faculty of law mai thị lan phương -...
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FACULTY OF LAW
University of Lund
Mai Thị Lan Phương
APPROACHING TO THE ILO UI PROVISIONS AND THE RECOMMENDATIONS TO IMPROVE
VIETNAMESE UI
Master thesis
Dr. Bengt Lundell
Unemployment Insurance
2009
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Table of Contents
Table of Contents ............................................................................................... 2 Summary .............................................................................................................. 3 Preface .................................................................................................................. 4 Abbreviation ........................................................................................................ 5 Chapter 1 THE CONCEPT OF THE UNEMPLOYMENT INSURANCE IN ILO PROVISIONS AND VIETNAMESE LAW ........................................ 6
1.1. Unemployment and UI ............................................................................. 6 1.1.1. Unemployment and UI in ILO provisions .......................................... 6 1.1.2. Unemployment and UI in Vietnamese law ....................................... 10
Chapter 2. THE CONTENT OF UNEMPLOYMENT INSURANCE IN THE ILO PROVISIONS AND VIETNAMESE LAW .................................. 13
2.1. The subjects participate to UI ............................................................... 13 2.1.1. The subjects participate in the UI in the ILO provisions .................. 13 2.1.2. The subjects participate in UI in Vietnamese law ............................ 14
2.2. The conditions to get UI benefit ............................................................ 15 2.2.1. The conditions to get UI benefit in the ILO provisions .................... 16 2.2.2. The conditions to get the UI benefit in Vietnamese law ................... 16
2.3. The level of getting the UI benefit ......................................................... 17 2.3.1. The level of getting the UI benefit in ILO provisions ...................... 17 2.3.2. The level of getting the UI benefit in Vietnamese law ..................... 18
2.4. The duration of getting the UI benefit ................................................. 18 2.4.1. The duration of getting UI benefit in the ILO provisions: ................ 18 2.4.2. The duration of getting UI benefit in Vietnamese law ..................... 19
2.5. The UI fund ............................................................................................. 19 2.5.1. The UI fund in ILO provisions ......................................................... 19 2.5.2. The UI fund in Vietnamese law ........................................................ 20
Chapter 3. THE RECOMMENDATIONS TO IMPROVE VIETNAMESE UNEMPLOYMENT INSURANCE ................................................................. 21 3.1. The situation of employment and unemployment in Vietnam .............. 21
3.2. The recommendations to perfect UI law in Viet Nam. ....................... 23 3.2.1. The subjects participate and get UI benefit ....................................... 23 3.2.2. The conditions to get the UI benefit .................................................. 25 3.2.3. The level of getting UI benefit ....................................................... 28 3.2.4. The duration of getting UI benefit .................................................... 29 3.2.5. The UI fund ....................................................................................... 30
CONCLUSIONS ................................................................................................ 33 Supplement A ..................................................................................................... 36 Bibliography ...................................................................................................... 38
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Summary
According to the provision of ILO in UI and unemployment situation in
Vietnam, a lot of recommendations are raised to improve Vietnamese UI law.
The thesis has three sections:
Chapter 1. The concept of UI in ILO provisions and Vietnamese law;
Chapter 2. The content of UI in ILO provisions and Vietnamese law;
Chapter 3. The recommendations to improve Vietnamese UI
Conclusion
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Preface
Demand for labour and supply of labour are of great importance in most
countries. In the market economy, global integration and competition have
become an indispensable part, which has greatly affected the workers’ jobs. The
fact that many workers have lost their jobs has become popular in Vietnam.
Therefore, this requires great efforts from workers as well as the State’s
appropriate legal policies to support the labor market. Consequently, UI policy
plays a very important role in ensuring social security of the nation.
Labor market integration and social-economic development are
important components for the birth of UI in Vietnam.
Vietnamese UI is a regulation of social insurance. It will be excuted in
2009.
Approaching to International Labour Organization (ILO) UI provisions
and Vietnamese present UI law will be the solid legal premise of UI in Vietnam.
Base on those premises, this thesis will present some petitions to perfect the
model of a specific, modern and integrated UI of Vietnam. A perfect UI system
will guarantee for human rights on labour and aspiration to overcome proverty.
And this will contribute to improving the Vietnamese social security system.
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Abbreviation
- ILO: International Labour Organization
- Unemployment Insurance: UI
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Chapter 1
THE CONCEPT OF THE UNEMPLOYMENT INSURANCE IN ILO
PROVISIONS AND VIETNAMESE LAW
1.1. Unemployment and UI
1.1.1. Unemployment and UI in ILO provisions
The problem of employment and the unemployees protection are legal
problems. They are stipulated in the Human Right internationl documents. The
employees have the working right. Besides, the employees have the enjoy
insurance right when they are unemployed. These right are stipulated in article
23, 25 of the Universal Declaration of Human Rights.
“ Everyone has the right to work, to free choice of employment, to just
and favourable conditions of work and to protection against unemployment”1
“ Everyone has the right to a standard of living adequate for the health and
well-being of himself and of his family, including food, clothing, housing and
medical care and necessary social services, and the right to security in the event
of unemployment, sickness, disability, widowhood, old age or other lack of
livelihood in circumstances beyond his control”2
The right to social insurance, the right to work are one of the basic rights
of humans. It isn’t only to be stipulated in national laws but also to be
acknowledged in international law. The introduction of UI is an effective
method to create conditions for the basic rights of human beings, so that the
right of citizens can become reality.
The ILO set up the ineternational document system to protect the
employees right. These conventions acknowledged the relation of employment
and the Humans Right’s employment. The employees are treated equal and get
the welfares.
