The Vietnamese Social Security Fund may start facing a deficit from 2021 and will be completely used up by 2034 without timely policy reform, the International Labour Organisation (ILO) warned.
On August 22, the ILO and the Ministry of Labour, Invalids and Social Affairs jointly announced a report named “Forecasts on balancing Social Insurance Fund and proper recommendations.”
The report forecasts the fund’s current payment capacity and suggests that policy changes would help to improve the fund’s sustainable operation. This is an urgent task today when Vietnam sees big population structure changes and the low number of workers offered insurance and very poor enforcement of the rules surrounding employment contracts. The report partially helps Vietnam to reform its Social Insurance Law which is expected get the National Assembly’s approval next year.
According to the report, despite the fund’s revenues rising from VND6.3 trillion (USD300 million) from 2001 to VND89.6 trillion in 2012, just 47% among the country’s total number of enterprises joined social insurance in 2010, and currently, only 20% of the Vietnamese workforce has social insurance cards. Meanwhile, under laws, any worker whose contract is valid for more than 3 months is allowed to take part in social insurance.
The Vietnamese population is quickly aging with peopled over 60 accounting for more than 10% of the country’s total population, while, the number of young people of working age is on the decrease.
The ILO suggested that Vietnam should raise the retirement age of female workers to 65, based on the country’s advancements in increasing average life expectancy.
Gyorgy Sziraczki, Director of ILO Office in Vietnam, said policy changes will also help to ensure equality among workers in both the state-owned and private sector. According to Mr. Sziraczki, with Social Insurance Fund reform, workers social insurance should be based on their total income, rather than their basic income.