Labor minister allays concerns over social insurance fund collapse

By Hoang Thuy   October 5, 2019 | 12:51 pm GMT+7
Labor minister allays concerns over social insurance fund collapse
Workers at a footwear factory in Hanoi. Photo by Reuters.

The Labour Minister has asserted that the jailing of former top insurance officials will not adversely affect the national social insurance fund.

Addressing a meeting of the National Assembly's Committee on Social Affairs on Friday, Dao Ngoc Dung, Minister of Labor, Invalids and Social Affairs, said that nearly VND220.5 trillion ($9.49 billion) was collected for the social insurance fund in 2018, up 12.9 percent over 2017.

The estimated total spending for social insurance last year was over VND155.6 trillion ($6.68 billion), and the number of people participating in unemployment and voluntary insurance schemes has exceeded expectations, he said.

The social insurance fund's total balance also reached over VND727.8 trillion ($31.24 billion) by the end of 2018, of which investments in government bonds made up over VND620.5 trillion ($26.63 billion) and the remaining VND107.3 trillion ($4.61 billion) was invested in commercial banks.

Dung said the fund's balance has been increasing by about 20 percent each year for the last five years.

"Therefore there is no such thing as the fund having difficulties. Some arrests and losses of a few trillion dong will not affect the fund and cause it to collapse," he said.

The minister, however, admitted that one major problem facing the social insurance fund was that a large number of laborers and businesses have yet to participate in it despite the participation being legally mandatory.

Specifically, of 610,000 businesses, just 327,000 are paying social insurance.

"Over 283,000 operating businesses not paying social insurance is a very large number, and if we don't tighten [enforcement] then it will be difficult," Dung said.

He suggested that Vietnam could learn from China, where businesses that refuse to pay social insurance are fined and persistent offenders have their assets frozen.

Additionally, social insurance authorities could ask tax authorities to collect social insurance payments for them, Dung said, arguing that if they were capable of collecting tax payments, they could do the same with social insurance payments.

Another issue facing the social insurance fund is a bad debt of about VND2.5 trillion ($107.3 million) from businesses that have "disappeared," gone bankrupt or got dissolved without paying overdue social insurance contributions. 

As the law has yet to have provisions on identifying and pursuing such businesses, Dung requested that functional agencies come up with solutions to handle this issue.

A Hanoi court last week sentenced two former general directors of Vietnam Social Security (VSS) and four other former VSS officials to up to 14 years in prison for economic management violations that caused losses of VND1.7 trillion ($73 million).

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