Foreign workers in Vietnam will be required to pay social insurance premiums starting in 2018, when the country plans to expand its social safety net.
“This is an initial step to facilitate bilateral agreements on social insurance between Vietnam and other countries,” said Pham Minh Huan, Deputy Minister of Labor, War Invalids and Social Affairs.
Huan was speaking at a conference held to discuss the enforcement of the Social Insurance Law in Ho Chi Minh City last week.
The event was jointly organized by Huan's agency, the National Assembly's Social Affairs Committee and the Vietnam Social Insurance Agency.
Huan explained that the law would work reciprocally and prevent double-payments.
For example, a Vietnamese national working in Cambodia will be exempted from his social insurance obligations while living abroad. When he returns, the agreement would require Cambodia to pay out his contributions to the Vietnamese Government, who will use that money to provide him social services.
The Social Insurance Law, which will go into effect in 2016, will force Vietnamese working abroad and workers signed to 1-3 month contracts to start paying into the social insurance fund in 2018.
Currently, workers have to pay compulsory premiums only if they are contracted for more than three months at a time.
Under current regulations, many employers avoid paying into the fund by signing short-term contracts with their employees. By law, employers must save a certain portion of each employee salary to pay their social insurance fees on their behalf.
During the conference, Do Thi Xuan Phuong, deputy director of the Vietnam Social Insurance Agency, proposed criminalizing any failure to pay the fee.
According to Phuong, her agency has failed to collect VND5.5 trillion (US$258.5 million) worth of compulsory premium in 2014 alone – almost five percent of the total income they expected.
Phuong pointed out that they'd chased down a lot of scofflaws. Prior to the crackdown, "the number was up to VND11.3 trillion,” she said.
Currently, 11.5 million people are paying compulsory premiums in Vietnam, including company leaders, long-term and government employees.
More than 37 million others are not paying social insurance.
Sixty percent of those living outside the safety net are farmers.
Among the groups who are eligible to voluntarily pay into the fund, only 196,000 people do.
Vietnam is looking to collect social insurance payments from half its labor force (roughly 28 million people) in 2020, of which 25 million would be compulsory participants and three million volunteers.