In addition, the current law stipulates the procedures for handling unemployment insurance for workers are generally timely, lawful, more and more convenient and fast, which [r]
Trang 1THE LAW ON UNEMPLOYMENT INSURANCE
– ADJUSTMENT FOR ADAPTATION
PhD.Le Thi Hoai Thu MSc Nguyen Ngoc Lan
1 Impacts of the era on labor, employment and unemployment
1.1 Impacts of Industry 4.0
The fourth industrial revolution is the combination of new technologies mainly such as the Internet of Things (IoT), Big data, Artificial Intelligence (AI), Renewable energy/clean technology, Robotics, 3D printing, New materials (grapheme, skymions, bio-plastic), Blockchain, Virtual/Augmented Reality), Smart cities, Fintech, Shared economics The development and utilization of advanced technologies will replace human labor, contribute to the increase of labor productivity, reduce manufacturing costs, bring benefits to the country, enterprises and consumers The revolution is expected to change the entire production and management system in Vietnam, affecting all aspects of contemporary social life deeply327 The rapid development will lead to the replacement of jobs by automation and robots in several industries such as textile, footwear, electronics, assembly machines and electronic components, consulting, customer care Agriculture, which has so far used human labor mainly, currently uses agricultural robotic system for fields and farmers manage their fields328 The banking system is getting more convenient as people begin to become familiar with Internet Banking service and no longer need to go to transaction offices and the position
of bank clerk are gradually disappearing Other occupations with specific repeated processes such as accountant, programmer and operational maintainer can be replaced by AI robots329
According to the International Labor Organization (ILO), about 56% of workforce in 5 ASEAN countries are at risk of losing their jobs due to robots330 Vietnam is one of countries which are most affected by Industry 4.0331 According to the Ministry of Science and Technology, there are several occupations in Vietnam which are forecasted to be eliminated owing to the impacts of Industry 4.0 such as factory worker (44%), cashier (40%), taxi driver (20%), customer care staff (18%), pilot (16%)332 It is expected that about two billion jobs will disappear by 2030 and there is no labor working in banking, accounting, maintenance-related sectors while 80% of new jobs will be available by 2025 that have never existed until now Additionally, 86% of workers in simple industries will be at risk of losing their jobs due
327
Central Institute for Economic Management, Impacts of Industrial Revolution 4.0 on Vietnam's human resource development, 2018
328 Central Institute for Economic Management, Impacts of Industrial Revolution 4.0 on Vietnam's human resource development, 2018
329
baodauthau.vn/doanh-nghiep/nguon-nhan-luc-40-co-hoi-va-thach-thuc-69031.html
330
http://tapchitaichinh.vn/nghien-cuu-trao-doi/nhieu-thu-thach-cho-nguoi-lao-dong-thoi-4.0-140389.htmn
331 http://www.most.gov.vn/vn/tin-tuc/14092/nguon-nhan-luc-chat-luong-cao san-sang-truoc-cach-mang-cong-nghiep-4-0.aspx
332
https://laodong.vn/cong-doan/cach-mang-cong-nghiep-40-nguoi-lao-dong-se-bi-bo-roi-neu-chien-dau-don-le-629973.ldo
Trang 2to the effects of Industry 4.0333 The revolution increases the number of unemployed people because of the rapid development of digital revolution This shows that this is a significant challenge for the country in arranging and solving insurance issues for unemployed people Completing the legal regulations on unemployment insurance for workers is posing challenges to managerial levels in the context of this digital revolution
1.2 Impacts of the Comprehensive and Progressive Trans-Pacific Partnership Agreement (CPTPP)
CPTPP is an agreement that benefits Vietnam with the expectation of bringing new motivation for the development of numerous economic sectors According to the Ministry of Planning and Investment, CPTPP will help Vietnam to achieve the increase in total export of over 4% per year equivalent to USD 4 billion, in intra-regional export of 14.3% equivalent USD 2.61 billion, in extra-regional export 1.7% equivalent to USD 1.4 billion Especially, textile and footwear industry grow at high rate from 8.3 to 10.8% These products are exported to Australia and Canada with the total annual consumption of USD 10 billion per year334 In addition to economic growth, the participant of Vietnam in CPTPP will create more jobs for Vietnamese workers It is calculated that the number of new jobs will increase from 17.000 to 27.000 since 2020335 Thus, this is a good opportunity for Vietnamese workers
to participate in the domestic and international labor market, which requires them to prepare human and investment resources, as well as the readiness firms to produce and ensure goods are accepted by the markets within the agreement The challenge that Vietnamese workershave to face is to make the most of employment opportunities while regional and international requirements specify qualified, professional, senior and experienced workers This leads to the increase in labor competition, some businesses fall into difficulties and the possibility of unemployment will occur By the first quarter of 2019, the labor force aged 15 and over of the country was 55.4 million people, an increase of 331.9 thousand people; the number of employed people was 54.3 million, an increase of 329.2 thousand people; the number of unemployed people was 1.1 million, a decrease of 8.2 thousand people compared