1 Article 23 of the Universal Declaration of Human Rights 2 Article 23 of the Universal Declaration of Human Rights
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According Convention No. 102 (1952) of ILO: "Convention on minimum
standards of social security" has been approved by the meeting of the whole
organization, including the following policies: health care; illness,
unemployment, old age; labour accidents; family assistance payments;
pregnancy; loss of workers; death allowance. The countries that ratified this
Convention have applied the provisions of the convention on the legal system of
their country and established a minimum system.
To overcome and solve the situation of unemployment which is currently
increasing in the countries in the globalized economy is an urgent issue.
Accordingly, depending on the conditions of each country, there will be
solutions to solve unemployment such as population policy, restricting migration
from rural to urban areas, reducing the age of retirement, strengthening
government and investment in the economy, pension dismissal, loss of
employment, UI ...
The concept of unemployment as it is defined in ILO regulation3:
Unemployment is the phenomenon of workers losing income ”due to
inability to obtain suitable employment in the case of a person protected who is
capable of, and available for, work. After that, it was added “workers actively
looking for work
Then to, the concept is completed that “….the employees look for works
activity” in the Convention No. 168 (1988)
- ILO considers the phenomenon of workers suffering "suspension of
earnings" as the criterion to identify the “unemployed” worker. Additionally, the
conditions to determine if a person is unemployed is if a worker do not have the
ability to find a suitable job but they are capable of working and ready to work
to generate income. When the "permanent income" is lost by unemployment,
workers must "actively look for work". Thus, according to the provision of ILO,
being without permanent income (by losing their job) is the only sign of 3 Article 20 of the ILO convention
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unemployment. To determine workers who are being unemployed when have
the additional conditions are not getting job, although workers have actively
sought and desired to get a job. We know that "unemployment" and "work"
always is related relation. Both have close relation with the "income".
“Unemployment” is the phenomenon of workers without work.
Thus, The unemployees are the employees have not income when they
lost jobs. The working help the employees to get income. The employees work
to get income and look after their family’s life. So, when the employees lost job,
their life and family’s life will become bad. The birth of the UI which are seen
the effective measure for the uemployees insurance
Most developed countries in the world have built a system of UI to ensure
life for the unemployed such as the United Kingdom (1911), Italy (1919), to
early 1930 with the additional countries such as Sweden, Canada, the United
States ... The countries have recognized the right of the unemployed and quickly
made UI a branch of the social insurance system Most countries don’t
considered UI just as measures to solve the consequences of unemployment.
They considered UI as a policy of an active labor market. And UI is not only a
payment but also has the important function to promote the transition the
structure of industries, job protection, enhancement of worker career, finding
jobs for the unemployed. These activities are associated with the functioning of
thelabor market, and the activities to create jobs.
According Convention No. 102 of ILO about payments of UI
The UI is a part of social insurance to protect workers in case of loss of
employment. In addition to payments for the unemployed, UI also has additional
measures between the unemployed and the labor market such as: vocational
training, re-training, job brokers, career counseling, support expenses of the
unemployed to establish business ...
The original legal recognition of UI is a regulation in the system of social
insurance. The appearance of this regulation makes insurance rights of human
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beings better.The right to enjoy social insurance, also one of the basic rights of
citizens, are regulated in most of the constitutions of the countries in the world.
Look at the social insurance system, and through the pension we can evaluate
the advantages of a social mode.
UI is paid for the package as "unemployed". It does not stop at the
function to pay the income of the unemployed when losing their job. UI,
according to ILO, is a part of social insurance to protect workers in case of loss
of employment.
UI takes care of the rights of workers who have lost their jobs. The
issuing and implementation of the UI contributes to effect on social security
policies of the country. UI are important for social - political stability and can
create sustainable development for each country.
The employment and job creation in order to limit unemployment is a
category under human rights, an issue which is legal in depth has been expressed
in international documents on human rights: "Freedom exit the fear of poverty
has been declared as the highest aspiration of all humanity ". And "Everyone has
the right to work, freely chosen profession, has been working conditions
favorable and legitimate, are protected against unemployment”[1]
To overcome and solve the situation of unemployment which is currently
increasing in the countries when we access the period of globalization is an
unrgent issue. Accordingly, depending on the conditions of each country, there
will be solutions to solve unemployment such as population policy, restricting
migration from rural to urban areas, reducing the age of retirement, Government
strengthening and investment in the economy, pension dismissal, loss of
employment, UI ...
According Convention No. 102 (1952) of ILO: "Convention on breaking
the rules on minimum social security" has been approved by the meeting of the
[1] Academy of Country political Ho Chi Minh, the international documents on human rights, Publisher Political countries Ha Noi. P.62, 67.
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whole organization, including following policies: health care; illness,
unemployment, old age; labour accidents; family assistance payments;
pregnancy; loss of workers; death allowance. The countries that ratified this
Convention have applied the provisions of the Convention on the legal system of
their country and establish a minimum system.
The right to social insurance, the right to work are one of the basic rights
of human. It isn’t only be stipulated in national laws but also be acknowledged
in international law. The introduction of UI is an effective method to create
conditions for the basic rights of human beings, the right of citizens to become
reality.
1.1.2. Unemployment and UI in Vietnamese law
The concept of unemployment in Vietnam
The concept of unemployment in Vietnam is: “Unemployment is a
phenomenon of no work in the determined period of time (paid work and the
self-made), ready to work (a job be paid and the self-made) and looking for
work”4.
However, because of the purpose of statistics, that concept has only
shown "signs" of unemployment, but it has not shown the nature and content of
the unemployment.
