Evaluating the implementation of unemployment insurance in thai nguyen province

On the basis of these findings, the study proposes some recommendations to improve UI policy and the efficiency of its implementation as follows: expand the coverage of UI; adjust the co

i

_

A DISSERTATION Presented to the Faculty of the Graduate School Southern Luzon State University, Lucban, Quezon, Philippines

in Collaboration with Thai Nguyen University, Socialist Republic of Vietnam

ii

The Dissertation of

PHUNG THI CAM CHAU

entitled

EVALUATING THE IMPLEMENTATION OF UNEMPLOYMENT

INSURANCE IN THAI NGUYEN PROVINCE

Submitted in Partial Fulfilment of the Requirements for the Degree

DOCTOR OF BUSINESS ADMINISTRATION

A program jointly offered by Southern Luzon State University, Republic of the Philippines and Thai Nguyen University,

Socialist Republic of Vietnam has been approved by Oral Examination Committee

WALBERTO A MACARAAN, Ed.D CONRADO L ABRAHAM, Ph.D

MELCHOL MELO O PLACINO, Ph.D TRAN DAI NGHIA, Ph D

CECILIA N GASCON,Ph.D

Chairman

DO ANH TAI, Ph.D APOLONIA A ESPINOSA, Ph.D

Accepted in Partial Fulfilment of the Requirements for the Degree

Doctor of Business Administration

_ WALBERTO A MACARAAN, Ed.D

Date Vice President for Academic Affairs

iii

iv

I would like to extend my sincere thanks to Thai Nguyen University

(Vietnam), International training center (Thai Nguyen University, College of

Agricultural and Forestry), Southern Luzon State University (Philippines) for

having organized this doctorate training course in business administration

training, which I have found to be a valuable opportunity for me to further

upgrade my knowledge and capacity

I feel grateful for my lecturers who have provided their students with

their great knowledge and guidance throughout the course

I am indebted to the administrators of Thai Nguyen College of

Economics and Finance, andVietnam Trade Union University for their

facilitation of my attendance to this course

I owe my deep gratitude to Assoc Prof Dr Do Anh Tai, my supervisor

and instructor, for his kind instructions and valuable remarks towards my

completion of this thesis

I would also like to say thanks to my relatives, friends and colleagues

Without their donations of materials, data processing, and translation, this

thesis would not have been made possible

I am indebted to many other people They are writers of useful

materials in books, internet, and newspapers

And finally, my big thanks to my family whose encouragement and

support have always been with me from the beginning to completion of this

thesis

I sincerely thank my relatives, friends and colleagues who have been around

with their cheers and encouragements

Thank you all!

PhungThi Cam Chau

vi

PAGE

TITLE PAGE ……… i

APPROVAL SHEET ……… ii

CERTIFICATE OF ORIGINALITY ……… iii

ACKNOWLEDGEMENT ……… iv

DEDICATION ……… v

TABLE OF CONTENTS ……… vi

LIST OF TABLES ……… viii

LIST OF FIGURES ……… ix

LIST OF APPENDICES ……… x

ABSTRACT ……… xi

CHAPTER I INTRODUCTION Introduction ……… 1

Background of the Study ……… 3

Statement of the Problem ……… 5

Significance of the Study ……… 6

Scope and Limitation of the Study ……… 8

Definition of Terms ……… 8

II REVIEW OF LITERATURE ……… 12

Conceptual Framework ……….………… 35

III METHODOLOGY Local of the Study ……… 37

Research Design ……… 41

Population and Sampling ……….……… 41

Research Instrumentation … … ……….… 42

Validation of the Instrument ……… 43

Data Gathering Procedure ……… 43

Data Processing Method ……… 45

vii

IV RESULTS AND DISCUSSIONS ……… 47

V SUMMARY, CONCLUSION AND RECOMMENDATION Summary of Findings ……… 82

Conclusions ……… 89

Recommendations ……… 91

REFERENCES ……… 97

APPENDICES ……… 100

CURRICULUM VITAE ……… 107

viii

1 Profile of Respondents ……… 48

2 Respondents’ Perceptions on Implementation of UI in Thai

Nguyen Province in Terms of Coverage of UI ……… 57

3 Implementation of UI in Thai Nguyen Province in Terms of

Coverage of UIBased on the Evaluation of the

Respondents have been Grouped ……… 58

4 Respondents’ Perception on Implementation of UI in Thai

Nguyen Province in Terms of Conditions for the Enjoyment of

5 Implementation of UI in Thai Nguyen Province in Terms

ofConditions for the Enjoyment of UI Based on the Evaluation

of the Respondents have been Grouped ……… 64

6 The Respondents’ Perception on Implementation of UI in

Thai Nguyen Province in Terms of UI fund ……… 67

7 Implementation of UI in Thai Nguyen Province in Terms of

UI Fund Based on the Evaluation of the Respondents have

8 The Respondents’ Perception on Implementation of UI in

Thai Nguyen Province in Terms of UI Regimes ……… 71

9 Implementation of UI in Thai Nguyen Province in Terms of

UI Regimes Based on the Evaluation of the Respondents

10 The Respondents’ Perception on Implementation of UI in

Thai Nguyen Province in Terms of Procedures for UI

11 Implementation of UI in Thai Nguyen Province in Terms of

Procedures for UI RegimesBased on the Evaluation of the

Respondents Have Been Grouped ……… 77

12 Implementation of UI in Thai Nguyen Province based on

the Evaluation of the Respondents have been Grouped … 79

xi

Title of Research : EVALUATING THE IMPLEMENTATION OF

UNEMPLOYMENT INSURANCE IN THAI NGUYEN PROVINCE

Researcher : PHUNG THI CAM CHAU (ROSE)