to the same period last year336 It can be said that the participation of Vietnam in CPTPP will increase the employment opportunities for Vietnamese workers; however, there are a number
of unqualified workers that will be inevitably unemployed
1.3 Impacts of EU-Vietnam Free Trade Agreement (EVFTA)
EVFTA has helped Vietnam to attract more FDI and create new production capacity, contributing to increase the positive effects of international economic integration for Vietnam, especially in export and import To take advantage of FTAs, exporters need to proactively
333
Central Institute for Economic Management, Impacts of Industrial Revolution 4.0 on Vietnam's human resource development, 2018
334Thai Linh (2018), Impacts of CPTPP on economic sectors, accessed on November 28, 2018, https://www.nhandan.com.vn/antuong/item/38387802-tac-dong-cua-cptpp-den-cac-nganh-kinh-te.html
335 Mai Dan (2018), What Vietnamese workers benefit from CPTPP, accessed on November 14, 2018, http://thoibaotaichinhvietnam.vn/pages/xa-hoi/2018-11-14/lao-dong-viet-nam-duoc-huong-lo-gi-tu-cptpp-64311.aspx
336 General Statistics Office, Employment situation in the first quarter of2019
Trang 3improve competitiveness and productivity through scaling up production, investing in technology to improve quality and reduce prices of goods Specifically, they need to mobilize investment in capital, human resources and technology to scale up production In particular, investment in technology development is one of key factors to help enterprises to improve productivity and competiveness in the market EVFTA will significantly boost trade between Vietnam and EU while turnover between two parties have increased 10 times in the nearly past 10 years and reached USD 53 billion in 2018337 The main exporting items of Vietnam to this market are textile and tropical fruits while these industries mostly use human labor The labor force working in these fields has accounted for a relatively large number When goods enter EU countries, it requires workers to be highly qualified and experienced whilst this proportion of Vietnamese workers is small Therefore, EVFTA may cause uncompetitive firms to reduce production and even dissolve or go bankrupt When EU goods go to Vietnam, their quality and the fact that Vietnamese consumers prefer foreign products338 may cause difficulties for domestic companies, requiring them restructure, rearrange, reduce production,
go bankrupt and workers lose their jobs Thus, the unemployment in Vietnam has recently increased significantly
2 The current situation of unemployment insurance law in Vietnam in the context of new era
Regulations on unemployment insurance are regulated in the Law on Social Insurance
in 2006 and effective since January 1, 2009 Since, 2015, the unemployment insurance system
is regulated in the Law on Employment in 2013339 To concretize the unemployment insurance system, the Government issued a system of legal documents to regulate relations among workers, employers and state agencies These regulations form a relatively comprehensive legal system of unemployment insurance and they are an important legal basis for effective enforcement Nevertheless, the law on unemployment insurance has certain restrictions in terms of participants, insurance system, funds and fund management and especially documents as well as procedures for implementing unemployment insurance
2.1 The current situation of legal regulations on unemployment insurance in Vietnam
Firstly, participants in unemployment insurance
Article 43 of the Law on Employment in 2013 stipulates that participants in unemployment insurance include workers and workers Accordingly, workers are obligated to participate in unemployment insurance when working under anemployment contract In case the employee commits to many contracts at the same time, the employer of the first contract has the responsibility to participate in unemployment insurance for the workers These employers include agencies and units specified in clause 3, Article 43 of the Law on Employment Therefore, employers are required to participate in unemployment insurance for
337
http://baochinhphu.vn/Thi-truong/EVFTA-se-thuc-day-thuong-mai-va-thay-doi-buc-tranh-dau-tu/359039.vgp
338 https://thuvienphapluat.vn/tintuc/vn/hiep-dinh-TPP/11814/lao-dong-viet-nam-truoc-nguy-co-that-nghiep-khi-tham-gia-tpp
339
Articles 41 to 59 of the Employment Law in 2013
Trang 4workers at the social insurance organization within 30 days since the date that the employment contract and the working contract take effect The Law on Employment in 2013 has expanded participants in unemployment insurance in comparison with the Law on Social Insurance in 2006 to ensure the right to participate in unemployment insurance and the life of workers that are easy to lose their jobs due to the transformation of the situation Nonetheless, participants of the current law have not included housekeepers and officials
Secondly, the unemployment insurance system
- Unemployment allowance
