New social insurance policy’s early success

March 29, 2019 | 16:54
After its first three months of implementation, the fresh decree outlining compulsory insurance for foreign workers has produced satisfying results, despite the sizeable difficulties in its path. Dinh Duy Hung, deputy director of the Vietnam Social Security’s Contribution Collection Debt Unit, shared his first impressions with VIR’s Van Anh.
new social insurance policys early success

Over the past few months, how much insurance did ­employers pay after their ­foreign employees in ­Vietnam and how many ­are liable to pay social ­insurance?

The Vietnam Social Security’s (VSS) statistics showed that as of February 28, about 8,730 employers and 51,524 foreign employees complied with their obligation to pay ­social insurance in Vietnam. In addition, the total insurance collected from the employers was VND100.8 trillion ($4.38 million).

According to the Ministry of Labour, Invalids and Social Affairs (MoLISA), the total number of foreign employees across the country is around 83,046, 90 per cent of whom hold work permits.

Thus, after three months of carrying out the decree, about 64 per cent of foreign ­employees participated in the ­compulsory social insurance scheme. This is a quite satisfying result for a new policy.

What difficulties does the VSS face during implementation of Decree 143?

Compulsory insurance for foreign employees is a brand new policy in Vietnam, so making Decree 143 work ­remains difficult.

No circulars guiding the implementation of the decree have been issued yet, which makes it ­complicated for both local ­authorities and employers to comply with the policy.

Over the past three months, we have noticed numerous troubles related to targeting subjects of compulsory insurance. Currently, our local branches are entering into ­co-operation with local authorities to create an up-to-date register of foreign employees affected by the policy, and to guide employers to perform their tasks under the decree.

In addition, the language barrier remains a premier ­obstacle when carrying out Decree 143. Foreign ­employees’ identity papers are all written in foreign ­languages, which causes ­further difficulties.

Finally, foreign employees in Vietnam may pay insurance in their home country, which could make exempt them from Decree 143. To deal with this particular issue, the Vietnamese government has assigned the MoLISA to negotiate and sign bilateral and multilateral agreements on social insurance aimed to avoid the issue as well as to ensure the rights of employees of both countries.

What is the current overall ­situation of overseas foreigners working in Vietnam?

As global integration ­accelerates, over the past few years, both the number of ­foreign workers in Vietnam and the number of Vietnamese workers in other countries have increased. The latest data published by the MoLISA ­indicated that the number of foreign workers increased from 63,557 to 83,046 during 2011-2016. In addition, the MoLISA’s Department of Overseas Labour stated that more than 140,000 ­Vietnamese people were working overseas in 2018, up 7 per cent on-year.

Currently, Vietnam and South Korea are over four rounds of negotiations on signing a bilateral agreement on social insurance. Japan is still researching the issue ­before entering into negotiations with Vietnam. Germany has agreed with Vietnam on the negotiation content. ­Finally, Taiwan is also doing research before deciding to sign an agreement.

Overall, what benefits should Decree 143 bring, and will it avoid contradicting international practices?

Although there is an ­increase in both foreign ­employees here and Vietnamese employees overseas, many ­nations have already applied similar rules, so it should not contradict international practices, and there is precedent that it can be made to work with international partners.

The launch of Decree 143 is aimed to create equality for both foreign employees and Vietnamese employees in the country, which means that ­foreign employees are entitled to the same social benefits as Vietnamese employees.

Thanks to this, foreign ­employees could be safe while working in Vietnam, which would contribute to a favourable working environment and lure in highly skilled employees, whom Vietnam needs as it turns towards ­Industry 4.0.

Decree No.143/2018/ND-CP on compulsory insurance for foreign workers was issued on October 15, 2018, and has been in effect since last December 1, 2018. Accordingly, foreign workers who hold a work permit of more than one year are subject to compulsory insurance in the country. Between December 1, 2018 and December 31, 2021, employers have to pay 3.5 per cent of their foreign employees’ salary for social insurance. From January 1, 2022, this rate will increase to 17.5 per cent, and employees themselves will have to pay an additional 8 per cent.

What the stars mean:

★ Poor ★ ★ Promising ★★★ Good ★★★★ Very good ★★★★★ Exceptional