Le Quang Trung, deputy director of the Employment Department, under the Ministry of Labour, Invalids and Social Affairs, talks with Thoi bao Kinh te Viet Nam (Viet Nam Economic Times)
What is the reason behind the current rise in unemployment insurance applicants in Viet Nam?
By late first quarter of 2012, there were more than 642.000 unemployment insurance applicants nationwide against a figure of 526,000 in 2010 and 2011.
In the first three months of this year, there were 116,000 applicants, an increase of 70 per cent against the same period last year. Most lived in Ho Chi Minh City, Binh Duong and Dong Nai provinces and worked in the fields of processing and machinery as well as garments and textiles.
Since the law came into force, nearly 510,000 people have received insurance payments.
In my opinion, there are three main reasons leading to the increase in unemployment.
First, the increase in the number of unemployment insurance applicants and the number of people having met required conditions for the benefit.
Second, financial difficulties have forced many enterprises to cut down their production while many of their products are piling up in storage. These are the two main causes making enterprises restructure production and to terminate labour contracts with workers.
Finally, quite a few enterprises were ordered to move outside the city to keep the inner environment clean in line with the government's master plan of industrial development.
In addition, under the law, many workers wanted to quit after a year of employment to enjoy the unemployment insurance and find a better job with better payment or to look for opportunities closer to home.
Some people have argued that the hike in unemployment insurance applicants was the result of collusion between employers and employees. How do you respond to that?
When we prepared for the unemployment insurance fund, we had already thought of various ideas that might have occurred, including the delay in payments to the fund by employers and falsified information about the working duration of the employees. By now, we have not detected any case of collusion between an employer and employee to seek profit.
Regarding the fund, in 2009 we had nearly 6,000 participants with insurance amounting to VND 3,510 billion ($ 171 million). Since then the number of participants has increased year-on-year. In 2011 there were nearly 8 million employees participating in the fund with a total contribution of VND 5,730 billion ($ 280 million).
Outstanding balances by late 2011 came to about VND14,600 billion ($ 712 million). Therefore, I can say the Unemployment Insurance Fund is still under control although the number of unemployment applicants has rapidly increased.
We have calculated that the fund will be dangerous, if the insurance beneficiaries accounted for 8 per cent of total unemployment insurance holders. At present, it is 3.6 per cent – a safe figure.
Does your department plan to develop measures to make the fund work more efficiently?
Following three years of implementing the law on unemployment insurance, we have realised some limitations, including the delay in the issuance of the guiding document to implement the Law on Public Employees and small financial support for the unemployed to learn new skills.
Under the current policy, unemployment benefits are paid monthly like pensions, I do not think this mechanism is appropriate as it caused a lot of difficulties for beneficiaries.
In addition, the delay in paying unemployment insurance by many employers has caused difficulties for Viet Nam Social Insurance, particularly its local branches.
We have proposed to the government to change the time from 7 days to three months for unemployed people to apply for unemployment insurance benefits. We have also made a proposal to the government to increase the allowance to the unemployed if they want to learn new skills. In the meantime, we are in the process of building an Employment Law based on the Unemployment Law.
Parallel to all activities, we deem it imperative to closely monitor employers' enforcement of the Labour Law. — VNS