RESEARCH PROPOSAL SOCIAL INSURANCE OF FORMAL LABOR

NATIONAL ECONOMIC UNIVERSITYBACHELOR BUSINESS ADMINISTRATION IN ENGLISH BUSINESS RESEARCH METHODOLOGY Topic: Determinants affecting the intent to buy social insurance of informal labor i

NATIONAL ECONOMIC UNIVERSITY

BACHELOR BUSINESS ADMINISTRATION IN

ENGLISH

BUSINESS RESEARCH METHODOLOGY

Topic: Determinants affecting the intent to buy social insurance of informal labor in urban area of Vietnam – A

case study in Hanoi

Instructor: Assoc Prof Dr Le Thi My Linh

Ha Noi, Oct, 2019

I Rationale

As the world has become more and more developed and innovative, there are more and more uncertain risks suddenly popping up and causing severe consequences It is the same situation in Vietnam when the economy is on the rise, income per capita compared to other countries in the region has increased significantly People's living standards have been gradually improved As a result, the need for security or insurance has been rising significantly

Social Insurance Law (2006) was issued and takes effect from

2007 However, the voluntary social insurance has been applied since 2008 Social insurance is a basic policy in the social security system (social security) of each country In Vietnam, the development of the social insurance system (social insurance) and the construction of voluntary social insurance (unemployment insurance) is one of the main solutions to develop the social security system This is also the first law in Vietnam to institutionalize at a high level a very basic demand for social security of the citizens

According to the Vietnam Social Insurance agency, at the end

of 2015, the number of people participating in social insurance was 12,319,866 people, an increase of 5.79% compared to

2014 In which, the obligatory social insurance participants were 12,065,223 people, an increase of 5.35% over the same period in 2014 and the number of people participating in social insurance is 254,643 people, an increase of 31.71% However, the number of employees participating in the social insurance

as above is less than 0.4% of employees joining the social insurance Thus, there is still a very large part of workers not participating in social insurance that cannot access this service Most of them are labor of the informal sector

The informal economy, informal sector of the economy, or grey economy is the part of an economy that is neither taxed nor monitored by any form of government Although the informal sector makes up a significant portion of the economies in developing countries, it is often stigmatized as troublesome and unmanageable However, the informal sector provides critical economic opportunities for the poor and has been expanding rapidly since the 1960s Integrating the informal economy into the formal sector is an important policy challenge The type of work making up the informal economy is diverse, particularly in terms of capital invested, technology used, and income generated Workers in the informal sector, even those are self-employed or wage workers, are mostly inaccessible to secure work, benefits, welfare protection, or representation

According to the General Statistics Office, Vietnam currently has more than 18 million employees doing informal jobs -accounting for 57% of the total non-farm employment in country However, up to 97.9% of workers do not have social

insurance This poses a great concern for the nation in terms of social security as the social insurance coverage has not been best improved On implementing the Party's orientation and the State's law on ensuring universal social security, the development of voluntary social insurance of workers in the informal sector has been implemented in our country quite early, the Social Insurance Law of 2006 stipulates implementation from 2008, amended in 2014, the Government issued Decree No 134 / ND-CP, dated December 29, 2015 detailing voluntary social insurance, the Ministry of Labor -Invalids and Social Affairs issued Circular No 01, dated 18/02/2016 providing detailed guidelines for implementation of voluntary social insurance The system of legal documents on voluntary social insurance is quite adequate, but the implementation process still faces many difficulties and shortcomings

We believe that the development of the coverage of social insurance can better guarantee the life standard as well as security of the people This goal can be obtained by focusing on enlarging the popularity of social insurance among labor from the informal factor To back up our opinion, we had looked for some literature, yet the most of them focus on the participation

of insurance, the determinants affecting the ITB of people in general but not those in informal labor sector Therefore, we decide to study further about the determinants influencing the intent to buy (ITB) for social insurance of the informal labor sector in Vietnam’s urban areas, where most of the workers from the sector settle down

II Research objectives

On conducting the research, our group aims to figure out three following goals related to the social insurance enrolment in informal labor sector in urban areas of Vietnam, which are, the situation, the determinants affecting ITB, how each factor

affects these two variables, and possible proposed solutions

III Research questions

This research is designed to answer the following questions:

1. What is the current status of the social insurance coverage among labor from informal sector in urban area?

2. What are the determinants affecting the ITB for social insurance of the informal labor sector in Vietnam’s urban areas?

