Businesses want to reduce social insurance contributions to 2009 levels

In the document providing comments on the draft revised Law on Social Insurance, 13 associations (including: Beer - Alcohol - Beverage Association (VBA), Transparent Food Association (AFT), American Chamber of Commerce in Vietnam (AmCham), Vietnam Textile and Apparel Association (VITAS), Ho Chi Minh City Food and Foodstuff Association, Vietnam Association of Seafood Exporters and Producers (VASEP), Milk Association (VDA), Leather, Footwear and Handbag Association (LEFASO), Vietnam Wood and Forest Products Association (VFA), Tea Association (VITAS), Plastics Association (VPAS), Vietnam Association of Motorcycle Manufacturers (VAMM), Ho Chi Minh City Handicraft and Wood Processing Association) said that the social insurance contribution rate in Vietnam is currently very high.

In the petition, the associations raised the issue: The draft Law on Social Insurance (amended) is regulating the compulsory insurance contribution rate including social insurance, health insurance and unemployment insurance for employees and employers with labor contracts to remain the same as the Law on Social Insurance 2014.

Specifically, employees pay 10.5% (8% social insurance, 1.5% health insurance and 1% unemployment insurance) and employers pay 21.5% (17.5% social insurance, 3% health insurance and 1% unemployment insurance). Thus, the total contribution rate of both employees and employers is 32%.

According to the analysis of the associations, the total contribution to the Social Insurance Fund of both employees and employers is based on the contribution rate (from 23% in 2007, 25% in 2009 due to the additional 1% unemployment insurance contribution and from 2017 to present increased to 32% per year) and the regional minimum wage (increased annually from 2007 to 2022, except for 2021 when there was no increase due to Covid-19), the contribution rate in 2022 was nearly 10 times higher than in 2007.

Compared to the region and the world , the social insurance contribution rate of employers in Vietnam is higher than many countries such as Malaysia, India, Indonesia, Cambodia, Thailand, Myanmar, Bangladesh... In Thailand alone, the social insurance fund is not only from employees and employers but also from the Government.

Based on the above reality, the associations recommend that the compulsory social insurance contribution rate of employees and employers should be brought back to the level of 2009, that is, employees pay 5% and employers pay 15%, a total of 20%, not 25.5% as it is now.

Regarding the unemployment insurance contribution rate, currently, the Unemployment Insurance Fund has too much surplus, while the purpose of the fund is to ensure social security for workers; when the fund has too much surplus, the contribution rate needs to be reduced to adjust the fund to a balanced level.

Therefore, the associations proposed to reduce the contribution rate to the Unemployment Insurance Fund for employees to 0.5%, for employers to 0.5% and have a roadmap for further reduction, in accordance with actual conditions.

Regarding the contribution rate to the Health Insurance Fund, employees contribute 1% and employers contribute 2%. Thus, the contribution rate of employees will be 6.5% for social insurance, health insurance, unemployment insurance; employers contribute 17.5% (each side reduces by 4% compared to present).

In addition, according to business associations, Vietnam needs to consider the overall effective management of the Social Insurance Fund as well as the inflation calculation method in particular to reduce the social insurance contribution rate but still ensure the actual pension of workers, meeting the spending needs of life.

In addition, the associations also proposed to regulate social insurance contributions and benefits based on regional minimum wages.

Enterprises owe more than 4,500 billion VND in social insurance. Ho Chi Minh City Social Insurance requires units and enterprises to settle social insurance debts and fully pay for employees. This agency will transfer the case to the police.

Source