UI IMPLEMENTATION IN VIETNAM: CHALLENGES AND WAYS FORWARDS

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Presentation transcript:

UI IMPLEMENTATION IN VIETNAM: CHALLENGES AND WAYS FORWARDS Ngo Thi Loan, ILO, 2013

Structure of presentation Facts of UI Implementation in Vietnam Challenges of UI legislation and implementation Ways forwards

Facts The SI law adopted in 2006 Collections started in 2009 Payments begin since 2010 By 2009 By 2010 By 2011 By 2012 (est’) No. Insured Members (million people) 5.9 7.2 7.9 8.3 Contributions (in million USD) 167 257 321 379 Delinquency (in million USD) 2.3 14.6 17.8 17.4 Fund reserve (accumulated- in million USD) 174.6 427.6 741.9 1,144.2

FACTS – Service delivered

Facts- issues Design of the system Limited coverage: cover only 16% total labour force. Informal workers, workers with contract less than 12 months, or working in employers with less than 10 workers are not included. Not targeting real unemployed: Whoever quits job for any reason, treated equally Lump sum payments for those who found a job before finishing UI benefits. UI benefits are not secured in case employers are late or evaded in making UI contributions. Basic salary, not total earnings, is used as insurable salary Operations Weak linkage between unemployment allowance and return-to-work support IT system is not yet functioning well. Coordination among the implementing agencies Inefficient complaining/appealing system Inadequate fraud control (No Identification number), inspection systems.

Challenges and opportunities Reach out to informal groups Improve the compliance rate Have unique identification number for individuals Integrate systems run by various implementing partners Opportunities Employment law is about being adopted by National Assembly. New Labour codes passed in 2012 Better awareness of workers and employers about the scheme

ILO’s Policy suggestions for VN UI Extending its coverage to include employers with less than 10 employees and workers with less than 12-month contract Reviewing policies for those who have left employment without just cause (misconduct and voluntary quitters) Reinforcing the linkages between unemployment benefits and employment support services, including re-skilling programmes Widening legal definition of insurable earnings to include bonus and overtime pay Securing UI entitlement of workers employed by employers how fail to pay contributions Establishing/reinforcing prevention, investigation, monitoring, enforcement and appealing mechanisms

Developing strategic plan of UI scheme: to achieve defined objective and targets for improvement of the system in medium and long terms. Using “SMART” KPIs to measure the scheme’s performance against the objectives Conducting regular actuarial assessment and costing exercises to propose improvement of the scheme (policy reform). Carrying out feasibility study for any major scheme’s reform (new institutional settings, new benefits, adjustment of parameters, etc..)

Unemployment protection for those not covered by the UI scheme Need for the design and introduction of some special support programmes targeting: long-term unemployed, first time job seekers, older workers, seasonal workers, part-time, domestic workers, farmers and fishermen unpaid family workers self-employed other informal economy workers