3. What is the interaction between ITB?

4. What are the recommendations for social policy maker?

IV Literature review

Following are the summaries of some typical studies related to the interested topic in Vietnam and worldwide:

1. Domestic Researches (analyze, evaluate the situation of research in the field of the topic in Vietnam)

• “Factors influencing the intention to subscribe to voluntary social insurance of farmers: A case study in Phu Yen Province” Hoang Thu Thuy, Bui Hoang Minh Thu (2018) Science & Technology development journal: Economics – Law and management, Vol 2, Issue 4, 2018

Based on the Theory of Reasoned Actions of Ajzen and Fishbein (1985), the study proposes the model of the links between decisive factors and the intent to buy voluntary social insurance of farmers in Phu Yen province In order to verify the factors affecting the intention to subscribe to

voluntary social insurance, the study used the primary data collected from the survey on 325 famer households

in 4 localities in Phu Yen province Initially employing a model with 7 variables, the authors found out the dependent variable – the intent to buy, is determined by 5 main factors, namely, “Awareness of voluntary social insurance policy”, “Attitude towards subscription”, “Risk awareness”, “Subscription procedures”, and “Moral responsibility” On recognizing the relation between the key determinants and the intent to buy, the study suggests renewing organizing quality, raising farmers’ awareness of the necessity for voluntary social insurance, improving policy mechanisms and strengthening the State’s management

• “Analyze factors affecting to attendance of health insurance of the objects in Tra Vinh province”.Nguyen Thi Dan Phuong Master thesis, Tra Vinh University, 2015

The research proposes and verifies the determinants influencing the intent to buy health insurance The study was conducted based on the information compiled from the opinions of experts in the seminar on the implementation of universal health insurance coverage by Universal Health Insurance Steering Committee of Tra Vinh province that held and performed a survey to get the opinions of experts in the field of health insurance The author constructed a model of 10 factors, then performed surveys of 460 households Consequently, after analyzing the data, the results showed that 7 factors affects to attendance of health insurance of the objects in Tra Vinh province on a level from high to low, which are:

“Understanding of health insurance”; “Quality of examination and treatment of health insurance”; “Health status”; “The fee on health insurance”; “Procedures for records of purchase health insurance and payment for the costs of examination and treatment of health insurance”;

“Procedures of registration and examination and treatment

of health insurance”; “Income”, “People’s living standards”

• “Some factors that have an effect on the Interest of participating in Voluntary Social Insurance of Small traders

in Nghe An province” Nguyen Xuan Cuong, Nguyen Xuan Tho, Ho Huy Tuu Vietnam National University Journal of Science, Economics and Business, Vol 30, Issue 1 (2014) 36-45

Aiming to discover and analyze the factors that affect the interest of participating in voluntary social insurance by small traders in Nghe An province On reviewing theories

of consumer behavior such as TRA and TPB, the research indicates seven variables that have a significant statistical influence on the interest of participating in voluntary social insurance, which are: “propagation of voluntary social insurance”, “health awareness”, “knowledge of voluntary social insurance”, “attitude”, “family expectation”, “moral obligation” and “behavior control” Of these factors, results show that propagation of voluntary social insurance plays the most important role in deciding the intent to buy insurance

• “Factors affecting the participation social insurance of informal labor” Hoang Bich Hong, Mai Thi Huong, To Thi Hong Social Insurance Journal, Issue 3B, 2017

In order to measure and evaluate the intention and behavior of voluntary social insurance participation of workers in the informal sector, the research team approached, studied and applied the theory and model of behavior such as Theory of Consumer Behavior; Attitude theory including models of Schiffman and Kanuk - 1987, model reasoned action theory TRA of Ajzen and Fishbein -1987, model of theory of planned behavior - TPB of Ajzen -1991 The study was conducted in a sample of 342 labors

of informal sector It verified the model of 10 independent variables including: “attitude towards participation”,

“family expectation”, “income”, “risk awareness”, “social influence”, “health awareness”, “propaganda of social insurance”, “moral responsibilities”, “knowledge about social insurance” The results of the survey and data processing show that factors of moral responsibilities and

propaganda of social insurance are the two factors that most influence the intention of participating in social insurance of workers in the informal sector In addition, low educational levels also hinder the understanding of social insurance policies, as well as the awareness of employees' moral responsibilities

2. Foreign researches:

• “Determinants of enrolment in the NHIS (the National Health Insurance Scheme) for women in Ghana – a cross sectional study” Anthony Kusi, Ama Fenny, Daniel Kojo Arhinful, Felix Ankomah Asante, Divya Parmar International Journal of Social Economics Vol 45 No.9,

2018 pp 1318-1334.