To make it the accurate concept of unemployment , according to Dr. Le
Thi Hoai Thu, one must consider the concept of "unemployed" in accordance
with "employment" as "all activities generating a source of incume and not
prohibited by law "5
In consideration of the relationship with a job to make the definition of
unemployment: "unemployment is the state of those without income who have
4 Guide social spending professional in Viet Nam - General Statistics published in 1995 5 Article 13- The Labor Law of 1994
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the ability to work, at age by the law stipulated that have no jobs or have lost
their jobs, and who are looking for job "6
The legislation on UI in Viet Nam has provisions on unemployment: "The
unemployed who contributes to UI and has lost job or terminated work contract
but has not found job "- according to chapter of the UI in social insurance law.
Determining the subject of adjustment on UI and the basis for reviewing
the benefit of UI, the concept of unemployment is central.
Thus, comparing the concept of unemployment as stipulated by ILO and
stipulated in the law of UI Vietnam, the similarity with each other in the
regulation of unemployment is shown through the following characteristics:
- Being a person who used to be employed and have income from work
but has lost income because of job loss;
- Not being able to find a job despite having the ability to work and desire
for work.
UI according to Vietnamese law
UI is a part of social insurance in the system of social security of the
country. Until now, no official concept of UI has exsisted in Viet Nam.
However, on the one hand, UI in Vietnam aims at ensuring income for the
unemployed. On the other hand, UI create opportunities and favorable
conditions for unemployed people to go back to the labor market.
Unemployment benefit is paid to people who are unemployed.
Vietnamese UI is similar to the provisions of ILO. UI is a mode-related
worker policy, aiming at ensuring the workers a stable life. However, depending
on the economic conditions of each country, the UI is placed in social insurance
system or independently as "UI". UI is different from other human insurance in
the system of business insurance. UI is a part of the system of social security in
6 The support workers lose jobs and the method of construction mode of unemployment insurance in Viet Nam-Dr. Le Thi Hoai Thu – Ha Noi national university -2005
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the country. In each country, a well functioning of UI will improve positive
social-economic efficiency.
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Chapter 2. THE CONTENT OF UNEMPLOYMENT INSURANCE IN
THE ILO PROVISIONS AND VIETNAMESE LAW
2.1. The subjects participate to UI
The unemployment and the birth of unemploymnet insurance is a
necessary consequens of a market economy. Each country must have a policy
for market adjustments adjustments appropriate to take care of benefits for
workers, especially the unemployed workers.
Defining the subject of UI is an important issue in the a country. The
State, employers and employees participate in UI. Workers are the center of UI
and the subject. The workers get the benefit of UI when they participate in UI.
But not all the workers who participate in UI can get unemployment benefit.
Depending on the conditions and circumstances of each country, they regulated
the law appropriately and most effectively for that country.
2.1.1. The subjects participate in the UI in the ILO provisions
According to Convention No.102 of ILO provisions, the people who
participate in UI must be workers and get salary. The Convention No.168 of
ILO expanded the subjects participating in UI. The Convention stipulates in
some articles that in special cases, it can apply to some types of persons who
work for the first time, those who don’t relate to unemployed, those who never
have been unemployed or have not participated in the protection of
unemployment.
According to this Convention, the subjects participating in UI are the
workers who work to get salary and other subjects that also may have the right
to participate in the UI. Provisions apply to some employees working for the
first time, working at home, getting salary in the range of public services of the
state, the workers who have not reached to the age conditions, people that have
reached the age of retirement and having enough income to ensure participate in
UI. We can list as below:
- The youth who finish vocational training program;
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- The young people who have completed the school program;
- The young people who have completed military obligations required;
- Those who leave job to look after children, take care of sick people, the
handicapped, the elderly;
- People who are windowed;
- People who does not get to allowance while at school;
- People who divorced;
- Those who expires imprisonment;
- People who have grown-up;
- Handicapped people who have graduated from training courses;
- The overseas people who return to the country, unless in the case they
get benefits according to the law of the country where they have worked
previously;
- People who previously have been self employed.
Thus, from the Convention 168 ILO has encouraged the expansion of
subjects participating in UI, and apply to the UI for all part-time employees, and
the subjects who do nothing, and the part-time employees want to find full-time
job.
UI can to apply to most subjects. This reflected the improvement of the
social welfare.
2.1.2. The subjects participate in UI in Vietnamese law
According to the law of Vietnamese UI, the subjects participating in UI
consist of employees and employers.
The provisions on employees states: employees who are Vietnamese
citizens who work on employment contracts without limit the time, or those who
work on contracts from 12 to 36 months.
The provisions on employers states: employers participating in UI is
regulated: those who have 10 or more employees. The employers are state
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agencies, political-social agencies, political organizations, social career
organizations, foreign organizations, international organizations operating in the
territory of Vietnam; companies or small individual business. These employers
hire employees and pay salary.
The UI is a part of the social insurance system and belongs to the social
security policies. Therefore, the nature of the UI is to take care the employees
and their interest. The UI stipulated by the ILO Convention has various
participating subjects. Every employee has the right to participate in the UI.
Vietnamese law limits the subjects participating in UI by the following
regulations:
- The UI is applied to the employers using from 10 and more employees;
- The articles regulate to the term of employment contract as below:
+ The contract has unlimited term;
+ For the limited labour contracts, the term is 12-36 months.
The term of employment contract ensures the employees have enough
time to contribute to the UI fund. These regulations help the management and
makes the benefit payment more convenient.