Degree Conferred : DOCTOR OF BUSINESS ADMINISTRATION

Name and Address

of Institution

: Southern Luzon State University Lucban, Quezon, Philippines and Thai Nguyen University, Socialist Republic of Vietnam

Adviser : Dr Do Anh Tai

Year Written : 2013

In Vietnam, unemployment insurance (UI), as a mode of social

insurance and a component of social security, has been built and was officially implemented in 2009 A 4-year experience, the implementation in the

country,in general, and inThai Nguyenprovince,in particular, of this policy has

made significant achievements, but also has some limitations that should

soon be adjusted for this policy to be more effective Given this observation,

this study, "Evaluating the implementation of Unemployment Insurance in Thai Nguyen Province" aims to evaluatethe implementationof UI inThai Nguyen

province in 2012andpropose recommendations toimprovethe implementation

ofthe policy in the coming years In solving the research problem mentioned

previously, this study has the following objectives: (1) describe the characteristics

of the respondents; (2) determine the perception of the respondents on the

implementation of UI in terms of: coverage of UI, conditions for enjoying UI, UI

fund, UI regimes, and procedures for UI regimes; (3) compare the perceived

implementation of the UI when the respondents are grouped in terms of type of nit that employees had worked at before unemployment; and (4) propose

xii

in the coming years

In this study, the researcher useddescriptive method and utilized a

questionnaire as the main data gathering tool From data collected on

performance statistics of UI in 2012 in Thai Nguyen, 348 employees who were

entitled to UI were chosen as respondents for the study

Based on the results of the survey, the following findings were found:

current Unemployment Insuranceexhibits basic policy limitations in the

following areas: regulation on the coverage of UI; regulation on the conditions

for the enjoyment of UI; regulation on procedures for UI regimes Aside from these, there are identified gaps in the implementation of the UI policy,

especially in the following areas: limited propaganda and information

dissemination; lack of awareness on coverage, conditions of eligibility;

process and nature of contributions; incomplete knowledge on eligibility requirements; and tedious processing of application for the insurance

On the basis of these findings, the study proposes some

recommendations to improve UI policy and the efficiency of its implementation

as follows: expand the coverage of UI; adjust the conditions for the enjoyment

of UI in favor of, than against, the workers; determine additional sanctions for

violations in terms of contribution to the UI fund; implement UI regimes,

especially vocational training and support to find work more efficiently; simplify

the process of UI regimes; strengthen policy advocacy of UI; improve the

responsibility oflabor agency, UI organizations, employers and employees in terms ofprocedures for UI regimes

Chapter I INTRODUCTION

Today, besides the development of all aspects, the world is faced with

many challenges of economic, political and social nature Along with large

uncertainties such as war, violence, crime, social inequality, etc.,

unemployment is also becoming a hot concern, exceeding all matters of

common worries, especially when the economic financial crisis knock to each

individual, each household in each country

Unemploymentaffectsnot onlyemployeesand their families

Unemploymentoflargenumbersof individualsalso havevery negativeimpacton

society: for individuals, forthe economy, for nations

However, in market economies, unemployment is an inevitable

phenomenon It means that if there is a market economy, there is still

unemployment The problem posed is how to control the allowed

unemployment rate According toeconomists, maintaining

acertainunemployment ratecanstimulateeconomic growth Butunemployment

rateincreaseexceeding the permitted levelwill greatly

affectthesocio-economicdevelopmentof the country Becauseoftheimpactof scientific and