This paper was carried out on the purpose of exploring whether dimensions of social exclusion explain the reason for the fact that some groups of women are not benefiting from the scheme Data collected from 4,050 representative households in five districts verify the proposed model of 7 main factors deciding enrolment into the scheme, namely, “wealth status”; “age”; “health status”; “locality”; “perception about the quality of care at health facilities and perception of the NHIS” The study provide evidence to show that certain groups of women are systemically excluded from participating in the NHIS

• “System and neural network analysis of intent to buy and willingness to pay insurance premium”.Sanjay Tolani and Ananth Rao, Genanew B Worku, Mohamed Osman Managerial Finance, Vol 45 No 1, 2019 pp 147-168

With the goal of analyzing significant determinants to assess the probability of insureds’ intent to buy (ITB) insurance and willingness to pay (WTP) quantum of dollars for security benefits By applying Double Hurdle Model and Neural Network architecture to 503 insureds of a branch of

a leading insurer in the United Arab Emirates, the research constructs a model building up with 5 key variables, which are: “awareness of social security”; “ability to recover from a loss”; “perceived personal control”; “behavioral tendency”; “demographic variables” After verifying the model, the results suggest that marketing managers

target insureds who are aware of social security, have ability to recover from loss, have perceived personal control, behave rationally and have favorable demographic features to enhance their ITB and WTP

• “The influence of behavioral factors on insurance decision – a Romanian Approach” Cristian Buzatu International Economic Conference of Sibiu 2013 Post Crisis Economy: Challenges and Opportunities, IECS 2013 Procedia Economics and Finance 6 (2013) 31-40

The paper presents the action of behavioral factors on the decisions regarding the insurance against certain event

By analyzing the elements that determine a person who should be covered against a risk, not to buy insurance and the reverse situation when, the author suggests a general approach of 7 behavioral factors leading to insurance decision: “risk perception”; “biases”; “models of decision making”; “mental accounts”; “the influence of emotions”;

“information availability” and “social norms”

Summary of the relevant researches – typical outcomes:

Of all researches reviewed, many factors have been investigated to find out the links between them and the intention to buy insurance Although each research analyzes different group of determinants, the majority of them confirm the following factor: awareness of social security or level of information available (Sanjay Tolani and Ananth Rao, 2018; Anthony Kusi, 2017; Hoang Thu Thuy and Bui Hoang Minh Thu, 2018), ability to recover from loss (Sanjay Tolani and Ananth Rao, 2018), perceived personal control (Sanjay Tolani and Ananth Rao, 2018), behavioral tendency (Sanjay Tolani and Ananth Rao, 2018; Anthony Kusi, 2017; Hoang Thu Thuy and Bui Hoang Minh Thu, 2018), socio-demographic factors (Sanjay Tolani and Ananth Rao, 2018; Anthony Kusi, 2017; Do Hoang Anh and Pham Hong Manh, 2019), “Moral responsibility” (Hoang Thu Thuy and Bui Hoang Minh Thu, 2018; Do Hoang Anh and Pham Hong Manh, 2019), “Risk awareness” (Hoang Thu Thuy and Bui Hoang Minh Thu, 2018)

However, there exists some shortcomings that need to be tackled:

• In term of the subject of the study, most of the studies only focus on the population of a specific area, for

example a province, a country, yet less notice on the

labors of different economic sectors as well as

socio-demographic area

• In term of topic, most of the studies pay much attention

on insurance in general or health insurance in particular However, the voluntary social insurance seems to be less noticed

V Theoretical framework and research

hypotheses

On considering multiple influencing variables in different research models, our group decided to hypothesize that the set

of determinants including attitude towards social insurance enrolment, behavioral tendency, level of information available, risk perception, subjective social norms, and other demographic factors affect ITB at the same time The following figure represents the theoretical framework: