Assistance for enterprises and their employees who are made redundant due to the economic decline is currently one of many urgent measures being taken by the Vietnamese Government to assure social welfare. Since employees aren’t eligible for unemployment insurance until the beginning of 2010, the Prime Minister has come up with another form of assistance for laid-off workers of enterprises heavily affected by the global economic downturn. Decision No. 30/2009/QD-TTg of February 23, which is further guided in Joint Circular No. 06/2009/TTLT-BLDTBXH-BTC of February 25 of the Ministry of Labor, War Invalids and Social Affairs and the Ministry of Finance introducing three policies:
First, enterprises may qualify for bank loans a the zero-per-cent interest rate for up to 12 months to pay salaries to employees, social insurance premiums and job-loss or severance allowances. Eligible for these loans are those which have met difficulties and have had to trim their workforce by 30% or lay off 100 employees or more (excluding seasonal workers employed under-three month labor contracts) and are still unable to pay salaries, social insurance premiums and job-loss or severance allowances to laid-off laborers from their existing financial sources.
Employees laid off by enterprises are those on these enterprises’ payrolls which must be cut in 2009, including: Vietnamese workers employed under labor contracts of an indefinite term or a term of between 12 and 36 months or seasonal labor contracts or job performance contracts of a term of three months or more. Enterprises should count employees to be laid off as soon as they work out, in collaboration with grassroots trade union organizations, labor rearrangement plans. Such a plan must indicate the total present number of employees and the number of employees to be further employed, those eligible for social insurance entitlements, those whose labor contracts are terminated and those who are redundant, and must be proposed to the provincial-level Labor, War Invalids and Social Affairs Service in the locality in which the enterprise is headquartered.
Within five working days of receiving the proposed plan, the provincial-level Labor, War Invalids and Social Affairs Service should send a written confirmation of receipt to the enterprise and the local branch of the Development Bank. In the course of implementation of an approved labor rearrangement plan, the concerned enterprise should report in writing any changes in the plan to the provincial-level Labor, War Invalids and Social Affairs Service and Development Bank branch.
In addition, enterprises are required to submit the latest quarterly financial statements and reports to provincial-level Finance Services in the localities where their head offices are based. The service will send a written confirmation of receipt to the enterprise and the local branch of the Development Bank. The Development Bank may decide on loan amounts, provide loans and recover and manage debts according to its competence.
This policy can be regarded as a bailout for enterprises and their employees in hard times. However, the Vietnam General Confederation of Labor has expressed its concerns about some enterprises’ tricks to circumvent the specified requirements to get the loan, i.e. declaration of a number of redundancies higher than the actual figure made to reach the prescribed level of 30%, leading to an unnecessary number of employees to be laid off, or collusion between enterprises and some employees in altering the terms of their labor contracts in order to meet the relevant requirements.
Many ineligible enterprises might get the loan by separating the payroll for executive officers from that of workers, thereby shirking the obligation to pay social insurance premiums for these workers.
Second, laid-off employees of enterprises whose owners have absconded will have salaries payable by their enterprises in 2009 paid from local budgets. Enterprises whose owners have absconded are those lacking lawful representatives responsible for settling the interests of their employees and identified by provincial-level People’s Committees or bodies authorized by provincial-level People’s Committees. Advances from local budgets for payroll will be refunded with proceeds from the liquidation of assets of concerned enterprises in accordance with law. If these proceeds are not enough to cover payroll, such should be reported to the Prime Minister for decision.
The provincial-level Labor, War Invalids and Social Affairs Service and Finance Service should work together to identify employees on payrolls of local enterprises and determine each employee’s salary amount owed by the enterprise before the Labor, Invalids and Social Affairs Service sends to the provincial-level People’s Committee chairman a report on the amount which needs to be advanced from the local budget, enclosed with a list of employees whose salaries are owed by enterprises. The Labor, War Invalids and Social Affairs Service will pay salary debts, while the Planning and Investment Service and Finance Service will sell assets of salary-owing enterprises to refund the budget advances.
Third, workers laid off in 2009 and Vietnamese guest workers who lose their jobs due to their companies’ production cutbacks and who return home before their labor contracts expire will be entitled to:
· Loans from the National Fund for Employment under the National Target Program on Employment to seek new jobs;
· Loans for job training under Prime Minister’s Decision No. 157/2007/QD-TTg of September 27, 2007, on student loans and credit to be provided to workers for 12 months from the date they become unemployed;
· Loans from the Social Policy Bank as for social policy beneficiaries under State Bank Decision No. 365/2004/QD-NHNN of April 13, 2004, for 12 months from the date they become unemployed or return home.
This policy aims to provide laid-off workers with loans for seeking new jobs. According to Vice Minister of Labor, War Invalids and Social Affairs Nguyen Thanh Hoa, Vietnamese guest workers who still owe debts to banks will be entitled to debt payment delay or have their debts rescheduled in order to access new loans. If these workers still want to work overseas, they will also be provided loans through the Social Policy Bank like policy beneficiaries.
On February 24, the Vietnam General Confederation of Labor proposed that the Prime Minister allow borrowers from the National Fund for Employment to enjoy an interest rate support of 3.8%/year (against the current 7.8%/year). The Department for Management of Guest Workers has also submitted to the Ministry of Labor, War Invalids and Social Affairs a plan on use of a fund for assistance of guest workers who have to return home before their labor contracts expire due to the economic downturn. The maximum level of support for these workers will be VND 5 million.
According to official unemployment statistics made and reported by 41 provinces and cities to the Employment Department of the Ministry of Labor, War Invalids and Social Affairs, by January 23 there were 66,700 laid-off workers in these localities. Meanwhile, the whole country saw an estimated total of 80,000 laid-off workers, including 19,000 in Ho Chi Minh City, about 10,000 in Hanoi, 8,000-10,000 each in Dong Nai and Binh Duong provinces, and some 5,000 in Vinh Phuc province. Of newly sacked workers, 2,000 were from enterprises with their owners absconding.
The Department for Management of Guest Workers forecasts that there will be around 10,000 Vietnamese guest workers forced to return home in 2009 before their labor contracts expire. At home, the number of unemployed workers in the whole year of 2009 is predicted by the Employment Department to reach 400,000 in the worst scenario.
Employment Department Director Nguyen Dai Dong admitted that most enterprises reported only their laid-off workers and omitted the number of newly recruited ones. This may create a loophole in the implementation and administration of the above policies, thereby limiting their effectiveness.
Another problem is that labor authorities are still unable to manage laid-off workers and ensure that support loans would be provided only to these workers until they find new jobs due to lack of a national labor management system.
Vietnam can learn from experience of other countries in issuing labor cards, which show the employment status of bearers, to facilitate labor management, Dong said. However, this cannot be realized until amendments are made to the Labor Code in 2010 as the earliest.
Apart from contributing to the improvement of the labor law, the timely enactment of these regulations has demonstrated the great efforts of the Vietnamese Government to help laid-off workers survive hard times and stabilize the economic situation. (VLLF)-