The conditions on the term of labour contracts stipulated to be 12-36
months is enough for the employees to contribute the UI fund. Almost all
employmnet contracts in Vietnam are short-term because of the socio-economy
characteristic. Most of the employees sign only daily-contracts informally. It is
difficult to determine the unemployment situation of the employees. Therefore,
with this in mind, the management of insurance fund is not easy.
2.2. The conditions to get UI benefit
To get the UI benefit, the employees must participate in the UI. But all the
unemployed have right to get the UI benefit.
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2.2.1. The conditions to get UI benefit in the ILO provisions
UI law is a part of the legal social insurance system. The nature of UI is to
support and to take care of the unemployee’s interests. Who will have right to
get the UI benefit?
According to article 20 of ILO Convention No.102
Convention regulates about the conditions to get the UI benefit as follows:
+ The unemployeds’ income from work is interrupted but they can not find
another suitable work to do and really want to work
+ The employee must satisfy the term of contribution to the UI fund;
+ The cause of unemployment is not caused by the employee. In this case,
the unemployed has the duty to prove;
+ The unemployed must register to find job at the labour office during the
unemployment;
+ In some cases, national law may have special exception provisions.
The conditions stipulated above is appropriate to determine effectively
the object of the UI payment. Besides, the unemployed can be denied the right to
get the UI benefit when the unemployee does not approve to do an appropriate
work - [Section 1 of article 21- Convention No. 168].
The purpose of these provisions restricts the UI payment to the
unemployed who do not want to work.
2.2.2. The conditions to get the UI benefit in Vietnamese law
The unemployed who get the UI benefit as regulated must satisfy the
following conditions - [Article 81- The Vietnam social insurance law]
- During the 24 months before unemployment, the employees must have
contributed the UI fund for 12 months or more;
- After 15 days of unemployment registration at social insurance office,
the unemployed have a right to get the UI benefit.
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Thus, the UI benefit is clearer than the receiving of other social insurance
benefits.
In brief, the conditions of the unemployment contribution term in
Vietnam is clearer than the stipulations of ILO. The conditions of
unemployment registration are considered very important to manage and control
the UI fund. The Vietnamese UI emphasize the interruption of income during
the unemployment term. In Vietnam, it is difficult to determine the relationship
between the unemployment and the interruption of income because in the
unemployment term, the unemployed lose the revenue. Actually, the
unemployed can get another income in this period.
In the Article 87- The social insurance law, the UI benefit termination is
regulated:
- The expiration of getting unemployment benefit;
- The unemployed have a new job;
- The unemployed join the army;
- The unemployed get retirement pension;
- After twice refusing to take an appropriate work introduced by social
insurance office (except for good reasons);
- Do not set up UI file for three successive months;
- The unemployed go abroad to settle;
- Serving a penalty;
- The unemployed dies.
- In case of terminating the benefit due to a new job or joining the army in
the unemployment term, the unemployed can get the benefit once.
2.3. The level of getting the UI benefit
2.3.1. The level of getting the UI benefit in ILO provisions
The level of subsidies is based on the contribution level and the
contribution term to UI fund.
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The benefit level must guarantee the poverty line of the unemployed.
The amount of benefit is calculated based on previous income.
The benefit amount will be fixed to not less than 50% the minimum
wages or the wages of ordinary employees, and guaranteeing the basic living
standard.
In general, the provisions of the Convention guarantee the principle of
creating the best conditions for employees to get a stable life.
2.3.2. The level of getting the UI benefit in Vietnamese law
According to the law of Vietnam, when a person fully satisfies the
conditions of getting the unemployment benefit, the subsidies for the
unemployed are calculated as 60% of the average salary of six months before
unemployment. This amount of money can be paid every month for the
unemployed - [Article 82 - the law on social insurance in Vietnam].
The purpose of the UI payment is to help the unemployed to have a stable
life and create opportunities for them to seek a new job in the unemployment
period. If the payment level is too high, the UI fund will not guarantee for the
full payment of previous salary. Besides, the employees will not seek jobs
actively if they just expect the UI benefit.
2.4. The duration of getting the UI benefit
The maximum duration of UI benefit depends on the contribution to the
UI fund and participatting term The regulations differs due to the socio-
ecomomy conditions of the country. With a low rate of unemployment and the
employees have the ability to look for work, the period of getting UI benefit will
be shorter.
2.4.1. The duration of getting UI benefit in the ILO provisions:
Article 19 ILO Convention No.168 says:
Each countries can limit the UI period to 26 weeks if the unemployed has
contributed to the UI of 24 months.
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The UI fund does not pay in the case the unemployed until after 7 days.
2.4.2. The duration of getting UI benefit in Vietnamese law
In Vietnam, the period of getting UI benefit stipulated in Article 87 - the
law on social insurance is:
- The Duration is 3 months if the unemployee contributes enough from 12
to 36 months to UI fund;
- The Duration is 6 months if the unemployee contributes enough from 36
to less than 72 months to UI fund;
- The Duration is 9 months, if the unemployee contributes enough from
72 months to less than 140 months to UI fund;
- The Duration is 12 months if the unemployment contributes enough 144
months to UI fund;
- The Duration of getting the UI benefit is calculated based on the UI
fund, but the maximum does not exceed 12 months. Beside getting UI benefit,
the unemployee can also be supported for 6 months vocational training. After
being supported by short-term vocational training (the unemployee can move to
new job) in this term, the unemployee can be adviced to seek for a new job for
free. The unemployed also can get the health insurance. The social insurance
office has the responsibility to provide this insurance for the unemployed
2.5. The UI fund
2.5.1. The UI fund in ILO provisions
The UI fund is formed from the contributions of the parties which
participate to UI. This fund is used to pay benefits and help the unemployed to
return to labour market.
