Van Thu Ha
Social security has been playing an important role in the socio-economic development plans of Vietnam as well as in the public awareness. It became an important measure for dealing with the price storm and impact of the economic downturn that started from 2008. This article tries to give an overview of the current social security system of Vietnam from the policy perspective and its development trend with a review of the government’s reaction toward the economic downturn.
In Vietnam, social security is translated in different ways such as: social assistance, social protection, social security, social safety, etc. In the strict sense of the word, however, the concept of social security, emphasizes providing, through different social measures, secure income and responses to other basic needs of the vulnerable groups, of people deserving reward from the country, or of the victims of natural and man-made disasters.1 Recently, however the stress has been put more on social protection against risks, hazards that may lead to reducing or depriving from income sources.2
The formal social security system (understood as the state or legal security system) is two-fold: social insurance (based on the contribution-for-benefits principle) and social assistance (providing benefits without requiring any financial contributions, including social allowance, assistance, aid and privilege). The informal social security system consists of traditional security measures such as a kind of intergeneration linkage, in which parents take care of their children who, in turn, take care of their parents when they are unable to work anymore; and assistance by the society/ communities/ individuals to vulnerable groups or disaster victims, in the spirit of ‘intact leaves wrap torn leaves, torn leaves wrap tattered leaves’, a strong traditional form of social capital in Vietnam.
The formal social security system is the main object of this article.
In general, the following areas are part of Vietnam’s social security system:
Compulsory social insurance (including compulsory health insurance): applied in the formal labour sector, based on financial contributions by the employer and the employees, it covers sickness, maternity, labour accidents, occupational diseases, unemployment, retirement and death. The voluntary social insurance, applied in the informal labour sector, is limited to covering retirement and death.
Voluntary health insurance for the remaining part of the population (except those targeted by state subsidies, including the poor, those who deserve rewards from the country or benefiting from social assistance, as well as under 6-year old children). The compulsory health insurance will be extended to the informal labour sector and to pupils/students who will benefit from the universal health insurance by 2014.
Social privilege is a special aspect of Vietnam’s social security system, giving priority and subsidies to a special group of people, who deserved reward and honour from the country (i.e. people or relatives who devoted their life to the Revolution, to the protection and development of the country, such as heroes’ mothers, other heroes, wounded soldiers, people who participated in the resistance-movement, youth volunteers, etc.), enjoying a higher and broader subsidy level compared to others in the system (including not only food subsidies, but also health care, education, employment, housing and spiritual support).
Social assistance (or Social relief): including social assistance to vulnerable people (a target group of social aid, such as lonely elderly people, orphans and the disabled) and emergency assistance (emergency aid/relief), to people affected by disaster or other critical situations they can not cope with. In this case, the beneficiaries do not have to pay, while the assistance offered to them and the means to do so are diversified according to context and relief needed (one-time or monthly allowance, provision of opportunities for vocational training and employment, support for education and health, etc.)
Labour market policies and programmes, focusing on job creation support for vulnerable people in the labour market and on subsidies for redundant workers due to the restructuring and equitization process of state-owned enterprises.3 The labour market is considered as one of the four main focus areas of social security, besides social insurance, assistance and privilege in the coming social security strategy for the period 2011-2020.4
The rights of the elderly and disabled people have been defined in the Constitution of 1946. Furthermore, policies regarding sickness, maternity, labour accidents and retirement for state workers were stipulated in the Ho Chi Minh Decree of 1950. And in the Constitution of 1992, important social security issues relating to employment, social insurance, education, health care, support to people well deserving from the country, and social assistance were mentioned as civil rights and have been gradually specified since then in a range of laws and ordinances.5 However, social security had never been systematically taken into account in the government socio-economic development plans. Here in this section of the article you will see how this has changed and its importance has gradually grown.
