The Ministry of Labour, Invalids and Social Affairs has proposed a flexible unemployment insurance contribution rate, with a maximum of 1% for both employees and businesses, instead of the current fixed rate of 1% for each party.
The draft amendment to the Law on Employment will be open for comments for two months, starting from March 15th. The Ministry of Labour, Invalids and Social Affairs, the drafting agency, proposes amendments whereby employees contribute a maximum of 1% of their monthly salary, and employers contribute a maximum of 1% of the monthly wage fund on the total number of employees participating in unemployment insurance. The State will provide a maximum of 1% support from the budget.
Current law stipulates that employees and employers contribute a fixed 1% of their salary and total payroll to the Fund each month. This is a system to partially compensate employees for lost income, support vocational training, and help maintain or find new employment.
The drafting agency argued that the regulations were not flexibly adjusted during natural disasters, epidemics, and economic crises, despite large surpluses. For example, the 38,000 billion VND support package from the Unemployment Insurance Fund issued in 2021 actually paid out to nearly 13 million workers and more than 346,000 businesses.
Workers filing for unemployment benefits in Ho Chi Minh City, July 2023. Photo: Thanh Tung
The Ministry of Labour, Invalids and Social Affairs also proposed abolishing the base salary as the basis for calculating the maximum number of months of unemployment benefits, retaining only the regional minimum wage. Specifically, the monthly unemployment benefit would be equal to 60% of the average monthly salary on which unemployment insurance contributions were paid during the six consecutive months prior to leaving employment, with a maximum of five times the regional minimum wage.
The proposed date for workers to receive unemployment benefits is also earlier, on the 11th day after submitting all necessary documents, instead of the current 16th day.
With the average salary subject to unemployment insurance contributions reaching approximately 5.56 million VND during the 2022-2023 period, workers received about 3.3 million VND in unemployment benefits each month.
Businesses have repeatedly proposed reducing unemployment insurance contributions and increasing unemployment benefits. In their feedback on the draft amendments to the Social Insurance Law, 13 business associations suggested reducing the unemployment insurance contribution rate for employers to 0.5% and for employees to 0.5%, instead of the current fixed rate. Authorities are also studying a roadmap for further reductions to better suit the current situation.
Workers have petitioned for an increase in unemployment benefits, arguing that the current rate of over 60% of the average salary used for unemployment insurance contributions during the six months prior to leaving their jobs is too low. However, the drafting committee has not considered adjusting the benefit level in this revision of the law.
Unemployment insurance policies, implemented since 2009, include unemployment benefits, job placement counseling, vocational training support, and health insurance. These are considered a "shock-absorbing" tool for the economy against unemployment.
Funding comes from contributions from employers and employees, government support, profits from investment activities, and other legitimate sources of income. Participants are formal sector workers with contracts, paid on a "contribution-based" principle.
Hong Chieu
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