The UI fund is administrated by two rules:
- Provisions on who will contribute to UI;
- Provisions on the management of the UI fund.
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Depending on the socio-economic situation of each country, they will
have different regulations on the contributions to UI and how to operate the fund
in their country. Normally, they stipulate that both the employers and the
employees must contribute to the UI fund. The provisions about UI contribution
must ensure not to have to big effects on the monthly income of the employees
and UI fund.
2.5.2. The UI fund in Vietnamese law
As the other developing countries in the world, in Vietnam, there are three
parties participating to the contribution to UI fund: the employees, the
employers and the state with the following regulations:
- The employees contribute 1% of the monthly salary;
- The employers contribute 1% the monthly salary fund ;
- Monthly, the state supports 1% salary fund for the participation in UI
and gives it once a year;
- The UI fund invest and its profits are added to the fund.
Presently, the provisions for contribution is suitable and can reduce the
burden for the attending subject. The state can not bear alone the UI as a social
welfare.
The UI fund is used for the following purposes:
- Payment for the unemployed;
- Support for vocational training;
- Support for seeking a new job;
- Contributing to health insurance for the unemployed;
- The management cost;
- All forms of legal, safe investments to develop the UI fund;
Provisions of UI fund management:
The cost of UI fund management is equal to the management cost of
administration.
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Chapter 3. THE RECOMMENDATIONS TO IMPROVE VIETNAMESE
UNEMPLOYMENT INSURANCE
3.1. The situation of employment and unemployment in Vietnam
The Vietnamese party and state execute totally innovative policy to
transfer the economy from subsidization to market economy. The removal of
economic subsidization and the transfer of business framework affected the
situation of employment in Vietnam. At present, after more than 20 years of
economic transition, Vietnam is a dynamic economy. The labour market is
established and it is followed with the problems of increasing the unemployment
status quickly. We can see the characteristics of employment and unemployment
in Vietnam as follows:
- The scale of people not fully occupied and the potential unemployed are
high. Due to the effects of population growth in the previous period and through
the economic development, it does not enable to resolve all job demands for the
high rate of the current working age.
- The rate of agricultural employment is high and almost all of those
employees are not trained. Therefore, the level and skill of Vietnamese
employees do not adapt the requirement of industrialization and modernization
of the economics. When there is a need for new workers, the employer must
train or retrain these employees.
- The positive result of the process of economics inovation is a lot of jobs
for the the employees in the undeveloped agricultural economy, subsidied for a
long time. The numbers of small and medium business increase constantly and
attract a lot of employees. The professional level of Vietnamese employees does
not satisfy the requirement of the labour market;
- The rate of female employees is high and affects the competitive ability
in the labour market. It is difficult for them to be equally with men;
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- The professional knowledge of the employees is weakened by the bad
training process. The training to improve skills for the employees does not meet
the requirement of the market economy;
- The employers in Vietnam do not enforce the adjustment of the law on
using or dismissing employees, and the policies for employees. The
consciousness of executing discipline of workers isn’t high and they lack of
knowledge about the labor law. This will easily lead to the dismissal of the
employees and that the employees also can leave their jobs easily.
From the characteristics of the employment mentioned above, we can give
the characteristics of unemployment in Vietnam, as follows:
- The characteristic of geographical moving and professional moving in
the labour market is unflexible;
- In the economy with agricultural advantages, disadvantage mechanism,
the increasing unemployment in handicraft industrial branch, are bound to the
liberalization of the employment;
- The life conditions and average income are still low. The numbers of
unemployed are increasing and most do not have ability to create jobs for
themselves;
- In Vietnam, the rate of unemployment is high in the big cities, where
the rate of not fully agricultural employment is very high;
- Almost all of unemployed in Vietnam focus on the young employees
with low quality and skill level. There are many people who can not seek a job
by the restriction of skill level, although many private employment agencies
need workers.
- The unemployment is formed and developed rapidly in a market
economy while the labour market control mechanism is not developed; the laws
and mechanisms for resolving labour disputes are not perfect and still weak.
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Understanding the situation of employment and unemployment in
Vietnam is necessary to build and implement the law of employment and
unemployment .
3.2. The recommendations to perfect UI law in Viet Nam.
UI is compensation for employees who lose income due to loss of job in
order to stablize their life and conveniently re-participate in the labor market.
The role of UI is the kernel of labor market policies in the social security policy
of the country.
Based on the ILO regulations of UI and the characteristics of employment
and unemployment in Vietnam, we propose the appropriate contributions to
improve the legislation on UI in Vietnam.
3.2.1. The subjects participate and get UI benefit
According to the ILO provisions in Convention No.102, the UI can be
paid for voluntary unemployed, for people who are looking for work or ready
for work . However, UI does not pay for those who give up job unlegally or are
dismissed when employers have legitimate reason. Besides, UI also does not pay
for those who enjoy the benefit of retirement pension. Theoretically, all
employees can face risks of losing jobs, so the UI system should cover all the
unemployed in the working age.
The UI system is built to protect the people who are employees (not those
who never work). Some countries have expanded the scope of protection to the
people who has never had a job, young people just leaving school but can not
look for a job or people that can create self-employment. With the UI subjects
are expanded like that, it will increase the spending of UI fund. Therefore, in the
early period of UI system in Vietnam, it shouldn’t cover all those who have
never have worked, self-employed and working at home.
The unemployment hit employees suddenly and beyond their control.
When we consider the coverage level of UI system, the aspects such as: the type
of unemployment and the scale of the unemployment are considered carefully.