To be entitled to unemployment insurance, workers must terminate the contract in accordance with legal regulations unless it is stipulated in point a and b, clause 1 of Article 49 and follow procedures and processes properly In addition, if workers receive severance pay when terminating the employment contract, they are not entitled to unemployment insurance This regulation is stricter, which contributes to the guarantee of equality for participants in unemployment insurance, as well as the financial security of the unemployment insurance fund
The current law also stipulates that workers have to pay unemployment insurance under the provision of clause 2, Article 49 of the Law on Employment in 2013 This is consistent with international practices as most countries in the world regulate that workers must have a long time of working and minimum time of paying unemployment insurance in order to receive unemployment insurance This provision ensures that receiving results from contribution and spending is guaranteed by revenue
In terms of documents and procedures for receiving unemployment insurance, the current law regulates that they must be submitted at the employment service centers within 3 months from the date of terminating contract This ensures that agencies are able to monitor, manage and control the quantity of unemployed people to pay unemployment allowance accurately On the other hand, the law stipulates the period that workers receive unemployment insurance depending on the duration that they pay unemployment insurance under clause 2, Article 50 This provision is completely reasonable, which ensures equality among participants in unemployment insurance The maximum receiving period is regulated
as 12 months, which helps to avoid the financial overload of the unemployment insurance fund for a long time
According to this law, the monthly receiving amount of unemployment insurance is stipulated in clause 1, Article 50 This is relatively appropriate because if the allowance is too low, it cannot ensure the objectives of social assistance In contrast, the financial security of unemployment insurance fund cannot be guaranteed The regulation on the receiving amount
of unemployment insurance is based on the average of salaries and wages of the last 6 consecutive months before losing jobs Concurrently, the law also controls the maximum amount to ensure the purpose of insurance is to compensate for income, stabilize social life and ensure the equality between unemployed and employed people This is also consistent
Trang 5with current actual legal framework in Vietnam, as well as regulations of ILO and other countries in the world
- Employment consultation and introduction system
Article 55 of the Law on Employment stipulates that workers who are receiving unemployment insurance are consulted and introduced freely by employment service centers
to jobs in accordance with their qualification and experience The period that workers are entitled to unemployment insurance and assisted, consulted and introduced by employment service centers is from the date that workers receive monthly allowance and does not exceed the total time that they receive unemployment insurance under the decision of the Director of the Department of Labor, Invalids and Social Affairs The allocated annual budget is based on the consulting and introducing costs of the previous year according to the number of workers applying for unemployment insurance and calculated according to the quantity of actual applicants Consulting and introducing fees are applied in accordance with the law on fees340
- Support for vocational training system
Workers are entitled to vocational training support when meeting the requirements in Article 55 of the Law on Employment in 2013 When they meet all above conditions, they are entitled to vocational training support The duration of support is based on the period of actual vocational training but must not exceed 6 months The supporting amount is regulated in the Decision no 77/2014/QD-TfGM of the Prime Minister on the supporting amount of vocational training for participants in unemployment insurance Accordingly, the maximum supporting amount is VND 1 million/person/month This amount needs to be reviewed to ensure the rights of workers to engage in vocational training and be supported for vocational training when the society moves and changes constantly
- Support for training and improving professional skills system
This is a new insurance system added in the Law on Employment in 2013 It shows the share of employers for the unemployment insurance fund when they cannot train workers owing to the change of science and technology The regulation has made significant progress and been consistent with the Law on Vocational Education in 2014, thereby reducing the burden of vocational training for employers, helping them overcome difficulties when dealing with problems related to workers under transformation
In order to be entitled to be supported for training and improving occupational skills for workers, employers need to meet all requirements specified in Article 47 of the Law on Employment in 2013 and Article 3 of Decree no 28/2015/ND-CP The maximum supporting amount is VND 1 million/person/month The particular amount is calculated on a monthly basis, according to the actual period of education of each training course but must not exceed