technologicalrevolutionandglobalization,unemployment isworsening

Unemploymentbecame one of the problematic issuesinlots ofcountries, which

influencesstrongly on the developmentandstability of economic, political and

social status ofeach country.Sogovernmentsshould haveresponse policiesto

resolvethese two issuesdepending ontheirconditionsin various periods Among

these response policies is what economists term as unemployment insurance

or UI whicharebuilt orimproved in manycountriestoprotectworkersto avoid

feelings of uncertaintyabout theeconomyand society

Whenworkerslose their jobs,theyloseincome Hence, one of thepositive

solutionsis to investto createnew jobs However, this is

notalwayspossible.Sometimesputting more moneyinto a not so strongcapital

economycanlead toinflation andeconomic crisis, exacerbatingunemployment

There isanother solutionto protectworkersavoiding theinadequacy oflost jobs,

so that society needsto give themarevenueto offsetincomelost by providingUI

This is one ofthe measures whichhave beenof interest inmany

countriesbecauseitnot only ensureslifefor individualswhoare unemployed,but

also contributes tosocial stability UIisthe process of formationand use

offundsthrough thefinancialcontributions ofthe employee, theemployerandwith

the helpof the state,in order to supportincomeof workersshouldtheylose their

jobs, enablingthem to findnew jobsin thelabor market This hasimportant

implications forindividualworkers andcompanies,

contributingtobalancingrolein the economy, helping to decrease social

stresscaused byunemployment Thatis one of thetoolsto implementsocial

securitypoliciesa country

Since Vietnam has begun its switch to market economy and integration

into the world economy, besides the economic-social achievement it has been

experiencing, unemployment has been one of the very urgent problems In

the labor market, labor supply is greater than labor demand Every year,

around 1.1 to 1.2 million people enter the work force, but the labor’s

absorptive capacity of the economy is limited In addition, there is shortage in

the number of trained, skilled or technical workers, and a lack of basic

training.This is the reason why unemployment or underemployment is

increasingly becoming severe Thus, even though there is a need in the labor

market, the level of available workers do not meet the criteria of the available

job Besides, in the process of industrialization, modernization and economic

restructuring and innovation, quite a huge number of workers, in many

different cases, have their work contracts terminated Moreover, in the context

of economic crisis in recent years, many small and medium enterprises,

department accounting about 98% of enterprises in Vietnam, to cut staff,

proceed toor went bankrupt, leaving workers lose their jobs The unemployed

workers fell into economic difficulties, depressed in spirit, very easy to fall into

evils This effects to social order - security largely

In this situation, UI, as a mode of social insurance and a component of

social security, has been built and was officially implemented in 2009

Background of the Study

In Vietnam, the unemployment insurancepolicy wasformally adoptedin

January 1, 2009 under the provisions of the Law on Social Insurance which

was enacted in 2006 with the following main contents: coverage of UI;

conditions for the enjoyment of UI; UI fund; UI regimes; and procedures for UI

regimes

UI is a policy that aims to assist the unemployed byreplacing or

partially offsetting the income workers lose due to unemployment and, more

importantly, support the unemployed by providing vocational training that

would aid the worker in finding job immediately and help them have a stable

income and life

Nationwide, the total number of employees was 49.322 million in 2009,

nearly 50.393 million in 2010, over 51.398 million people in 2011 On the other

hand, the unemployment rate (calculated width in urban areas) was 4.60% in

2009, 4.29% in 2010, and 3.60% in 2011 Particularly in Thai Nguyen province,

the total number of employees was 665,652 in 2009; 677,070 in 2010; and

685,630 in 2011; unemployment rate (calculated width in urban areas) was

4.46% in 2009, 4.24% in 2010, and 3.75% in 2011

These figures shows the number of people that might be affected by UI

policies of Thai Nguyen Province, as well as, across the country, especially in

urban areas where the population is quite large

It is worth noting that during the first four years from its implementation,

the policy has made significant achievements, while at the same time not

discounting the fact that there have been some limitations that should be

addressed to further enhance the policy

One of its successes can be said to be its immediate practice, adoption

and positive response that may be accounted toits direct and practical

impacts to both employers and employees Additionally, it is seen to

contribute toensuringsocial securityin the countryin general, and Thai

Nguyenprovincein particular

However,the implementationprocessof UIalsogenerate many problems

that need to be addressed Some of these relatedissues includecoverage of UI,

conditions for the enjoyment of UI,UI fund,UI regimes, and procedures for UI

regimes Aside from these, many workers did notknowor were notinsured inUI,

and there are companies who"hide" the UI Additionally, contribution

andregimes of UI wereunreasonable, entitlementprocedures were notfavorable,

and there were manyscenesofUI fraud

What are the inadequacies of the current UI program? What difficulties

exist in the implementation of the Unemployment Insurance policy? What solutions can be made to improve the effectiveness of UI? The researcher

believe these are the significant issues that need to be looked into These matters are the reasons why the researcher attempted to find out the success and limitation of the implementation of UI in Thai Nguyen province, and congruently provide some recommendations based on the research results

These issues and the fact that the researcher is a law lecturer with passion for researching and teaching labor law and social security and born

and raised in Thai Nguyen, encouraged the author to evaluate the implementation process of Unemployment Insurance in Thai Nguyen Province for her research

Statement of the Problem

The main purposes of this study are(1) to evaluatethe implementationof

Unemployment Insurance inThai Nguyen province in 2012,and(2) proposerecommendations toimprovethe implementation ofthe policy in the coming years

In solving the identified research problem, this study has the following objectives:

1 To describe the characteristics of the respondents;

2 To determine the perception of the respondents on the implementation of UI in terms of: (1) coverage of UI; (2) conditions for the enjoyment of UI; (3) UI fund; (4) UI regimes; and (5)

procedures for UI regimes;

3 To compare the perceived implementation of the UI when the respondents are grouped based on the type of unit that employees had worked in before unemployment;

4 To propose some recommendations to improve the implementation

of UI in Thai Nguyen province in the coming years

Specifically, it sought answers to the following questions:

1 What is the profile of the respondents in terms of the following factors: age, sex, type of unit that employees had worked in before

unemployment, type of labor contract/work contract signed before unemployment; current job status; time participated in UI; and UI status?

2 What is the perception of respondents on the Unemployment Insurance policy in Thai Nguyen province in terms of: coverage of UI; conditions for the enjoyment of UI; UI fund; UI regimes; and

procedures for UI regimes?

3 Is there a significant difference between the perception of the employees grouped in terms of type of unit that employees had

worked at before unemployment (who were entitled to UI in 2012) on the implementation of UI in Thai Nguyen province?

