Despite their important contributions to socio-economic development, the majority of labourers in the informal sector do not have adequate coverage from social security policies.
Labourers working in the informal sector are in need of more social security protection. — VNS Photo Doan Tung
HA NOI —
According to the Analysis and Forecasting Centre under the Viet Nam Academy of Social Sciences (VASS), those working in the informal sector are often manual labourers such as hairdressers, bricklayers, xe om (taxi motorbike) drivers and domestic helpers.
Nearly 10.9 million people currently work in this sector, accounting for 23.5 per cent of all labourers in the country. This reality eases the pressure of the country's increasing unemployment rate. A growing trend has even seen formal labourers move to the informal labour sector.
VASS statistics show that informal labourers contributed 20 per cent of the country's Gross Domestic Product (GDP) in 2009.
The informal sector also contributed to poverty reduction, as only a small proportion of people were able to find jobs in the formal sector. Informal work allowed people to earn a wage, gain a better income and educate their children, said Andrea Salvini, a Labour Economist at the International Labour Organisation (ILO) Viet Nam.
"The issue of workers transitioning from formal to informal contractual arrangements does not depend on individual preferences alone. Sometimes, especially in times of economic downturn, workers laid off by formal enterprises find an income safety net in the informal sector," he said.
"In developing countries and transition economies, many workers cannot afford to be out of a job, they are too poor to be unemployed, and, in the absence of jobs, income support and re-training programmes, they enter a spiral of unprotected, poor quality jobs," Salvini said.
According to the Analysis and Forecasting Centre's latest survey, the monthly income of informal labourers is increasing. This year, domestic helpers can earn around VND2.2-2.5 million (US$105-119) compared to VND1.5-2 million ($71.4-95) in 2010.
Nguyen Dai Dong, director of the Employment Department under the Ministry of Labour, Invalids and Social Affairs said that salaries earned by working at enterprises were sometimes lower than what could be earned in the informal sector. Many unskilled people did not want to work in the formal sector because of work-load and unassured income.
Despite stable incomes, informal labourers still faced many difficulties due to living beyond the social security net, experts said.
Only 0.19 per cent of informal sector workers participated in social and health insurance in 2010, said Nguyen Ba Ngoc, deputy director of the ministry's Institute for Labour and Social Sciences.
In addition, only a small proportion of the labourers could access vocational training programmes, he said, so the percentage of skilled workers in the sector was very low. More than 90 per cent of informal labourers did not have any professional certificates.
Under the circumstances, experts suggested that the State should have suitable policies to better protect informal labourers as well as provide them vocational skills.
Salvini said it was important to note that different aspects of the informal sector required a wide range of different policies and programmes, and reforms of formal labour market institutions were a necessity.
MA Du Phuoc Chan of the HCM City Institute for Development Studies said that demarcation of the two sectors was just relative.
"We should not value which sector is better. The key thing is that the Government should have policies to use the labour force effectively and reduce the disadvantages and negative aspects of the informal labour sector." — VNS