6 months If the course has the duration of under 15 days, it shall be counted as a half of a month and if the course lasts more than 15 days, it shall be counted as one month to determine
340
Clause 2 and 3, Article 14 of the Decree No 28/2015/ND-CP
Trang 6the supporting amount If the supporting amount for courses exceeds regulated amount, the excess amount shall be paid by employers341
Thirdly, unemployment insurance fund and management of fund
The current law regulates that the unemployment insurance fund is contributed by both workers and employers This shows that the insurance fund principle is protected by the state The premium is determined as 1% of the monthly salary of workers participating in unemployment insurance, which iscontributed by workers, employers and the state The salary used as the basis for payingunemployment insurance is based on the Decree no 28/2015/ND-CP Accordingly, the monthly salary of workers that work under the salary system paid by the state stipulated in clause 1, 2, Article 58 of the Law is the basis for paying unemployment insurance
The unemployment insurance fund is formed by the contributions of workers, employers and state support, benefits of the fund‘s investment and other legal revenues, as well as the fund used to pay unemployment insurance, management and investment cost to preserve and develop the fund Vietnam social security is selected to be the direct agency to organize and manage the fund, which is consistent with the specific conditions in Vietnam as the management of the agency is operated effectively
Fourthly, documents and procedures for the implementation of unemployment insurance system
The unemployment insurance system includes unemployment allowance, employment consultation and introduction, support for vocational training, support for training and improving skills of workers In respect of unemployment allowance system, documents and procedures are implemented according to Article from 16 to 23 of the Decree no 28/2015/ND-CP With regard to employment consultation and introduction system, documents and procedures are implemented according to Article 15 of the Decree In terms of support for vocational training and support for training and improving skills of workers documents and procedures are implemented according to Article 24, 25 and Article 26 respectively of the Decree The implementation of unemployment insurance system must comply with the statutory procedures and documents The state and social security agency facilitate workers to receive unemployment insurance, contributing to ensure their lives, help them quickly adapt to new working environment and harsh working conditions which require qualification and specialty
Fifthly, handling violation of law and settling disputes on unemployment insurance
The violation of law is illegal acts of one of the parties or related parties in the field of unemployment insurance of any organization or individual The handling of the violation of law is implemented according to administrative punishment regulation, which is stipulated in the Decree no 95/2013/ND-CP dated August 22, 2013 and amended in the Decree no
341
Article 4 of the Decree No 28/2015/ND-CP
Trang 788/2015/ND-CP Accordingly, these acts are late payment, improper payment, violation on making unemployment insurance book and other regulations The main punishment is warning and fine with the amount from VND 1 million to VND 75 million There are also additional penalties The handling of administrative violation has been innovated and made progress More acts are added and the fine increases, which help to ensure the strict punishment and prevent illegal acts in practice However, it is inappropriate if there is only administrative punishment It is necessary to have criminal punishment as a further deterrence for violating individuals and organizations
According to the current law, the disputes on unemployment insurance are labor disputes or administrative disputes342 Therefore, the principles, jurisdiction, order and procedure for settling these disputes shall comply with the regulation of point d, clause 1, Article 201 of the 2012 Labor Code, 2015 Civil Procedure Code (labor dispute) and Administrative Procedure Law (administrative dispute)
2.2 Implementation of Vietnamese laws on unemployment insurance
2.2.1 Results
On the basis of the law and conclusive and comprehensive solutions, the number of participants in unemployment insurance have increased over past 10 years and ensure the target assigned by the state According to the report of the Ministry of Labor, Invalids and Social Affairs, the number of participants in unemployment insurance increased from 5.993.300 people
in 2009 to 10.308.180 people in 2015, an increase of 11.8% compared to the previous year In
2018, there were 12.690.173 participants, an increase of 7.7% compared to 2017, which was equal
to 87.7% of the total number of participants in compulsory social insurance (14.45 million people) The number of people receiving unemployment allowance increased from 671.789 in
2017 to 763.573 in 2018 The total amount of unemployment insurance revenue also increased In