4 What would be the proposed recommendations to improve the

implementation of UI in Thai Nguyen province in the coming years?

Significance of the Study

This study attempts to know the status of the implementation of Unemployment Insurance policy in Thai Nguyen province in 2012, and

propose some solutions to improve its implementation in Thai Nguyen province in the coming years Aside from these aims, the study would also be beneficial to the following:

Employees

This studyprovides employeesa clear knowledge and awarenesson the

meaning ofUI.Employeeswill also havedeep understandingof their rights,their responsibilitiesand the responsibilities ofinvolvedagenciesand organizationsin the implementation ofUI

Trade UnionsinEnterprises

This studywill help organizeunions inenterprises, as

acollectiverepresentationforworkers,and aid employees in guaranteeing that

they know their right in view of theUnemployment Insurance policy With the

supportof unions inenterprises, employees can have more opportunities

toparticipate inUI, andifunemployed,theywillbe entitledto full and timely

coverage

Enterprises

This studyalso helpsenterprises,astheemployers, aware oftheir

obligations on implementing UImoreclearly, thus exhibit their sense of

responsibility towards theiremployees,in particular,social responsibility, in

general

The UI Policies Promulgating Agenciesandthe UI Management Agencies

Throughthe evaluation ofthe implementation ofUIin Thai Nguyen

province, this study can alsopoint outshortcomingsofUIandthe difficultiesand

limitations of theimplementationprocess ofthis policy The studycan, therefore,

providevaluablerecommendationsregardingUI policies and will also aid

involved agenciesin Thai Nguyen provincein findingsolutions to problems and

be ableto implement the program more effectively

Researcher

Performing this study is an opportunity for the researcher to have a

deeper understanding of one of her passion areas – UI This also helps to

supplement knowledge and serve her teaching at the university

Future Researchers

This study could provide references for future proponents who wish to

venture into a study similar to the nature of this research Thus, basic tenets

on the UI andthe implementation of UI could serve as resources for other

studies

Scope and Limitation of the Study

The primary intent of this study is to evaluate the implementation of UI

in Thai Nguyen province in 2012 There were 348 employees who were

entitled to UI in Thai Nguyen province used as respondents in this study

Measurement of the implementation of UI in Thai Nguyen province is

limited to the use ofquestionnaires with a limited number of peopleinvolved A

checklist was developed for the purpose of the study

The time frame of this study covered the period from January 2012 to

April 2013

Definition of Terms

For clarity and better understanding of this study, the following terms

were, hereby, defined conceptually and operationally:

Definite Term Labor Contract is a contract in which the two parties

determine the term and the time for termination of the validity of the

contract as a period of twelve (12) months to thirty six (36) months

Employeerefers to a person of at least fifteen (15) years of age who is able to

work and has entered into a labor contract

Employershall be an enterprise, body, or organization, or an individual who is at

least eighteen (18) years of age, employing and paying wages to an

employee

Indefinite Term Labor Contract is a contract in which the two parties do not

determine the term and the time for termination of the validity of the

contract

Labor Contract is an agreement between the employee and the employer on

the paid job, working conditions, and the rights and obligations of each

party in the labor relationship

Labor Force (economic activity population) includes all persons aged 15

years or more have a job and unemployed people in the observation

period

Large Enterpriseis a business which is not on the scale of small and medium

enterprises

Service Unit of the State is an organization which is held by competent

authorities of the State, political organizations established under the

provisions of law and have legal status, public service providers, and

state management service

Small and Medium Enterpriseis a business with a total capital of 50 billion

dongs or less, using no more than 100 employees if it operates in the

field of trade and services, ora business with a total capital of 100

billion dongs or less, using no more than 300 employees if it operates

in other areas

Social Insurancemeans the guarantee to fully or partially offset a laborer's

income that is lost or reduced due to his/her sickness, maternity, labor

accident, occupational disease, unemployment, retirement or death, on

the basis of his/her contributions to the social insurance fund

Social Insurance Organizationis a non-business organization functioning to

materialize the social insurance regimes and policies, to manage and

use the social insurance funds under the provisions of the “Law on

Social Insurance”

Trade Unionmeans a socio-political organization of the working-class and

laborers Trade unions are founded on voluntary basis and are a

component part of the political system of the Vietnamese society,

placed under the leadership of the Communist Party of Vietnam Trade

unions are representatives of cadres and civil servants, public

employees, workers and other laborers together with state agencies,

economical organizations, social organizations which are expected to

protect laborers’ legitimate and legal rights and interests Trade unions

join in state management, eco-social management, inspection;

examination, supervision of activities of state agencies, organizations,

units, enterprises; and mobilization, propagation for laborers to study,

improve knowledge, professional skill, observe law, build and defend

the socialist fatherland of Vietnam

Unemployed are those not working but seeking employment and willing to

work to generate income in cash or kind in the observation period,

including those who have never worked Unemployed also include

those have no active job search in the observation period because they

are arranged a new job after the observation period, who were

suspended without pay, with or without time limit or those not actively

seeking employment

Unemployment Insurance (UI)is afederal program whereby eligible

unemployed persons receive cash benefits for a specified period of time

These benefits are paid out of funds derived from employer, employee

and government contributions

Unemployment Rate is the percentage of unemployment than labor force

(economic activity population)