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+ The type of unemployed: Most of the unemployed need to be assisted
by the UI benefit.
+ The type and scale of the unemployed: theoretically, the UI policy
should be applied to all unemployed. However, in practice, the successful UI
depends a lot on the development level of economic, the ability to financial
management of a country. So the scope of UI should be adjusted carefully.
Based on the provisions of the ILO on the scope of application, depending
on the conditions of the economy and society of each country, we should
consider the provisions on the scope and the subjects which should participate in
the UI.
- The income situation is still low and the control of labour market in
Vietnam isn’t good. The scope and subjects participating in UI should be
regulated specifically based on consideration about factors which relate to the
employees, employers, the control level of the state about employment. It should
ensure the following:
+ The subjects participing in the UI provisions must have ability to
contribute to the UI;
+ The subjects can be controlled and pay to the UI fund.
- The provisions on the employees who participate UI:
The Vietnamese law provisions on the employees participating in the UI
who work in the employmnet contracts from 12-36 months, or no limit
contracts are reasonable. Because:
+ These employees have a high risk of unemployment. The provisions
above also reflect that the purpose of the UI is to take care of the unemployed;
+ In Vietnam, almost all of the employees do not have formal contracts,
and have a high risk of unemployment. The UI should take care of these
subjects.
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- Provisions on employers who participate in mandatory social insurance
include: state agencies, service delivery agencies, the army, the political
organizations, the political-social organizations, the political-society-
professional organizations, other social organizations; the agencies, the foreign
organizations, the international organizations operating in the territory of
Vietnam; enterprises, small business individuals, cooperative groups, other
organizations and individuals hire, use and pay for workers. They must have 10
or more workers. These provisions on employers show the equality between the
unemployed in the economic sectors.
3.2.2. The conditions to get the UI benefit
The UI takes care of the unemployed. It does not mean that all
unemployed can get the UI benefit when they lose their jobs. The employees’
participation in the UI and the contribution to the UI fund are the necessary
conditions to get the UI benefit.
Thus, what is the unemployment concep? Presently, to know what the
unemployment is, we must consider the relationship between stopping work and
losing income. In Vietnam, the border between having job and not having job is
unclear. Therefore, the state should have a clear definition of the specific
subjects which can get UI benefit. The specific provisions about the
unemployment cases will help the unemployment insurance benefit payment to
be right and timely.
The UI benefit are payed when the unemployed satisfy two conditions as
below:
- The conditions necessary to get the UI benefit as losing job;
- The conditions about the duration of getting the UI benefit.
The unemployment is not voluntary. The unemployed wants to work and
actively seeks new job. These are all conditions to get UI benefit. The goal of
these conditions ensure benefits for the unemployed who really live by wages.
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The necessary conditions to get the UI benefits when losing job include:
the duration of the UI fund contribution; voluntary or mandatory unemployment;
the responsibility to report about the unemployment status of the unemployed;
the registeration for looking for new jobs with the insurance office. The
conditions to continue getting UI benefit relate to new job seeking of the
unemployed who desire to work and have enough ability to work.
The ILO Convention No.102, does not give any specific indications
related to the UI benefit duration. But they recommend that this duration must
be considered to prevent the abuse of UI benefit.
In Vietnam, beside the condition of the unemployement insurance fund
contribution, the unemployed must satisfy all these stipulated conditions: the UI
contribution duration is over 12 months during the 24 working months; the
unemployment registration at the social insurance office; after 15 days of the
unemployment registration but not getting job. If these conditions are satisfied,
the unemployed can get the UI benefit.
Compared to the current insurance mode, the conditions for getting UI
benefit is more complex. It must satisfy the necessary and sufficient conditions
to prevent the abuse of the unemployment insurance benefit. The conditions for
getting UI benefit are suggested as follows:
- For getting the UI benefit, it is necessary to test the specific
unemployment circumstances, loss of income, how the unemployed’ life is
affected by the lost job; the voluntary or not voluntary unemployment reason;
the fault of the employee in order to avoid the case that employees expect to the
UI benefit. All the above can make the UI benefit payment to be accurate and
effective.
- The problem of UI benefit payment should be also considered. It is the
contribution to UI fund. In the market economy, the migration and moving of
unemployed from companies to different companies is indispensable. Between
the moving times and job changing, there is always a period of having no job.
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There will be a few days or even several months that employees do not want or
do not have enough possibilities to get the UI benefit. It is necessary to have the
conditions of UI duration.
For example, the provisions to the unemployed’ contribution are 6 months
within 12 working months before losing job, 6 months within 15 working
months before losing job, 9 months within 15 working months before losing job.
This satisfies the flexibility of the labour market and protects the employees’
rights when participating in the UI. It is especially to protect the employees that
work with short-term contracts and have high unemployment risks.
The nature of the unemployment is a risk for the employees. It may also
be the unpredictable risk. The UI is the sharing of the unemployed’s risk and is
the necessary support for employees to early return to work. It is not necessary
to regulate the duration of minimum working. Therefore, when the employees
lose job, they can get the UI benefit. Of course, the UI benefit level and the
duration will depend on the duration of UI contribution.
