with contribution levels and durations. Suggestions include adopting a "contribution-benefit principle", akin to the Social Insurance Law, where benefits correspond to contributions.

Additionally, mechanisms to distinguish between overdue contributions for unemployment insurance versus social and health insurance were recommended to ensure transparency and feasibility.

Conclusion

The proposed revisions aim to strengthen unemployment insurance policies by expanding coverage, enhancing fairness, and improving effectiveness. These changes are critical for safeguarding workers' rights, supporting employers, and fostering socio-economic stability in an evolving labor market.