Social insurance penalties get teeth

This will be the reality if the amended Social Insurance Law comes into force.

Vietnam Social Security reports have shown an alarming drop off in firms ignoring or delayed their obligations in paying social and health insurance for workers. 

For instance, in southern Dong Nai province by May, 2013 unpaid social insurance amounted to VND338 billion ($16 million), more than double that in late 2012.

In northern Hoa Binh province, this figure leaped from VND13.6 billion ($648,000) in 2010 to around VND111 billion ($5.3 million) by May 2013, while in central Quang Binh province, unpaid amounts surged VND20 billion ($960,000) to VND94 billion ($4.5 million) after March and April.

Dong Nai Social Security deputy director Pham Minh Thanh said from 2007 until present his organisation brought several dozen violators to the court and won most cases, but debt collections have proven a tough task.

“In 2012, 28 disobedient firms were brought to the court. Their owed amounts exceeded VND28 billion ($1.3 million). The collected amount, however, was VND2.4 billion ($114,000), less than 10 per cent of the total,” Thanh said, adding that this had affected workers’ benefits.

“However, since sanction measures are not tough enough, firms deliberately appropriate payment amounts and accept fines of VND30 million ($1,400) maximum,” said Deputy Minister of Labour, Invalids and Social Affairs Pham Minh Huan.

Tran Thi Thuy Nga, head of Ministry of Labour, Invalids and Social Affairs’ (MoLISA) Social Insurance Department, said now was the time to get tough and its amended Social Insurance Draft Law could hike current interest rate (0.05 per cent, per month) levied on unpaid social insurance amounts.

Accordingly, it is proposed to triple the interest rate applied to investment activities involving social insurance funds and double the inter-bank interest rate.