In the five-year socio-economic development plan 2001-2005, social security only appeared vaguely in some measures such as the National programme on hunger alleviation and poverty reduction, water supply and rural sanitation, and public health care.6 Economic growth was the dominant trend of this five-year plan (six out of 12 measures were directly related to economic development, four to Governance, and two to social welfare). At the end of it, the Government openly criticized the ‘unequal status’ of social-cultural development, compared to the results of economic growth in the implementation of this five-year plan.7 This led to a Party decision in the following five-year development programme to ‘combine economic objectives with social objectives (…), implementing social progress and justice within each step of development and in each development policy’.8
The concept of social security was mentioned for the first time in the report of the Party Congress IX9 halfway through the 2001-2005 plan. In the new plan, ‘promptly extending social insurance and social security systems, developing and implementing unemployment insurance policies for jobless labourers’ were proposed as measures to address social issues, beside other measures such as job creation, poverty reduction, social assistance, public health care, etc. ‘Extending the social security system’ meant widening the scope of social security policies by extending its reach (beneficiary targets and scope) and increasing the benefits level, together with giving a new impetus to economic growth.
The next five-year 2006-2010 socio-economic development directive presented a clearer picture, defining ‘development of a social security system’ as one of the eight main tasks of the five-year plan,10 including working towards universal health insurance. However, to implement that task, the Government action programme focused mainly on job creation, income generation and poverty reduction, together with ‘the promotion/intensification of social security activities’.11 So, a more strategic approach to a social security system was not yet considered as a clear priority in this five-year plan.
New policies were often developed provisionally (on an ad hoc basis) more than strategically. Prof. Trinh Duy Luan, Director of Sociology Institute (Vietnam Academy of Social Sciences) compares the social security model in Vietnam to ‘a person trying to protect his thatched cottage before and during a storm attack by using available materials to cobbling up the corners of his house according to the direction of the storm’.12
Yet, it can be claimed that breakthrough were also made. One breakthrough in social security during this period was first of all the proposal of a strategy focusing on risk mitigation via social insurance. The most remarkable results were two new laws on social insurance (2007) and health insurance (2008). These laws created a legal framework allowing the informal labour sector to be part of a social insurance system and to reach universal health insurance in five years’ time. A government decree on health insurance (2005) was another step taken, which has helped to almost double the number of people benefiting from health insurance, going up from 18 million to 34 million, by extending the target population benefiting from health care subsidies and creating a new scheme for a voluntary medical insurance system applied to all. With these two laws, in principle, the informal sector is able now to have access to insurance in case of sickness, maternity, retirement and death. (See more details in Box 1.)
The second breakthrough was that the social security system took a strong step forward in its coupling with economic development policies, e.g. by including social security concerns in emergency policies in order to cope with inflation and the economic crisis.
Social security became one among other solutions to deal with the economic downturn. If at the beginning of 2008, social security was one among 8 other measures focusing on food security and emergency relief in an attempt to resist the sudden price increase, at the end of 2008, these measures were better integrated, diversified and systematically applied in using state budget for social security. (See more details in Box 2).
The estimated state budget for 2009 was restructured with the priority given to social security, increased expense for agriculture, rural areas and areas in difficult situations especially the 61 poorest districts.13 For the first time, ‘ensuring social security’ was part of the overall objectives of the 2009 socio-economic development plan (and it still is in the revised objective).14 Social security is one among ‘five urgent solutions of the government’, including specific social security measures which are at the same time economic stimulation measures, such as the fast and sustainable poverty reduction programme for the 61 poorest districts (in 20 provinces, with 2.4 millions of people and a poverty rate of more than 50%),15 the social housing programme for students, workers and low income people in 63 provinces/cities,16 which have been rather quickly implemented.
By the end of the 10-year socio-economic development plan 2001-2010, it can be said that social security will have gained a clearer and more important position in the development objectives.
Social security has become a hot issue for the population suffering from the impact of the world economic downturn and has been discussed in many aspects, going from methodological levels to practical concerns about the current social security system. The crisis has focused the discussions on development. ‘Taking growth rate as the measure to evaluate development is a mistake. Growth does not mean development’, said Vice-Prof. Dr. Nguyen The Nghia, vice-president of Ho Chi Minh City Union of Science and Technology Associations.
Some remarkable achievements in the area of social security have been publicly recognized, such as the extension of the system’s coverage, a better quality of its services, a fast and continuous poverty reduction rate (2-3% per year since 2001-2007), better access to economic resources and basic social services (subsidized credit, improved livelihood, health card provision, remission of school fees, housing support, urgent relief due to disaster and loss of harvest),17 and an increased mobilization of community support, etc. However, some weaknesses have also come more clearly to the fore.