- The unemployed register the unemployment status at the social
insurance office. It ensures a possiblity to manage and control the number of
unemployed. This makes the unemployment payment accurate and quick. The
registration of the unemployment status will create good conditions for the UI
payment office and the working promotion office. One of all conditions to
receive UI is that the unemployed must report about the unemployment status
and register to look for a new job. This will be more convenient for the
employment management office in the inspection and the supervision of the
duration of getting UI. Besides, there are the data and information about the
unemployment level and the skills that the employees are missing to adjust and
support in the vocational training;
- The unemployed must have desire to work and look for a job. This
records the positive attitude of the unemployed. The unemployed always have a
good attitude and ready to work when being offered a new work. It will restrict
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the reason of causing unemployment for a long time. However, the unemployed
must be always ready, able and want to work. The UI office also needs to
consider to arrange the suitable works for the unemployed. Because the
unemployed sometimes worry about the conditions of getting UI, they have to
accept doing a job that does not completely relate to their profession;
- If the unemployed do not find new jobs after 15 days from the date of
the unemployment registration with the social insurance office, they can be
considered to get the benefit. This provision is reasonable. It avoids prolonging
the unemployment status when they are not supported on time;
- The unemployed periodically report to the social insurance office about
evidence of active job seeking. The UI does not encourage to passively get
unemployment benefit. In the duration of getting UI benefit, the unemployed
should actively look for a job to quickly return to work. It is necessary to
promote and develop the intimate relation between the , the employment
promotion office, the vocational training department, and the employers.
- It is regulated that the unemployed can not have any other income
during the unemployment duration. This provision will ensure the meaning of
the UI benefits payment for the unemployed and help them return early to work.
In fact, it should have a mechanism to manage and pay the UI benefit;
The above provisions are not only a legal basis for the UI benefit, but also
help the UI office to control the number of unemployed and pay the UI benefit
accurately and effectively.
3.2.3. The level of getting UI benefit
The UI fund pays and supports for the unemployed to return the labour
market.
The level of UI benefit payment is calculated based on the benefit getting
condition, the contribution level, the relation with the benefit and the other
assistance relating to labour policy and vocational training.
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Convention 102 of ILO Convention on the benefit level of payment
minimum requirement is lower than 45% of previous income of the unemployed
(including the family support) and the standard recievers (spouse and 2
children). The standard limit rate is minimum of 50% of maximum income of
previous UI contribution.
The UI benefit level must be less than the employees’ income while
working and still ensures their life. Many countries often apply the percentage
rate of average wages.
In Vietnam, 15 days after the employees lose their jobs, they will get the
UI benefit to be 60% of previous 6 months average salary of 12 months working
before losing the job. The UI payment level depends on the previous premium
duration of the employees. The unemployee is supported for a maximum 6
months vocational training; is consulted, and is introduced to work for free and
can get health insurance. The finance come from the UI fund.
3.2.4. The duration of getting UI benefit
Article 24 ILO Convention No 102 regulates that the the UI payment may
be limited to 13 weeks of one year the UI contribution. According to ILO
Convention No. 168, the period is 26 weeks. Related to the duration of getting
the benefits of UI, the ILO recommendations consider to avoid the abuse of UI.
The duration of the UI benefit of each country is different. It is based on
the a ability of financial funds and the support of the state for the unemployed.
In the world, there are two regulation modes about the duration of getting
UI benefit :
- The duration of getting the UI benefit is the same. It does not depend on
the duaration of UI contribution;
- The duration of getting the UI differs. It depends on the duration of UI
contribution.
In the early UI system formation, the stipulation of the UI benefit
duration should not depend on the duration of UI contribution. It will be
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convenient for the administration of UI fund because the level of management is
limited.
The UI duration is different depending on the duration of UI
contribution. It will be fair to the unemployed. It is difficult for the management
and financing of UI fund. When the management level will be improved, the UI
benefit duration can be different based on the duration of UI contribution.
Based on the consideration of the finance of the UI fund and the management
ability, the unemployement insurance duration should apply in the same way for
all unemployed. Because:
- The state shares the unemployment risk, helps the unemployed and their
family during the unemployment duration. Risk should be shared equally;
- The unemployment is the risk of the employees. The employees can not
adjust the duration of their unemployment;
- While the system of implementation, training, employment promotion to
the unemployed to return the labor market is not synchronous, less active and
less effective coordinating. So, some the unemployed will soon return to work
and the others will slowly find new suitable jobs . If the UI contribution duration
is short and the unemployed do not have new work quickly, they will fall into
difficult circumstances. Thus, the UI will not meet the requirement.
However, we should consider to reasonably fixed benefit payment
duration based on the ability of UI fund to apply to all unemployed. Until the
labour market policy is synchronous and the management of UI fund becomes
closely, these rules will be changed.
3.2.5. The UI fund The UI fund is formed by the contribution of the participants. The UI
fund is used to pay benefits for the unemployed. The UI helps the unemployed
early return to the labor market. The UI fund is regulated by 2 provisions:
- The provisions on the UI fund contribution;
- The provisions on the UI fund management.
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The UI belongs to social insurance. The UI is important support for the
unemployed. There are 3 subjects participating in the UI: the government, the
employers and employees.
The contribution level of the UI fund is calculated base on the UI benefit
eligibility level, the UI benefit period of eligibility, and other assistances
policies in the labor market. In addition, to determine the UI premium level, it is
necessary to consider the number of unemployment rate, the current financial
pressures of the employers. The rate of contribution must not create a burden for
the contributing subjects in order to avoid negative reactions.
The contribution level 3% of total salary fund is reasonable. There are
two options for the sharing of the UI contributive responsibility:
- The responsibility of all the participating subjects is same. The state,
employer, employees contribute 1% to the unemployment isurance fund;
- The responsibility of the employer and the employee is shared, together
with the support of the state.
The contribution of three subjects participating in the UI fund reflects the
general trend of the of UI fund systems in the world.