Working Contract is an agreement in writing by an officer or officer is

recruited and the head of public service units of the location of

employment, wages, treatment regime, working conditions rights and

obligations of each party

Chapter II REVIEW OF LITERATURE

This chapter presents the discussion of topics that served as

background information in conducting this study

Unemployment Insurance

Unemployment Insurance Concept

The Unemployment Insuranceconcept or commonly known as UI, is a

federal program whereby eligible unemployed persons receive cash benefits

for a specified period of time These benefits are paid out of funds derived

from employer, employee and government contributions

(www.entrepreneur.com/ encyclopedia)

Hai Pham Van (2010) wrote: “UI is the process of organizing and using

focus monetary fund - the UI fund - is formed by the contribution of

stakeholders (employees, employers and support state) to ensure a stable life

for workers and their families facing risks of employment”

On the other hand, Hong Do Thu (2010) said that,“UI is all legal, make

regulations on the contributions, the use of the UI fund,the payment of

unemployment allowance to offset income for workers lost employment and

performance measures for the unemployed to return to work”

Thu Le Thi Hoai (2008) similarly states that "UI is a part of social

insurance to protect employees in case they lose their jobs In addition to the

payment of benefits for the unemployed, UI was the link between the

unemployed to the labor market, such as job training, retraining, job

brokerage, career counseling, support funding for the unemployed up to now"

Milan Vodopivec and Minna Hahn Tong (2008) in their work China:

Improving UI stated that: “The objective of a UI program is precisely that

implied by its name: compensation for income loss due to unemployment The

program provides income protection to workers by partly replacing their lost

wages with social insurance payments Social insurance mimics market

insurance arrangements but deviates from actuarial principles Such

payments help cushion the reduction in consumption in the wake of job loss -

that is, they smooth consumption - and may also help alleviate poverty

Viewed from a broader, societal perspective, other objectives of the UI

program include encouraging workers to learn new skills, providing workers

with the means to conduct more extensive and more effective job searches,

redistributing income from high - to low - wage earners, and increasing output

and efficiency by promoting restructuring of enterprises or encouraging

workers to accept higher wages and thus higher-productivity - but also riskier -

jobs Depending on the level of development of the economy and labor

market, these objectives may vary, and the relative importance of these

objectives may also change as these circumstances change With economic

development, the emphasis may shift to preserving consumption so that the

program becomes a consumption-smoothing tool by offering a higher level of

benefits”

Milan Vodopivec and Minna Hahn Tong (2008) also stated that UI as

part of the general labor market risk management framework They said thatin

order to design the UI program appropriately, it should be recognized that

there are various labor market risk management mechanisms - informal and

formal, private and public - and that they interact in many important ways

These mechanisms can be divided into three categories: (1) those that reduce

the risk of unemployment, reducing the probability of becoming unemployed

or increasing the probability of leaving unemployment if unemployed; (2)

those that mitigate that risk, reducing the impact of a future unemployment

spell, and (3) those applied in response to the undesirable event, known as

coping mechanisms Within all three categories, informal and formal

mechanisms are usually available Formal mechanisms include both

market-based and public mechanisms The labor market risk management framework

thus enables one to position the UI program in the context of other

mechanisms that may be used to manage the risk of unemployment and

thereby allows one to pinpoint diverse interactions that usually exist among

them Two types of interactions are particularly important: interactions with

other policies and programs; interactions with private risk management

mechanisms

Characteristics of Unemployment Insurance

Tiep Nguyen (2011) said that UI is one of many national social

economic policies However, this policy has distinct characteristics:

- Subject to the application of UI are in working age, with labor, lost his

job and is ready to return to work

- The purpose of UI is not only to supply the unemployment benefits but

also to put the unemployed back to the labor market

- UI comes from labor relations but are mainly associated with the field

work The collection and payment of insurance, financial assistance for

unemployed workers to stabilize life is tied to their employment,

education or vocational training, job placement, temporary jobs for the

unemployed and implementation of policies to support the unemployed

The Role of Unemployment Insurance

According to Tiep Nguyen (2011), UIhas a very important role in the

economic life of every national society, that is:

UI incomes are partially offset for workers when they lose a job

In labor relations, there are unavoidable cases where workers lose

their jobs, so there should be a relationship where there is also mutual

interaction between three parties: employers, insurance agencies and social

workers to offset and to ensure income for workers when this event takes

place The employer shall contribute to the UI funds for laborers working for

them and employees also have the responsibility to contribute part of their

salaries to their own insurance The contributions of the employer and

employeeare required and in accordance with the level of play of social

insurance agencies Social insurance agenciesare assigned the task of

managing revenues and expenditures and UI when the insured (the

employees) are eligible to get a new set of UI benefits

UI is a tool to redistribute income

The effect of unemployment is inevitably less than the number of people

who contributed to the UI fund, thus, establishing the principle of UI, "take cover