The many weaknesses that have been pointed out include: the non-integrated and non-comprehensive development of the social security system, linked with economic achievements,18 lack of specific social security policies for the population in rural, mountainous and other difficult areas,19 low coverage ratio, low benefit level, and low effectiveness (the compulsory social insurance only covers 16% of the labour force, and 67% of the target group). Other problems are the high debt level of the social insurance system (10%), high rate of poor households just out of but still close to poverty (70-80%), high ratio of households falling back under the poverty line (7-10%), and difficult access of the poor to social services and welfare. The government provides only a low level of social allowance, which is only equal to ½ of the poverty line criteria and covers only 50% of around 1.3 million people.20 Also, besides covering the traditional groups such as lonely elderly people, orphans, and disabled people, there was also the question of shortcomings of the system for new vulnerable groups such as seasonal/short term contract workers, landless farmers, migrant workers, etc.
A major weakness is the unequal access to the benefits of the social security policies. This has even been recognized by Mr. Bui Hong Linh, Vice-Minister of MOLISA (Ministry of Labour, Invalids and Social Welfare), in a national workshop on social security of April 2008, for failing to offer the same opportunities to the low-income groups so as to allow them to participate in and benefit from the policies.21 This is mainly due to the failure to provide mechanisms for some groups to access the social security. The results of the Vietnam social security survey of 2007 (see detailed results in Box 3) suggested a new way of approaching social security, looking at the effectiveness of the system from the perspective of assisting vulnerable people and its position in the development strategy.
Take as an example the compulsory social insurance system, a sub-system of the social security system. The target population of the compulsory social insurance are workers having at least a three-month duration contract up to an open-ended contract. Yet, employers usually only declare a list of key employees (i.e. long-term contract workers) for social insurance benefits. Moreover, seasonal or short-term contract workers normally have unstable jobs and are moving from one job to another, so that they can not get any social insurance record books. So, by what mechanism can they have access to a compulsory social insurance?
Another example for the opposite case is that, a mechanism may belong to the system, but destroy it from inside. The system’s fulcrum is household registration, which excludes all non-residents from basic social services and other social security benefits, yet this group (non-residents) has strongly increased with the extension of a more flexible labour market. ‘The design and implementation of social policies and programmes in VN remain residence-based. This denies mobile workers or unregistered residents access to many social, political and economic rights and resources’.22 The new residence law shows a more open approach to migrants. However, only a small number of them meet the requirements to get a residence registration book. Lower and upper secondary education for migrant children remains difficult. The migrant poor also have difficulty in accessing social services and other support policies for poor households.23
Another weakness to be mentioned is the absence of information control capacity to measure of the effectiveness of the social security system, and thus also to develop its capacity to cope with critical changes that might harm or weaken the effectiveness of the social security system and its specific policies. Another major related concern, according to a UN country team consultative group, is the huge information gap that exists between the existing information level and a full and nuanced understanding of the employment and social impact of the economic crisis.24
According to MOLISA Minister, Ms. Nguyen Thi Kim Ngan, the greatest difficulty in labour management and the development of policies for labourers is managing the situation of the informal workers (70% of the labour force). It is impossible to know exactly where they work, when they lose their jobs or change job, so that it is impossible to offer specific and appropriate measures.25
It is too early to say how above-mentioned obstacles will be taken into account in the coming socio-economic development plan of 2011-2020. However, a very positive sign is that the government decided to develop a social security strategy that is an integral part of the socio-economic development strategy for the period 2011-2020. The social security strategy is being drafted now. I will give some initial comments based on the very limited information available from the very first draft of this social security strategy.
It is anticipated that by the end of this year, the draft social security strategy for 2011-2020 from the Labour and Social Science Institute of MOLISA, will be submitted to the National Assembly. This strategy is a component of ‘the overall strategy for Vietnam socio-economic development in the period 2011-2020’. The draft proposal of a social security system for the population in rural and mountainous areas drafted by MOLISA will be submitted to the government by the end of this year as well.26
A social security strategy is being developed, starting from the view that ‘social security is the guarantee that the society provides to its members by implementing a series of mechanisms, policies and interventions against dangers, risks that may lead to the decrease or loss of their income sources’. Social security, in this sense of the word, puts the stress on prevention and protection of each individual against risks and vulnerability, adopting an active social security approach – a recent worldwide trend.
