>>Major principles of the law on social security
Pham Diem
State and Law Institute of Vietnam
Under Vietnamese law, social insurance is understood as a substitute or partial compensation for employees’ incomes which are reduced or lost due to their sickness, maternity leave labor accidents, occupational diseases, unemployment, retirement or death, based on their contributions to the social insurance fund.
The current social insurance regime covers:
- Sickness insurance.
- Labor accident and occupational disease insurance.
- Maternity insurance.
- Health insurance.
- Unemployment insurance.
- Retirement.
- Survivorship allowance.
The social insurance regime appeared early in Vietnam right in the 1930s under the French colonial rule. However, it was limited to cover only the sickness insurance, labor accident insurance and retirement insurance, which were applicable to those working in the French administrative apparatus and army.
Following the victorious August 1945 Revolution, the newly established Democratic Republic of Vietnam provided in its 1946 Constitution: “Aged or disabled workers who are unable to work will be assisted.” Later, the Government promulgated Decree No. 29-SL of March 12, 1947, Decree No. 76-SL of May 20, 1950, and Decree No. 77-SL of May 22, 1950, which prescribed the right of employees to enjoy social insurance at different levels in specific cases.
However, such social insurance regime was not fully applied due to the resistance war against the French colonialists, the then complicated socio-political situation and financial difficulties.
The social insurance regime was officially implemented widely following Government Decree No. 218-CP of December 27, 1961, promulgating the provisional Charter on Social Insurance applicable to workers and state employees. As a major legal document on social insurance, this Decree governed all issues related to social insurance in Vietnam for quite a long time till the 1980s.
Since Vietnam adopted the open-door policy, shifting to a market economy and strongly integrating itself into the international community, its social insurance law has been gradually and substantively improved.
The 1992 Constitution stipulates: “The State provides the social insurance regime for state employees and wage earners, and encourages other forms of social insurance.” On June 22, 1993, the Government promulgated Decree No. 43-CP, temporarily providing for the social insurance regime, which was later institutionalized in a chapter of the 1994 Labor Code. This has laid legal grounds for the renewal and reform of the social insurance regime in Vietnam.
To concretize the Labor Code’s provisions on social insurance, the Government issued Decree No. 12-CP of January 26, 1995, together with the Charter on Social Insurance; Decree No. 45-CP of July 15, 1995, together with the Charter on Social Insurance applicable to officers and professionals in the army and police forces; Decree No. 19-CP of February 16, 1995, on the establishment of a system of social insurance agencies in Vietnam. Later, the Government promulgated Decree No. 01-CP of January 9, 2003, amending a number of articles of the Charter on Social Insurance to suit the new situation after nearly 20 years of “doi moi” (renewal).
With Vietnam’s commitments on social welfare policy upon its admission to the World Trade Organization (WTO), full awareness of social insurance, national socio-economic conditions and demands of practical life, on June 29, 2006, the National Assembly passed the Social Insurance Law, which took effect on January 1, 2007. For the first time since Vietnam regained its independence in 1945, the social insurance regime was institutionalized in a separate law.
Under current law, the social insurance institutions are formulated and enforced on the following major principles:
First, the social insurance payment is calculated on the levels of social insurance contributions and duration. Social insurance must ensure rationality between contribution and enjoyment. In other words, it must be based on employees’ contributions to the social insurance fund and contribution duration. Yet, social insurance bears not only economic but also social nature as manifest in the principle of “risk sharing” and “compensation for the minority by the majority.”
Second, the compulsory social insurance premium and unemployment insurance allowances are calculated on the basis of employees’ salaries or wages. The voluntary social insurance premium is calculated on the basis of levels selected by employees which, however, must not be lower than the minimum wage level.
Third, the social insurance fund is managed by the State in a unified, democratic, public and transparent manner and used for proper purposes. At present, the social insurance fund is formed from different sources: Contributions of social insurance participants (employees and employers), known as social insurance premiums; state budget supports; and profits from the social insurance fund. To ensure the publicity, democracy and transparency in the management of the social insurance fund, social insurance agencies, though being established by the Government, are directed and supervised by the Social Insurance Management Council, which is composed of representatives of the Ministry of Labor, War Invalids and Social Affairs, the Ministry of Finance, The Vietnam General Confederation of Labor, the Vietnam Chamber of Commerce and Industry, social insurance agencies and others.
Fourth, the social insurance payment must be carried out in a simple and convenient manner, promptly and fully ensuring the interests of social insurance participants. When employees face risks, social insurance allowances play an important role, making up for their income loss and helping them stabilize their lives.
Social insurance is classified by law in different ways. By form of social insurance, it includes compulsory social insurance and voluntary social insurance. Compulsory social insurance requires the participation of employees and employers. Meanwhile, voluntary social insurance is voluntarily participated by employees with contribution levels chosen by themselves and modes of payment suitable to their incomes in order to enjoy social insurance allowances. Compulsory social insurance applies to employees with certain working durations and stable incomes (monthly salaries) and enterprises employing labor in a stable manner. Meanwhile, voluntary social insurance applies to other subjects.
By case of risks covered by social insurance, social insurance is classified into sickness insurance, maternity insurance, labor accident and occupational disease insurance, retirement insurance, unemployment insurance and survivorship insurance.