the majority of the few" This principle redistribute income among workers with

incomes ranging between high-income and low income, between those who

contribute regularly and steadily into the UI fund now, through the

implementation of social justice

UI encourages workers to work energetically

When employees are working, they have income, even if they lose their

jobs, they are entitled to unemployment benefits Thus, workers have "safety

prop" to ensure his life when work is temporarily unavailable This helps

workers get on with the work, actively work to increase revenues, increased

UI, assured of the insurance policy when necessary

UI fund formed to do business development

Raising compulsory UI for workers, as well as the employers and the

support of the state budget accrues a centralized monetary fund During idle

time, the fund may be invested as part of the economic activity for profit, also

increasing income for UI fund This type of investment has contributed to

business development, while ensuring the safety of the UI fund against price

loss to pay UI benefits for workers

UI facility attachment between the interests of the State and the employees

From a social standpoint, UI is a means of spreading risks as it is

possible to lose in both space and time It is alsomeans sharing the

risksdamage with the people, from the ability to increase settlement risks

On the government side, UI payments for employees allow them to spend

less income when they are working, butthey still have a good deal of risk and

loss, and life can be tough for the employees and the family Unemployment

insurance, thus, contributes to stability and social security, as well as protects

the rights of employers and employees

Implementing Agency of Unemployment Insurance - Vietnam Social Insurance

A Brief History of Formation and Development of Vietnam Social Insurance

Before 1995, the social insurance is implemented by both Labor -

Invalids and Social Affairs and the management team Since Social Security

was born and came into effect on January 1, 1995 the implementation of

social insurance policies have had fundamental changes in the way it has

assigned a well-defined functional state of security management social

functioning and social insurance career

Vietnam Social Insurance was established by the Government through Decree No 19 dated February 16, 1995, as a system organized

hierarchically, and centralized and uniform from the central to local levels to

implement the professional activities of social insurance and have the

following structure:

- Central Vietnam Social Insurance

- In the provinces and cities directly under the Central Social Insurance

provinces and centrally-run cities under the Vietnam Social

Insurance

- In the districts, towns and provincial cities as social insurance

districts, towns and provincial cities

- Vietnam Social Insurance has a legal status, independent accounting

and protected by the State, has its own seal, bank accounts, and headquartered at No.7 Trang Thi - Hoan Kiem - Ha Noi

Management functions of the State Social Insurance agency is

assigned to Labor-Invalids and Social Affairs Supervising of social insurance

is assigned to the new organization - Vietnam Social Insurance done Vietnam

Social Insurance is managed by the state Department of Labor - Invalids and

Social Affairs on Social Insurance, Ministry of Health on health insurance, the

Ministry of Finance of fiscal regime for social insurance, health insurance

Functions, Tasks of the System of Vietnam Social Insurance

According to Decree No 94 dated August 22, 2008 of the Government,

the Vietnam Social Insurance is an agency of government, functional

implementation mode, social policy, UI, health insurance; organization revenue and expenditure social insurance, UI, medical insurance,

management and use of funds: social insurance, UI, and health insurance as

provided by law

Functionally, Vietnam Social Insurance is tasked to do the following:

- Issue guidelines on procedures, expertise and professional conduct

settlement regime and policies of social insurance, unemployment

insurance, medical insurance and income, social insurance payments,

security unemployment insurance, health insurance as prescribed by

law;

- Issue individual documents and internal documentsfor management

industry Vietnam Social Insurance;

- Organize information dissemination, communication and dissemination

of the regime, policy and legislation on social security, UI, health

insurance and organized exploitation, registration, management the

participants of social insurance, UI, health insurance as prescribed by

law;

- Organize the collection of contributions for social insurance, UI, health

insurance agencies, units, organizations, employers and individuals in

accordance with law as well as to receive funding from the state budget

to cover the switch to modes of social insurance, UI, health insurance

as prescribed by law;

- Receipt of documents, settlement and payment organization of sickness,

maternity, work accidents and occupational diseases; retirement,

unemployment, death; convalescence rehabilitation following illness,

maternity and after treatment of occupational accidents and occupational

diseases; medical examination as prescribed by law;

- Management and use of the social insurance fund, UI, health

insurance, including: retirement, survivorship; funds accidents and

occupational diseases; funds sickness and maternity benefits; funds

voluntary social insurance, UI, medical insurance fund focused on the

principles of unity, openness, transparency, proper purposes in

accordance with the law organizing the insurance accounting social

health insurance in accordance with the law;

- Organize contracts, monitor contract performance with the examination

and treatment, ensuring qualified and professional standards, and

monitoring techniques to provide medical services and treatment, to

protect the rights of patients with medical insurance card and abuse

prevention; introduction of laborers who did the inspection of impaired

workers at the Medical Assessment Board under the provisions of law;

- Direct and guide the professional services for social insurance Ministry

of Defense, Ministry of Public Security, Government Information

Department, in collaboration with the Ministry of Social Insurance

Defense, Ministry of Public Security, the Cipher Government

management of the implementation of social insurance, health insurance

in the Ministry of Defense, Ministry of Public Security, andGovernment

Information Department;

- Define the functions, tasks, powers and organizational structure and

the relationship of the subordinate units; allocating decisions on payroll

for the units of payroll agency competent state, public employers,

employees and management organizational structure, staffing,

personnel, public officials and employees in accordance with law

- Coordinate with state agencies, the social and political organizations,

social organizations at the central and local stakeholders with social

insurance to solve problems related to the implementation of policies of

social insurance regime as prescribed by law;