The objective up to 2020 is to ‘develop a comprehensive, diversified, flexible, sustainable social security system compatible with the socialist-oriented market economy, ensuring that all social members enjoy minimum living standards’.
In order to achieve this objective, the structure of resource allocation will stress the importance of putting more funds aside for social security. Social security will become a mainstay in development, with a rights-based approach (all inhabitants have a right to social security and access to a social security system), a responsibility-based approach (coupling responsibility with rights, contribution with benefit, mutual sharing, support, assistance, complementarity between individuals, social groups and the government), and a participatory approach (encourage people to participate in the system, encourage all social actors to participate in the development and implementation of social security policies).
There are three main social security strategies, including a preventive strategy (active labour market policies), a mitigation strategy (social insurance) and a response strategy (social assistance and social privilege), to be carried out in 3 periods: i) up to 2010, the government provides initial support to guide the people’s participation; ii) in the period of 2011-2015, the government will gradually lessen its support and people gradually increase their contribution; iii) in the period of 2016-2020, secure a social security net covering 80% of population. The core issues for all people being able to participate in the social security net are poverty alleviation, job creation and a stable income.
More specifically for the population in rural and mountainous areas and for ethnic minorities, the social security system will be designed as a five-floor building. The first floor will ensure minimum living standards for the population. The second will cover labour market policies, the third social insurance (whether compulsory or voluntary), health insurance and (piloted) agriculture insurance, the fourth social privilege policies for people deserving of their country. The last floor will be social assistance (regular allowance and emergency relief).
This is the most remarkable point of the strategy, although it is not totally new, since it stems from the Constitution. Social security is considered as a basic right of the citizens. When social security becomes a right, the poor and vulnerable groups are no longer charity targets of assistance. The rights-based approach looks at the marginalized fringe of the population from the perspective of injustice/inequality, not as victims of poverty or misfortune. Talking about rights means talking about equality. Consequently, the social security system will have to be built in such a way that it offers a better access to the majority of the population, without excluding the poorest and the most vulnerable.
The draft strategy talks about the responsibilities of the actors of the triangle made of the individual citizens, the community and the government. From a rights-based approach, the government role is decisive and irreplacable. The strategy of gradually lessening government support and increasing the people’s contribution only makes sense if social insurance is truly in place - when the system is reactive and flexible and ensures access of all people to social security. Building up such a system requires both a lot of financial resources and a lot of human resources. Vietnam currently has less than one professional social worker for every 10,000 people (in England, it is one social worker per 500 people, in other countries in the region or elsewhere in the world one per 1,000 people).27 Professional inspection staff responsible for enforcing implementation of the social and health insurance policies are also very few, able to inspect only a very small percentage (0.28%) of all the enterprises and organizations and to impose very light penalties that hardly deter violators.28 Thus the government would have to invest a lot, yet from what resources? If the Party’s determination to ‘combine economic objectives with social objectives (…), implement social progress and justice in each step of development and each development policy’,29 is seriously taken into account, social security would have to be prioritized in the socio-economic development objectives, and the government must consider other measures such as reduction of wasteful expenditures and combating corruption; and a solidarity scheme including taxation and redistribution.
Encouraging the participation of the people and the social actors in the development and implementation of the social security policies is a new approach, compared to a top-down development policy process merely consulting the population in a perfunctory way. However, this new approach can only be put into practice if it is clearly institutionalized and if sufficient resources are allocated to make its implementation possible. People are able to participate if they are offered necessary and sufficient conditions. One of the necessary conditions is information, as Vice-Prof. Dr. Nguyen The Nghia, vice-president of Ho Chi Minh City Union of Sciences and Technologies Associations, put it: ‘The government should transparently inform people about its activities, apart from state secrets. This would show the government’s trust in the people and the sure return would be the people’s trust in the government’.30 However, this ‘trust stimulus’ should not only be given in critical periods such as economic crisis, but also in normal times. A sufficient condition is the opportunity to participate, not only in the development and the implementation of the social security policies, but also in the monitoring and adjustment process of these policies.
If social security is a focal point only in emergency situations, In the World Bank’s report ‘TAKING STOCK. An Update on Vietnam’s Recent Economic Development’, (see details in box 4), the social security system is regarded as a focal point only in emergency situations - to be developed in such a way that it can temporarily resist a critical situation such as an economic crisis. Thus, the priority is still given to growth, and a certain level of inequality in society allowed to persist, so long as it does not lead to social instability. Yet such a position is contrary to the rights-based approach of social security.
