Project contextViet Nam has a relatively well-developed social protection system in terms of scope and legal coverage. This includes a social insurance scheme that covers seven social security branches and various minor social assistance programmes. However, there are challenges in what regards effective coverage, as contributory and non-contributory policies are currently planned and implemented independently from each other.
The Social Insurance System is managed by the Viet Nam Social Security (VSS) agency and currently covers only 30 per cent of the labour force. As it is mostly designed for those in full-time, permanent wage employment, it is not well adapted to include workers in non-standard forms of employment. A Voluntary Social Insurance system has been introduced to help to incorporate these workers, but has achieved very low coverage results so far – it is estimated that less than 3% of the labour force participates in the voluntary social insurance system.
At the same time, with the exception of the universal social pension for those above age 80, social assistance benefits are narrowly targeted and severely under-funded.
The policy and institutional fragmentation of the Social Protection system results in significant coverage gaps. For example, contributory and non-contributory pensions, combined, only reach one third of older people. A new momentum for reform was launched by the adoption of Resolution No. 28-NQ/TW, which for the first time incorporates the concept of universality into the Vietnamese legal framework covering Social Protection.
It was against this background that the Vietnamese economy, labour market and society was hit by the COVID-19 pandemic. The GDP growth rate of 1.8 per cent recorded in the first quarter of 2020 was the lowest of the past three decades. It was, nonetheless, one of the few countries in the world to report positive economic growth over this period. If, overall, the economy has been resilient, many Vietnamese have felt a severe blow to their income security and their livelihoods. Overall, COVID-19 has affected 30 million people, or half the total labour force. Urban unemployment reached 4.5 per cent and approximately 1.2 million persons left the labour market, with a higher proportion of women for whom the long-term socio-economic impact of COVID-19 is posed to be significant. The impact has also been greater on informal workers (71 per cent of total employment) than for wage employees. Before the crisis, only 25 per cent of workers were covered by unemployment benefits, leaving nearly 40 million workers without coverage. As part of its fiscal response package, the government provided cash transfers to individuals who lost their jobs but were not eligible for unemployment benefits, mostly in the informal sector. However, rollout was slow as authorities struggled to identify and reach informally employed workers.
This situation exposed important gaps in social protection coverage, which are only exacerbated by the institutional fragmentation. A majority of workers in Viet Nam still fall within the “missing middle”, neither formal enough to participate in social insurance, nor vulnerable enough to receive social assistance.
Going forward, on of ethe biggest challenges for Viet Nam will be to prevent the surge of inequalities. Many wage-earners whose jobs can be done from home have received full pay, while low-wage workers, mostly in the informal economy, have seen their earnings fall and unemployment rise. These differentiated impacts not only have an influence in the short-term, but could also shape future patterns in the labour market. An expanded and inclusive social protection system will be key to implement an effective redistributive policy. In the short-term this will include revising the unemployment insurance policy to ensure it is more inclusive and responsive to the new pressures of the post-COVID labour market, while continuing to develop a broader framework for Social Protection in Viet Nam, which takes all branches together to identify how to narrow the existing coverage gaps.
Project strategyThe project will support Viet Nam in accelerating the transition towards an inclusive and integrated social protection system through (i) legislative reform to promote a rights-based system, (ii) evidence for the development of specific policy options for coverage expansion, and (iii) advocacy for high-level political support.
The focus is therefore on expanding the coverage of the system, including unemployment insurance, to groups insufficiently covered or at risk of being left behind. Through this, the project will aim to promote formalization. The project will also enhance synergies and complementarity between the work of the two departments of the Ministry of Labour, Invalids and Social Affairs (MOLISA), to ensure that an integrated and coherent approach is adopted as the country adapts to the effects of COVID-19.
Project objectivesMore workers are covered by social security schemes, through gender sensitive and rights based improved policy and legal framework, and enforcement and delivery mechanisms in Viet Nam.
- Output 1: Additional evidence and knowledge are available to feed the legal review draft and to facilitate the development of a rights-based coherent SP framework
- Output 2: Evidence-based policy options for the extension of contributory and non-contributory benefits are developed, including for unemployment protection, in line with MPSARD, MPSIR and Resolution 42 objectives
- Output 3: Advocacy and communications tools are developed to support Government and other partners facilitation of evidence-based decision-making on existing and new schemes
Main StakeholdersThe key stakeholder, or executing partner, is MOLISA and its key departments. The Department of Employment (DOE) is MOLISA’s department in charge of all employment-related topics, including unemployment insurance. DOE also plays the lead role in the implementation of Resolution 42 to address the impact of COVID-19.
Vietnam Social Security (VSS) is responsible for the management and implementation of the social insurance, health insurance and unemployment insurance policies. It is responsible for the collection of social insurance contributions and the administration of benefits and is, thus, a key player in the implementation of social protection in Viet Nam.
Other key stakeholders, including the National Assembly’s Parliamentary Committee on Social Affairs (PCSA) and the Central Party Committee Office will provide direction and oversight of the development and implementation of SP policies. The involvement of these partners, with their important decision-making role in consultations will help build consensus needed for formulation and experimenting new policies/systems. The ILO will also consult with the social partner organisations as part of its institutional tripartite approach. These are the Viet Nam Chamber of Commerce and Industry (VCCI) and the Viet Nam General Confederation of Labour (VGCL) and the Viet Nam Women Union (VWU).
ILO Country Office for Viet Nam
304 Kim Ma, Ngoc Khanh, Ba Dinh, Hanoi, Viet Nam