- Provide adequate and timely information about the play, the right to

attend reachable entitlements, procedures for social insurance, UI,

medical insurance; provide adequate and timely documentation,

relevant information requested by an agency of estimated competence;

- In addition to the above specific tasks, Vietnam Social Insurance shall

perform duties and powers as stipulated by the Government and those

delivered by the Prime Minister

Organizational Structure of the System of Vietnam Social Insurance

Organizational System: hierarchy management, including three levels:

central, provincial and district levels Each level has a legal status, markers,

accounts and offices

Structure: Social Insurance in Vietnamis composed of 18 units This

includes 12 organizations assisting the General Manager and 6 subordinate

units

Coverage of Unemployment Insurance

Under the provisions in Article 80 of Law on Social Insurance, UI shall

compulsorily apply to:

- Laborers who are Vietnamese citizens working under labor

contracts or working contracts of indefinite term or a term of

between full twelve months and thirty six months for employers

- Employers include state agencies, non-business units, people's

armed force units; political organizations, socio-political

organizations, socio-professional-politicalorganizations,

socio-professional organizations, other social organizations; foreign

agencies and organizations, international organizations operating in

the Vietnamese territory; enterprises, cooperatives, individual

business households, cooperative groups, other organizations and

individuals who employ ten or more laborers

Nhung Dang (2011) indicated that, “Under the provisions of the Social

Insurance Law, employers who participate in UI is to employ 10 employees or

more.” Actually, this provision has become a barrier to workers and employers

whose manpower is under 10 employees but wishes to participate in UI,

because these units that employ less than 10 employees are usually small

ventures, where workers have higher risks of job loss and, thus, should be

considered for protection If they do not participate in UI, they are considered

to be much marginalized

“The specified units of the UI objects involved must have 10 or more

employees cannot currently be fair to the unit with nine employees or less and

those employees working in small businesses (easier to take the more

medium and large enterprises) On the other hand, this condition is easy to

assume that legal phenomenon arises, do not pay UI costs of businesses,

leading to the assessment of UI participation rates incorrectly”(Cam, 2011)

The Ministry of Labor, Invalids and Social Affairs stated that:

“Businesses employing less than 10 employees, employees working under

contract for less than 12 months have not been insured for unemployment

These are people who have a high possibility of job loss, they are to be

supported yet, do not participate in UI”

Dung (2012) also states that there are many employees who are

engaged in the Unemployment Insurance policy

First, more than 60% of units and enterprises employ less than 10

employees, of which a large volume of small and micro enterprises only have

one to two people According to Statistics of the Vietnam Social Insurance in

2010, only 49% of the units enrolled UI than the total of units participating in

compulsory social insurance in general, the remaining 51% of units have not

enrolled the in the policy

Second, under the provisions of the Law on social insurance, workers

under UI must meet two conditions: firstly, contract labor or employment

contracts of 12 months or more; secondly, the business where the employee

is working should have 10 or more workers Missing 1 of 2 conditions above

makes employees ineligible to participate in the UI, thus, not entitled to

unemployment regime, vocational training, or job search support of

Unemployment Insurance

Third, there is a limited number of workers who are under UI Although

labor groups should be insured, especially low-income earners and those with

job insecurity, workers in the informal sector do not meet enough conditions

for participation in this type of insurance

Van Dao (2013), in article titled,Implementation of UI: there are many

"gaps", states that, “Employees who have short-term contracts and workers in

enterprises which employ less than 10 employees are not eligible for UI.” This

is an area of concern as they are the ones who have higher risks of losing

their jobs

Khanh An (2013), in UI has many shortcomings, on the other hand,

wrote that UI has forgotten so many people, such as workers with labor

contracts of less than 12 months; employees who have worked in enterprises

which employed less than 10 employees, or the employees who have worked

in foreign countries This is worrisome for, again, these are the ones who are

in the high risk level, especially in the context of economic difficulties

Conditions for the Enjoyment of Unemployment Insurance

Under the provisions in Article 81 of Law on Social Insurance,

unemployed persons are entitled to UI when they fully satisfy the following

conditions: Having paid UI premiums for full twelve months or more within

twenty four months before they become unemployed;Having registered their

unemployment with the social insurance organization;Having not yet found a

job within fifteen days after the date of making unemployment registration

These conditions laid down are necessary, but some people may take

advantage of the tight rules for personal gain

Nhu Tran (2012) stated that, “besides the actual unemployment

because of the dissolution, bankruptcy and labor cuts of the business, there

are many active workers who applied for leave to be entitled to UI.” The

problem is that the authorities do not take measures to verify the case being

applied for the policy, so there is no way no know if the industry is real or fake

He also mentioned that “some companies have created conditions for the

workers to receive unemployment benefits They arranged for employees

intermittent leave, when employees have to pay UI for 12 months to receive UI,

soon after the re-signing The employee is still receiving full 3 months of

unemployment benefits even though they did go back to work elsewhere or even

in the old unit”