Hopefully, the social security strategy for the period 2011-2020 will actually confirm social security as a mainstay in development, in a spirit of social justice.
Training Manual on Social Security / Ms. Nguyen Thi Kim Phung, General Editor. Hanoi Laws University, Legal Publisher (2005)
Related Documents of the Party and Government (Socio-Economic Development Orientation, Socio-Economic Development Plans of 2001-2005, 2006-2010, 2011-2015, 2011-2020, Budget Estimation of 2008)
Related Laws and Ordinances (See Annex)
Report on the Socio-Economic Situation in 2008, General Statistics Office (GSO).
Report on the Socio-Economic Situation in The First Six Months Of 2009, GSO.
Participatory Monitoring of Urban Poverty in Vietnam, Synthesis Report 2008, April 2009.
TAKING STOCK: An Update on Vietnam’s Recent Economic Developments, World Bank in Vietnam, 8-9 June 2009.
Related articles in the electronic newspapers and magazines of Vietnam.
1. Education Law (1998, Amendment in 2005);
2. Children Protection, Care and Education Law (1991, Amendment in 2004);
3. People Health Care Law (1989);
4. Labour Codes (1994, Amendment in 2002, 2006 and 2007);
5. Disable Ordinance (1998, Draft Law on The Disabled - 2009 );
6. Elderly Ordinance (2000 Draft Law on The Elderly - 2009);
7. Vietnam Hero Mother Ordinance (1995);
8. Country Dedicators’ Privilege Ordinance (1994);
9. Flood and Storm Prevention and Management Ordinance (2000);
10. Decree 07/2000/ND-CP on Social Relief Policies (2000);
11. Decree 63/2005/ND-CP in Medical Insurance (2005);
12. Housing Law (2005);
13. Vocational Training Law (2006);
14. Law on Contracted Vietnamese Working Abroad (2006);
15. Law on Human Immunodeficiency Virus Prevention and Management (HIV/AIDS) (2006);
16. Gender Equity Law (2006);
17. Law on Infectious Disease Prevention and Management (2007);
18. Social Insurance Law (2006)
19. Health Insurance Law (2008);
20. Draft Law on Health Check and Treatment (2009)
1. A similar point of view can be seen in several documents:
‘Renovation of social policies – proofs and solutions’, Professor Pham Xuan Nam (general editor), 1997.
‘Training manual on social security,’ Msc. Nguyen Thi Kim Phung (general editor), Hanoi Laws University, Justice Publisher, 2005, p. 13.
‘Social security’, Communist magazine, Source: Understanding several concepts in the Party Congress X, National Politics Publisher, Hanoi, 2006. Accessed from website, 2 June 2009.
2. Point of view of the Labour and Social Science Institute (Minister Nguyen thi kim Ngan worked with the Labour and Social Science Institute on the draft social security strategy framework in the 2011-2020 period, Hong Phuong.) From Molisa.gov.vn, 6 May 2009, accessed on 4 June 2009.
3. Social security, Communist magazine, Source: Understanding several concepts in the Party Congress X, National Politics Publisher, Hanoi, 2006. Accessed 2 June 2009.
4. Workshop to develop a social security strategy in the 2011-2020 period, 5-6 June 2009. From portal.net.vn, accessed 2 July 2009.
5. See Annex 1.
6. National Assembly Decision 55/2001/QH10 on the five-year socio-economic development plan 2001-2005. From vbqppl.moj.gov.vn, accessed 28 August 2009.
7. Government Report on the five-year socio-economic development plan 2006 – 2010. From vietnamnet.vn, 16 May 2006, accessed 28 August 2009.
8. IX term Party Steering Committee’s Political Report in the Party Congress X, 18 April 2006. From cpv.org.vn; accessed 19 August 2009.
9. VIII term Party Steering Committee’s Political Report in the Party Congress IX, May 2003 From cpv.org.vn; accessed 19 August 2009.
10. Government Report on the five year socio-economic development plan 2006 - 2010 in 9th meeting, National Assembly term XI. From vietnamnet.vn, 16 May 2006, accessed 28 August 2009.