2018, the average monthly unemployment insurance contribution of workers was VND 4.937.117, an increase of 9.94% compared to 2017 The total unemployment insurance revenue in
2018 was VND 15.531 billion, an increase of 14.9% compared to VND 13.517 billion in 2017343 This shows that the law on unemployment insurance is more and more appropriate, meeting the needs of workers when they lose their jobs, facilitating them and employers access to supports from unemployment insurance fund, contributing to cover participants in unemployment insurance under the changes of current socio-economic situation
Following regulations, local employment service centers are assigned to receive and handle documents of unemployment insurance According to the report of the Ministry of Labor, Invalids and Social Affairs, this number increased from 156.765 people in 2010 583.669 people in 2015 and achieved 763.573 in 2018 In addition, the reduction of
342
Official Dispatch No 105/ TANDTC-PC&QLKH of The Supreme People‘s Court dated April 14, 2016 on the implementation of the Law on Social Insurance
343 Ministry of Labor, Invalids and Social Affairs, Summarizing report of 10 years on the implementing unemployment policy and solutions in the coming time, 2019
Trang 8production scale of enterprises leads to the elimination of jobs and the increase of unemployed people Thus, the number of people entitled to unemployment insurance increased, leading to the increase in the total spending for unemployment insurance In 2015, the spending was VND 4882.9 billion, an increase of 1.3% compared to 2014 The amount of
2016, 2017 and expected 2018 was VND 5.171 billion, 7.831 billion and 7.566 billion respectively The 2018 amount included 92.8% of unemployment allowance, 0.9% of support for vocational training and 4.1% for health insurance In addition, the balance of unemployment insurance fund was reported as VND 79073 billion by the end of 2018 and the fund was expected to be secured by 2020344
The current law specifies the function and obligation of employment consultation and introduction centers Accordingly, they concentrate on diversifying forms and improving processes, so the number of people consulted and introduced tends to increase and account for
a relatively large proportion in the total number of people receiving unemployment insurance The figure nearly tripled from 125562 people in 2010 to 463856 people in 2015 and reached
1309429 people in 2018 The data show that the number of people consulted and introduced is still lower than those who receive unemployment allowance The consultation effectiveness of several localities is low, which cannot meet the requirements of workers Thus, it is necessary
to have appropriate forms of consultation to contribute to increase the number of workers who are entitled to employment consultation and introduction
Support for vocational training has seen positive changes and the number of people supported with vocational training tends to increase The figure increased from 270 people in
2010 to 24363 people in 2015 and achieved 37977 people in 2018 This facilitates workers to improve their skills or change their profession to quickly find jobs
According to local reports, the number of people who are accepted to receive unemployment insurance tends to increase every year The figure tripled from 156765 people
in 2010 526309 people in 2015 Since the Law on Employment came into effect along with the change in the calculation of the unemployment insurance period, the percentage of people who were accepted to receive unemployment insurance between 2015 and 2018 was stable with the average rate of 12.5%345
In addition, the current law stipulates the procedures for handling unemployment insurance for workers are generally timely, lawful, more and more convenient and fast, which help the unemployment insurance policy become familiar, meet the needs and rights of workers, support them when they lose jobs and find new jobs, contribute to ensure social security These procedures have started to be implemented via the Internet in accordance with stipulated schedule and time The social security agency assesses that the implementation of
344
Ministry of Labor, Invalids and Social Affairs, Summarizing report of 10 years on the implementing unemployment policy and solutions in the coming time, 2019
345
Ministry of Labor, Invalids and Social Affairs, Summarizing report of 10 years on the implementing unemployment policy and solutions in the coming time, 2019
Trang 9procedures for receiving unemployment insurance by electronic transaction reduces the implementing time and arising costs, avoiding errors of information of workers and employers On the other hand, it helps to eliminate negative activities of parties
The social security agency has also focused on the inspection of the implementation of the law on unemployment insurance Annual reports show that the social security agency has received and dealt with many applications and complaints, which comply with the legal regulations on complaint, accusation and there is no prolonged complaint
2.2.2 Weaknesses
In addition to positive results, the implementation of the law on unemployment insurance has included the following weaknesses:
Firstly, the unemployment insurance policy has mainly focused on unemployment
