ILO Helps Vietnam Improve Social Insurance Law to Benefit Retirees

Vietnam’s Ministry of Labor, Invalids and Social Affairs (MoLISA) and the International Labor Organization (ILO) launched on June 17 a project to strengthen the performance of the local social insurance system to protect workers after retirement. Under the project, the legislation and legal framework for social insurance will be improved to support the reform of the Social Insurance Law, which is expected to be approved by the National Assembly (NA), the country’s highest legislative body, next year. The ILO will provide technical advice on critical issues, including the deficit pension fund, law enforcement, the improvement of short-term insurance schemes, and protecting informal workers using a combination of voluntary insurance and social allowances. Although finding jobs for more than one million young women and men entering the labor force every year is a priority for Vietnam in the short term, the growing number of elderly people poses a serious long-term problem, said ILO Vietnam Director Gyorgy Sziraczki. The reform needs to protect workers after retirement by making sure that employers and employees contribute to the social-insurance fund based on the total income instead of the basic salary and in line with the new Labor Code, Mr. Sziraczki suggested. Last year, Vietnam found that people over 60-year-old accounted for more than 10% of the total population five years ahead of predictions. With fewer young workers in the future and a generous pension formula, the country may run out of funds for pensions unless urgent measures are introduced. The Vietnam Social Security (VSS) covers Vietnamese citizens with employment contracts of three months or longer, but the enforcement remains a challenge as only 10.3 million workers had social insurance policies at the end of last year, accounting for 20% of the country’s total workforce. Economists hoped that the situation will change once the amendments to the Social Insurance Law 2007 are passed by the NA. (Phap Luat Vietnam –Vietnam Law June 18 p2)