Social insurance reform for sustainable development

Monday, 2018-05-14 11:49:08
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The number of beneficiaries of pension and monthly social insurance allowances comes to more than three million people (Illustrative image)
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NDO - Social insurance is considered as the main pillar of the social welfare system and one of the most important social achievements of mankind since the early 20th century. To achieve this "position", social insurance policy itself and the implementation of social insurance policies must make appropriate adjustments to adapt to the real situation.

In the past 30 years, the world has witnessed a number of social insurance reforms, with the focus on pension reform implemented in dozens of Latin American, Central and Eastern European countries, the United States, Japan, Germany, the UK, France, and others. At present, the reform roadmap is still underway in many countries.

These reforms have many similarities. First, it derives from the challenges facing each country, including the increasing pressure on the budget and the social insurance fund, as well as an aging population, and low social insurance coverage, among others.

The reforms also aim to fulfil the objectives set out by social insurance policies including ensuring better interests for participants, increasing the coverage of social insurance, and effectively using the labour resources to serve development needs, and so forth.

As a nation that always pays due attention to the development and happiness of the people, the Party and the State of Vietnam have soon given heed to implementing the social insurance policy for workers, defining it as the target and motivation for national sustainable development, as well as the good nature of the socialist regime.

In each period in the history of the country, the social insurance policy system has been adjusted many times to meet the objective requirements. In particular, after the country's Doi Moi (reform) policy, Vietnam implemented important reforms in its social insurance policy in 1995, such as establishing a system of agencies specialising in implementing social insurance policy at three levels; establishing a social insurance fund independent from the state budget which is formed on the contributions of both employers and employees; in addition to expanding the scope of subjects participating in compulsory social insurance and implementing voluntary social insurance; among others.

Thanks to these important reforms, the social insurance fund has become the largest welfare fund; the organisational model of the social insurance system has promoted its effectiveness in policy implementation; and the number of employees participating in compulsory and voluntary social insurance has continuously increased (reaching 13.9 million people by the end of 2017, an increase of seven times compared to 1995).

The number of beneficiaries of pension and monthly social insurance allowances comes to more than three million people and, each year, more than nine million people are provided with short-term allowances such as sickness, maternity, health rehabilitation, and unemployment, among others. The total spending from the social insurance fund for these interests has increased to more than VND130 trillion (US$5.72 billion) per year, while the expenditure from the budget has been decreasing.

However, besides these important achievements, the implementation of social insurance in Vietnam also shows inadequacies, including the low coverage of social insurance; the social insurance system being designed in a single-stage manner with loose connections to other social policies; and compulsory social insurance also omits some groups of people with the demand and ability to participate in it.

In addition, the retirement and death benefits fund are at risk of long-term imbalances; the social insurance evasion and debts have yet to be resolved thoroughly; and a lack of full awareness on the part of employers and employees of social insurance.

In particular, the social insurance system also has to face high pressures in the population aging trend and the impacts from the industrial revolution 4.0 which will create changes in labour structure and relations.

Thus, it is an objective and necessity to effectively solve the existing problems to ensure the sustainable development of the social welfare system in particular and the goal of national sustainable development in general.