EuroCham advocates balanced reforms at Social Insurance Law consultation

EuroCham voiced recommendations for balanced implementation of Vietnam’s draft amended Law on Social Insurance at an August 3 consultation workshop organized by the Ministry of Labour, Invalids and Social Affairs (MOLISA) and the International Labour Organization (ILO).

This consultation comes as the Vietnamese government seeks feedback on proposed reforms to the law, and was attended by Deputy Minister of Labour, Invalids and Social Affairs (MOLISA) Nguyen Ba Hoan. The government had initially circulated a draft in March, opening a public comment period until April. An updated draft issued on July 28 reflected some initial feedback received during that public consultation phase.

Speaking at the session, Trung Khuat, Co-Chairman of EuroCham’s Human Resources and Training Sector Committee (HR&T SC) gave remarks underscoring prudent implementation of the reforms. His speech focused on striking the right balance – ensuring the ambitious proposals avoid overly disrupting business operations or imposing undue burdens, given current economic conditions. 

Remove new contribution evasion sanctions – 

• The draft law proposes new penalties of banning invoice usage and restricting employee travel for contribution evasion over 6 months.

• These unprecedented sanctions are impractical, unreasonable and could improperly damage businesses.

• More measured enforcement through fines and mandated back-payment with interest was recommended instead.

Clarify compulsory insurance expansion – 

• The draft law expands compulsory insurance to more workers like part-timers and unpaid managers.

• Unclear definitions risk unfair enforcement if employment arrangements are interpreted differently.

• Official guidance should conclusively identify who qualifies for compulsory enrollment.

Make insurance voluntary for select groups –

• Making insurance voluntary rather than compulsory is more practical for some groups like part-time and unpaid managers.

• Compulsory enrollment is problematic given their circumstances of short-term work or lacking salaries.

• Tailored solutions should match program intent.

Define basis for contributions –

• Definitions are needed for “regular” and “stable” supplemental pay included in the contribution basis.

• Specify time periods constituting regular pay and define stable pay.

• This prevents an expansive basis including irregular bonuses that increase obligations.

Exempt foreign workers from long-term insurance –

• Pension and survivorship insurance should be voluntary, not compulsory for foreign employees.

• Short Vietnam tenures and existing home country contributions make compulsory enrollment impractical.

• Processes for overseas pensions are unclear and document translation/notarization is burdensome.

EuroCham’s recommendations aim to support the Vietnamese government in enacting balanced, sustainable social insurance reforms through cooperation and experience-sharing between policymakers, employers and workers. 

For a comprehensive view of his entire speech, you can access the document by clicking here.

This amended draft Law on Social Insurance will undergo further debate at the 15th National Assembly’s 6th session in October, before being submitted for final approval at their 7th session in May 2024. Keeping EuroCham members informed on the progress of this important legislation is a key aim of our advocacy efforts.

EuroCham extends its appreciation to MOLISA and the ILO for organizing an open and collaborative consultation session. Events like this align policymakers, employers and workers on enacting social insurance reforms that benefit all parties.

The HR&T SC serves as EuroCham’s specialist committee regarding human resources, education and training matters in Vietnam. It plays a key role in raising awareness of legislative changes in labor and education among EuroCham members, while also providing regular policy updates to the wider business community. Beyond advocacy, the HR&T SC organizes training workshops and other activities for EuroCham members and partners focused on HR and training. Further details on the HR&T SC’s activities and objectives are available here.

Businesses interested in engaging with EuroCham on pressing human resources and training issues facing their Vietnam operations are encouraged to join the HR&T SC. Participation in the committee presents opportunities to directly shape EuroCham’s policy advocacy priorities and initiatives in this space. Queries on joining the HR&T SC can be directed to Mr. Toan Le at Toan.le@eurochamvn.org.