11. Government action programme to implement the decision of the Party congress X and National Assembly term XI (according to government website). From vietbao.vn, 17 October 2006, accessed 19 August 2009.
12. Vietnamese farmers will enjoy social security with WTO accession. Phuong Loan. From vietnamnet.vn, 30 November 2006, accessed 2 June 2009.
13. State budget for NN 2009: increasing expenditure for social security, agriculture and rural. From Xaluan.com, 8 November 2008, accessed 2 June 2009.
14. Decision of the National Assembly term 12, dost-dongnai.gov.vn, message, 8 May 2009, accessed 2 July 2009
Government reported the Assembly about implementation progress of socio-economic tasks, 20 May 2009. From vtv.vn, accessed on 2 June 2009.
15. Government Decision 30a/2008/ND-CP, 27 December 2008.
16. Government Decision 18 NQ-CP.
17. Socialist-oriented market economy - Development and implementation of social security policies in the country, Nguyen Huu Dung, 9 June 2008. From tapchicongsan.org.vn, accessed 5 June 2009.
18. Vietnam social security strategy for the period 2011-2020, 29 June 2009 Molisa.gov.vn, accessed 18 August 2009
19. Project on social security. Đan Thanh, anninhthudo.vn, 31 August 2009, accessed 1 September 2009.
20. Socialist-oriented market economy - Development and implementation of social security policies in the country, Nguyen Huu Dung, 9 June 2008, tapchicongsan.org.vn, accessed 5 June 2009.
21. National workshop on social security – toward effective implementation of social security objectives, Đang Doanh, 11 April 2008, vnsocialwork.net, theo molisa.gov.vn, accessed on 2 June 2009.
22. Social protection for rural migrants to cities and industrial zones in Vietnam, a literature review and secondary data analysis, Le Bach Duong, Nguyen Thanh Liem, Tran Giang Linh, Institute for Social Development Studies, Hanoi, Vietnam, socialprotectionasia.org, issue 1 May 2009.
23. Participatory monitoring of urban poverty in Vietnam, synthesis report 2008, April 2009.
24. Statement of the UN country team for the informal mid-year consultative group meeting - an assessment of the macroeconomic situation, 8 June 2009, un.org.vn, accessed 2 July 2009.
25. Social security policies for labourers should start from statistics, nguoidaibieu.com.vn, accessed 2 July 2009.
26. These drafts are under finalization, but have not yet been publically announced. So the information used in this article was taken from articles informing about the consultation workshops for these drafts:
- Hong Phuong. From Molisa.gov.vn, 6 May 2009. Minister Nguyen thi kim Ngan worked with the Labour and Social Science Institute on the Draft Social Security Strategy Framework for 2011-2020. Accessed 4 June 2009.
- Workshop to develop a social security strategy in 2011-2020, 5-6 June 2009, From portal.net.vn, accessed 2 July 2009.
- Vietnam social security strategy in 2011-2020. 29 June 2009. From molisa.gov.vn, accessed 18 August 2009.
- Thanh Phong, baomoi.com (thanh nien online), 26 March 2009. Accessed 18 August 2009.
- Project on social security. Đan Thanh, anninhthudo.vn thứ Hai, 31 August 2009. Accessed 1 September 2009.
- Social security for rural and mountainous areas should not be more tardy, 21 July 2009. From webbaohiem.net, accessed 4 September 2009.
27. Vietnam is at the bottom of the list in the region regarding the number of social workers, Kim Anh, 12 November 2007. From vietbao.vn, accessed on 2 July 2009.
28. Workshop to deploying tasks of Vietnam social ensurance branch in 2009. Hoang Canh. 16 February 2009. From molisa.gov.vn; accessed 18 August 2009.
29. IX term Party Steering Committee’s Political Report in the Party Congress X, 18 April 2006. From cpv.org.vn; accessed 19 August 2009.
30. Social security is as important as demand stimulus, Đoan Quy, 9 May 2009. From vietnamnet.vn, accessed on 2 June 2009.
Issue No : 73 October - December 2009
* This article is an abbreviated, edited version of the article submitted by the author to the Asian Regional Roundtable on Social Security, Hong Kong, 8-9 October 2009, organized by AMRC, the Hong Kong Polytechnic University and the Hong Kong Social Security Society.