allowance and not paid adequate attention to preventive measures according to international practices On the other hand, the unemployment insurance policy has not transformed into a more effective employment insurance policy such as employment security programs, compensation for firms that reduce working hour instead of firing workers, supporting enterprises in setting up strategies to use and arrange workers appropriately, polices to encourage self-employed workers
Secondly, participants in unemployment insurance of the Law on Employment have
not covered workers working in the non-official sector, self-employed workers, freelancers, workers who are paid but do not sign labor contracts or sign less than 3 months contracts, workers working in agriculture, forestry and fishery They account346for 70% of all national labor force, which was 38,08 million people by July 1, 2016 Their similarities are low qualification, low income and uncertain employment
Most firms have not reported periodically on the fluctuation of labor in accordance with the Decree no 28/2015/ND-CP, so it is difficult for localities to update data on labor of their areas Because it is compulsory to wait for the reports of labor managerial agencies, the social security agency has not approached appropriately the changes in the number of workers, employment contracts and their terms Therefore, the development and expansion of participants in unemployment insurance have been untimely There are even cases in which the social security agency makes the list of workers who have not paid unemployment insurance prior to detect them in terminating employment contracts
Thirdly, regulations on supporting for training and improving skills of workers to
maintain their employment are quite inflexible, causing difficulties for unemployed people to access this system On the other hand, support for vocational training system has only focused
on solving demands of workers who are receiving unemployment insurance instead of supporting them to be trained and improved their skills
346
MSc Truong Thi Thu Hien, Orientation to expand the participants of unemployment insurance policy in Vietnam, Magazine of Labor and Social Affairs No 558/2017, p.13
Trang 10Fourthly, the situation of employers owing unemployment insurance is quite prevalent They are not fully aware of their rights and responsibilities for unemployment insurance This leads to the fact that they pay unemployment insurance tardily and owe unemployment insurance so that the social insurance book cannot be concluded, affecting the rights of workers and the implementation of the law on unemployment insurance On the other hand, there are more and more unprofitable firms do not pay and owe unemployment insurance, leading to the increase in the owing amount and months
Fifthly, the payment of unemployment insurance in some localities is slow The
implementation of unemployment insurance collection is carried out monthly while the deduction to pay for unemployment insurance fund is calculated yearly Therefore, it is difficult to receive unemployment insurance347 The calculation of paying for unemployment insurance is based on the basis salary or regional minimum wage while this amount changes every year, leading to the tardiness of localities Some professional guidelines are not specific,
so the conclusion of insurance book also faces many difficulties, especially for dissolved firms or those whose owners flees or detain
Sixthly, the inspection and handling of violation of unemployment insurance law have
not been carried out regularly In fact, the number of inspectors is inadequate and the qualification of inspectors is limited while the number of firms is increasing Therefore, it is difficult to inspect and handle illegal acts in social insurance in general and unemployment insurance in particular
2.2.3 Causes
Firstly,the regulations on employment often change in terms of salary, allowance and
other supplements so the activities of collecting, managing and paying unemployment insurance by common measures are not timely and prompt while the collecting and paying unemployment insurance in previous years are complicated In addition, the legal issues related to the inspection and handling of violation of the law on unemployment insurance, settling of complaints and accusation are implemented by a variety of law branches, which also cause many problems for the implementation of unemployment insurance
Secondly, awareness of unemployment insuranceof some workers and employers is
inappropriate Workers who apply for unemployment insurance mostly are unskilled workers
so they may not be aware of their rights and obligations in implementing unemployment insurance policy, dishonest when they report their employment status due to the fear of losing unemployment allowance Enterprises are either aware of their rights and obligations on unemployment insurance so that they pay unemployment insurance tardily and owe unemployment insurance, leading to the fact that the social insurance book cannot be concluded, affecting the rights of workers and the implementation of the law on unemployment
347 Doan Xuan Truong, International law and law of several countries in the world on unemployment insurance - Lessons for Vietnam, School-level Scientific Research, Hanoi University of Law, 2019