There is also a gap in terms of the availing of the unemployment

benefits which employees and employers alike take advantage of According

to Thanh Kim (2012), after paying the shortest premium requirement for

eligibility, workers will apply for a leave and then apply for the benefitsthen

continue to sign new labor contracts with other units or with the old unit This

way, they enjoy the benefits of the insurance policy, and keep a job at the

same time Even some employers create favorable conditions for workers to

continue this practice, breaking a labor contract with a term of 36 months to

three contracts with 12 months each, helpingemployees complete UI

beneficiaries registration dossiers

Van Dao (2013) wrote: “The current conditions for enjoying UI do not

make sense to prevent the "profiteering" policy In the fact, many workers actively

asked for leave benefits, leading to difficulties for businesses So, some

enterprises came up with ‘initiatives’: arranging for employees intermittent leaving

works, when they had enough UI contribution for 12 months to receive UI

regimes, then immediately re-signing Thus, workers are still receiving full three

months of unemployment allowance, even though they have gone back to work

elsewhere or even in the old unit”

An Khanh (2013) also cites International Labour Organization (ILO)

experts in Vietnam who believe that to limit the status of ‘profiteering’ the UI fund,

there should be a review of the policy for workers who abandoned their works

proactively

Unemployment Insurance Fund

Under the provisions in Article 102 of Law on Social Insurance, the

Unemployment Insurance funds are to be sourced from the following:laborers'

payment of 1% of monthly salary or remuneration on which UI premiums are

based; employers' payment of 1% of the fund of monthly salaries and

remuneration of laborers who participate in UI on which UI premiums are based;

the state's monthly budgetary support equivalent to 1% of the fund of the

salaries and remuneration of laborers insured by UI on which UI premiums

are based, transferred once a year; profits from activities of investment of the

fund; other lawful sources of revenues

On the other hand, Article 103 of Law on Social Insurance, stipulates

the fund will only be used for the following unemployment insurance

items:payment for unemployment allowances; support for job training; support for job seeking; payment for health insurance premiums; payment for

management costs; investments to preserve and develop the fund

In addition, the Social Insurance of Vietnam, under the provisions in Article 30 of Decree No.127/2008/ND-CP, is tasked to oversee the

implementation of the revenue and expenditure related to the insurance

program, as well as manage the UI fund and open an account for its fund in

the State Treasury system and commercial banking system of the State

Nguyen Pham (2012), however, was worried about the breakdown of

UI fund He said that the Department of Employment, Ministry of Labor,

Invalids and Social Affairs mentioned that the number of registered

unemployed in 2011 increased 77% from 2010 and up 68% in the first quarter

of 2012, over the same period in 2011 Furthermore, many businesses still do

not participate inthe UIprogram, while there is a sharp increase in the number

of registered unemployed workers This is because companies continue to

pay low wages, yet, working conditions are not guaranteed, so they do not

attract workers

Dung Pham Do (2012) also said that the number of compulsory

subjects involved are huge and can be validated by actual data However, the

collection of UI is still very low compared with the need to collect, requiring the

necessary time to disseminateUI policies to workers and employers This is

tied to what Van Dao (2013) believe to the real situation: when workers

register for UI regimes, many of them are not approved because their

employers have not paid the premium fees yet

For these issues, Khanh An (2013) recommends a solution – create

additional regulations on the obligations of employers, force them to confirm

time of UI fund contributions for the employee, as a basis for the authorities to

resolve policy for employees

Unemployment Insurance Regimes

Under the provisions in Article 82 of Law on Social Insurance, the

following are the features of the Unemployment Insurance allowance:

Unemployment Allowance

- The monthly unemployment allowance is equivalent to 60% of the

average monthly salary or remuneration of six consecutive months

before unemployment on which UI premiums are based

- The period of enjoyment of unemployment allowance is stipulated

as follows:Three months, if UI premiums have been paid for

between full twelve months and under thirty six months;Six months,

if UI premiums have been paid for between full thirty six months and

under seventy two months;Nine months, if UI premiums have been

paid for between full seventy two months and under one hundred

and forty four months;Twelve months, if UI premiums have been

paid for full one hundred and forty four months

- Suspension from enjoyment of unemployment allowance:

Persons who are on unemployment allowance shall be

suspended from the enjoyment of unemployment allowance in one of

the following cases: failing to observe regulations on compilation of

social insurance dossiers; being put in detention

- Termination of unemployment allowance:

Persons who are on unemployment allowance are not

entitled to such allowance in one of the following cases: their period

of enjoyment of unemployment allowance has expired; they have

found a job; they perform military service obligation; they are on

retirement pension; they have twice refused to take up jobs

recommended by the social insurance organization without

plausible reasons; they fail to observe regulations on compilation of

social insurance dossiers for three months in a row; they settle

abroad; they serve a decision on application of administrative

handling measures at reformatory, education camp, medical

establishment or serve an imprisonment sentence which is not

suspended; they die

For other types of support under the Unemployment Insurance

program, Articles 83 to 85 of Law on Social Insurance provides the following

information:

Vocational training support

Persons who are on unemployment allowance shall be

supported in vocational training for a period of no more than six

months The support level is equivalent to the level of expense for

short-term vocational training in accordance with the law on vocational

training

Job-seeking support

Persons who are on unemployment allowance shall be provided

with employment consultancy and recommendation free of charge

Health insurance

Persons who are on unemployment allowance are entitled to the

health insurance regime which shall be provided by the social

insurance organizations which shall pay health insurance premiums for

persons who are on unemployment allowance