Unemployment insurance policy considered solid support for social welfare system
Workers in the fishery sector. (Photo: DINH CHAU/NDO)
NDO – Over the past nearly two years as the economy has faced the negative impacts of the COVID-19 pandemic, unemployment insurance has shown its role and preeminence as a solid support for the welfare system, contributing to protecting labourers as their income decreased sharply due to the shutdown of economic activities.
When the pandemic is controlled in the near future, unemployment insurance, in combination with the activities of state management agencies on labourers and employment, will act as an effective connection between labour supply and demand. Thereby, difficulties will be turned into opportunities in order to reallocate jobs and connect labour markets as well as strengthen the development foundation to help the economy quickly regain its growth momentum.
Significance of the policy
Unemployment insurance is a type of social security with a long history of development. It was first applied in England in 1911 as a part of the country’s National Insurance Act 1911 that had its own official governing law in 1920 (Unemployment Insurance Act 1920). In 1935, the US introduced unemployment insurance nationwide under the Social Security Act 1935.
Unemployment insurance began to become a popular policy tool around the world after World War II along with the concept of the welfare state. It has developed into a complete system that has been applied in most developed countries. According to statistics, around 30 countries and territories around the world have unemployment insurance policies.
Unemployment insurance is a form of risk sharing among workers. It only comes into effect when labourers fall into unemployment.
Through its close connection and interaction with the labour market and state management agencies in charge of labour, unemployment insurance will help maintain motivation and create favourable conditions for employees to improve their capacity and seek suitable new jobs in the shortest time, thereby minimising the total draw from the unemployment insurance.
It can be said that unemployment insurance is one of the social security policies with the most positive impact on both the labour market and the economy.
Specifically, it has a positive impact on the consumption of individuals and households with its ability to support a portion of income they have lost due to unemployment. This impact is especially useful amidst the unexpected crisis and reduction in the workforce.
On the other hand, it encourages employees to prioritize choosing stable and sustainable jobs in order to qualify for their benefits. In addition, amidst the difficulties for the economy, for example during the COVID-19 pandemic’s outbreak, it contributes to savings in terms of the budget spending of the Government.
Without unemployment insurance, the burden not only lies on unemployed employees but also on the State through public financial resources. Accordingly, with the principle of risk sharing, unemployment insurance funds are responsible for allocating financial resources contributed by the employees to support unemployed workers.
An essential policy in Vietnam
Employees in Hanoi carrying out procedures to receive unemployment benefits. (Photo: NDO)
Unemployment insurance is still a relatively new policy in Vietnam with just over ten years of development. In 2006, when the issue of employment in the economy received special attention as a result of the restructuring of state-owned enterprises and international economic integration, the National Assembly passed Law No. 71/2006/QH11 on Social Insurance, consisting of the policy related to unemployment insurance that took official effect on January 1, 2009.
On the basis of the inheritance and development of the unemployment insurance policy as prescribed in the Law on Social Insurance 2006 and global experience in the implementation of unemployment insurance, the 13th National Assembly officially adopted the Law at its sixth session in 2015. Under the law, which took effect from January 1, 2015, the unemployment insurance policy was expanded to more participants, supplementing support for training and the improvement of vocational skills for employees, and improving the process of its implementation.
Since then, official unemployment insurance has been maintained and developed with four regimes including: unemployment insurance benefits, job search assistance, support for vocational training, and support for training, fostering and improving vocational skills to maintain jobs for workers.
Regarding the operation mechanism of the current unemployment insurance policy, the Employment Department under the Ministry of Labour, War Invalids and Social Affairs is responsible for performing the state management of unemployment insurance. The department is currently accompanying the system of employment service centres of 63 provinces and cities to carry out professional activities on unemployment insurance such as the reception and handling of applications for unemployment insurance benefits and vocational training support, introduction of jobs for employees, the provision of information about the labour market, and training and vocational skills.
Following over ten years of implementation, especially after the Employment Law was passed, the unemployment insurance policy has achieved encouraging results, contributing to ensuring the country’s social security.
Amidst COVID-19’s negative impact on the labour market, the policy has upheld its role as a key support. The number of participants in unemployment insurance and applications for unemployment insurance benefits increased sharply over the past two years.
Through the system of employment service centres, unemployment insurance has promptly helped workers ensure their lives while reducing the burden on the State budget.
Towards sustainable development goals
Facing the complicated development of COVID-19, the National Assembly Standing Committee issued Resolution No.03/2021/UBTVQH15 on promulgating policies to support employees and employers affected by the pandemic from the Unemployment Insurance Fund.
On that basis, the Government also issued Resolution No.116/NQ-CP on supporting employees and employers affected by the COVID-19 pandemic from the Unemployment Insurance Fund. The resolution expressed the concern and sharing of the Party and State for employees and employers affected by the pandemic and the unemployment insurance policy has become an effective tool to convey that concern.
In order to maintain and promote the above positive results as well as help the unemployment insurance continue to play a role as a solid support and development foundation for the labour market and economy in the near future, it is crucial to pay great attention to the continuous development, perfection and implementation of unemployment insurance policies and the assurance of their close connection with the labour supply and demand, State management agencies on the unemployment insurance and employment service centres nationwide.
During the first eight months of this year, over 511,000 applications for unemployment benefits were received and paid. In particular, over 500,000 employees enjoyed unemployment benefits and more than 11,000 others were supported with vocational training.
Masters Le Quynh Trang and Vu Thi Hang
Translated by NDO
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