Calculation to the UI contribution level should consider the financial
ability of the employees and employers based on the need of the UI. It is
necessary to have the participation of the state in the formation of UI fund. At
present, the structure of the three subjects contributing to UI fund is appropriate.
The responsibility of the state and the employers is to take care the employees.
The employees also have to regconize the responsibility to ensure safety for
themselves.
- The UI fund through the premium rate of the contribution of the
subjects should have the appropriate level based on the socio-economic
condition of the country and the unemployment rate in the society.
- The management of UI fund: the state is the subject to participate in the
contribution to UI fund. Besides the social administrative role, the state aslo
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plays a very important role in the solution of the unemployment problem and the
UI fund.
- The state quoted budget for unemployed to contribute to the insurance
fund;
- Being the subject to manage the society, the state promulgates the
necessary policies and the laws to support the unemployed and even the
employers when the production and the economy have problem.
UI is a policy for the unemployment problem in the labour market. With
the employees, this is the center of UI. Together with the other insurance funds,
UI fund can not be separate from the administration of the state. By its nature
and characteristics, UI should be unified from central to local. The UI fund
should have the dependent and seft-control mechanisms about finance in its
operation and growth in accordance to the provisions of law. In that case, the
management and the use of UI fund become more active and effective.
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CONCLUSIONS
Unemployment insurance is a quite new phenomenon in Vietnam. The
unemployment insurance linked the employment service system and the active
labour market support measures. Among the income support policies satisfy the
unemployed’s need well. It is a subsidy but also supports the necessary skills of
the unemployed. It links the job-seeking employees and the employment
demand of the employers.
The study is about the ILO unemployment insurance provisions, I propose
some recommendations as follows:
- The Vietnamese employees’income is low and the state does not in
detail control the labour market. Consequently, the participation of the
unemployment insurance scope should be regulated in more detail. It is based on
the basic relation beteen the unemployede, the employer and the state’s
employment control level.
+ In the start, the unemployment insurance system should not cover all
unemployed like the full social welfare. Under the Vietnamese conditions, the
unemployment insurance policy should focus on the employees who work under
employment contracts and employees who have not lost their jobs voluntarily;
+ The rat of “freelance” employees is high in Vietnam. When the system
is complete, it should include these “freelance” employees who register to
paticipate in the unemployment insurance. They have low income and have a
high unemployment risk. It is for them the unemployment insurance exists and
guarantees the welfare.
- The state should decide the provisions about the unemployment
insurance benefit conditions. The povision should be such as: the contribution
and the benefit conditions; the benefit level; and the benefit duration. The state
should set up a comprehensive mechanism for the unemployment promotion
organisation; the employment and unemployment register office. Besides, the
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mechanism for the employment supervision office should be set up and operate
professionally.
+ The state should consider carefully the contribution duration for having
the benefit right. In the early formation period, the unimployment insurance
fund contribution duration condition can be long. This will maintain the fund.
When the fund has a stable financial situation, the fund contribution duration
condition can be shortened so that all unemployed can have opportunity to get
the benefit.
- The benefit level should be calculated based on the contribution level.
The level have a resonable balancebetween: the benefit duration, other labour
market policy and vocational training assistances. The benefit level should be
calculated so that it is less than the working employment income but it must
guarantee a level above the unemployed’s poverty line. The benefit is not only
for the safeness for the unemployed; the unemployed should still want to be
employed.
+ The unemployment is the status for the employees that have lost their
jobs and are looking passivelyfor a new job. Although, the unemployed look for
a new job actively but they have not inicitament to get a new job. Getting a new
job can take short or long time. In addition to this, the unemployed are also
influenced by the labour market mechanism and policy which still are not
comprehensive. Consequently, the benefit duration should be applied the same
for all unemployed who get the benefit. However, the fund should consider
carefully to calculate the same maximum benefit duration for all unemployed
based on the fund’s financial ability. When the labour market policy and the
fund management are developed, the fund can hava different benefit duration for
every unemployed. Consequently, the benefit duration will be based on the fund
contribution duration according to a contribution - receiving regulation.
- The three party mechanism contributions to the unimploymnet insurance
fund is reasonable. This regulation show the spirit of the duty sharing of the
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state with the employer. They together look after the unemployed. The
unemployed must have the duty to guarantee the life of safeness themselve.
The management and adjustment the fund maintainance based on the
contribution level. Based on Vietnam’s socioeconomic situation and the current
unemployment rate, the fund should regulate the contribution to a suitable level.
Because the special character of the unemployment insurance, the fund should
be unified from the central to the local level. The fund should have ab
independent finance mechanism, operational self-control and freedom of
development according to the law. When the fund is independent and self-
controlled in the operation, the fund will be managed and used effective.
The unemployment insurance is a young and complex institution.
However, the based on the ILO provisions for unemployment insurance, it is
possible to set up and implement effectively an unemployment insurance policy
under Vietnam’s socioeconomic conditions.
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Supplement A
37
38
Bibliography
1. The Universal Declaration of Human Rights
2. Conventions of ILO No.120, No.168
3. Vietnamese labour code 2002;
4. Vietnamese social insurance in 2006;
5. Decree No. 127/2008/NĐ-CP December 12 2008 of The Vietnamese
Government lead to excute the VietNamese social law in the
unemployment insurance.
6. The project of UI book - Vietnamese Labor Ministry 2000;
7. UI textbook of national economic university- 2004;
8. Recommendation UI in social insurance – Le Thi Hoai Thu - research
legislative magazine - 2006
9. The building and excute Vietnamese UI – Dang Anh Due – 2002- Labour
and Social magazine;
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insurance magazine – 2002
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science legal information -2006
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