Vietnam

Over the past 10 years (2001-2010), Vietnam has achieved great successes in economic development with average annual economic growth of nearly 8%. Poverty rate quickly declined from 58% in 1993 to 12% in 2009. The basic infrastructure system, such as electricity, transportation, schools, and health care facilities for people in mountainous and remote areas has been improved significantly. People's life expectancy reached 73.1 years as compared to 65 years in late 1980s. However, Vietnam is also facing some social disadvantages, such as slow labour restructuring, low employment quality, difficult living conditions of a part of population, increasing trend in inequality between urban and rural areas, quick but unsustainable poverty reduction. On the other hand, the perception of the role and position of social security system in the society's development model is not consistent; the system coverage and benefit level are low; access to the system is still limited for some target groups; people's capacity to prevent and manage risks is not high; and the resources for social security mainly relies on State budget. In addition, the role of traditional and informal social security system tends to get weaker.

Overview of Social Security Schemes

Like in many developing countries, the social security programs in place in Viet Nam have had, in the past, a limited role in mitigating the impact of financial and economic shocks. But, social security was recognized by the GoV as early as 1946 when the first constitution included the concept. In 1961, a Decree of the GoV was issued to provide social security benefits for all civil servants and government employees in the sectors of public security, education, health, internal affairs and state-owned enterprises.

Since 1975, the social security policy has been uniformly implemented throughout the country. These schemes provided insured persons with retirement, disability and survivor’s benefits, together with the sickness, maternity and employment injury, occupational diseases benefits which were funded by employer’s contribution.

In 1995, the GoV issued a Decree forming the Vietnamese social security system in terms of general administration and fund-management. This time it extended social security coverage to civilian employees and the armed forces, with five types of benefits i.e. sickness, maternity, employment injury & occupational disease, retirement pension and survivor’s benefit. In 2002, the health insurance, which had been administered by the Ministry of Health, was incorporated into the existing social security programme.

Since 2005 Viet Nam has initiated a strategy that aims at developing a comprehensive social insurance system. The Social Insurance Law No. 71/2006/QH11, which was passed in June 2006 to supplement and reinforce existing legislation, has extended coverage under the retirement pension scheme to all the working-age population. In the sector of health insurance the law No. 25/2008/QH12 adopted in 2008 explicitly sets the goal of achieving universal coverage before 2015. A new unemployment insurance scheme came into force on 1st January 2009.

The compulsory social insurance scheme covers all establishments in the public and private sectors employing more than 10 workers. Social security coverage has now been extended to all registered private enterprises. The funding of the social insurance programme relies on contributions by employers (15 per cent of the payroll) and employees (5 per cent of his/her salary).

By the end of 2007, 6.97 million people were covered by compulsory social insurance, representing a total social insurance premium of VND 23,573 billion (USD 1.46 billion). Contributors to Vietnam’s social insurance represent 63 per cent of the population obliged to contribute to social insurance; 2.1 million persons are beneficiaries of social insurance, and total expenditure is VND 10,780 billion (USD 0.67 billion). Vietnam’s compulsory social insurance covers only the formal and the state sectors and consequently covers only 25 per cent of the labour force of 44 million. The low level of effective coverage in social security results not only from the employers under unstable business conditions but also from the employees who do not have enough information about their rights at work.

The revised Social Insurance Law of 2006 includes stipulations of voluntary social insurance as well. The voluntary social insurance scheme was started in January 2008. It has enormous potential, given that 33 million workers are not covered by compulsory insurance but take up has been low, probably because contributions are very high, amounting to 20 per cent of wages, shared between employer and employee.

Total population : 89.7 million

(UN Population Division | World Population Prospects, 2012)

GDP per capita (PPP US $) : 3435

(World Bank | WDI, 2011)

GDP growth (in %) : 5.9

(World Bank | WDI, 2011)

Human Development Index (HDI) : 0.593 [Rank: 128]

(UNDP | Human Development Indicators, 2011)

Total expenditures on health as % of GDP : 6.8

(WHO | WHO Statistical System, 2010)

Public expenditure on health as % of GDP : 2.6

(WHO | WHO Statistical System, 2010)