13 associations propose reducing social insurance contributions

13 business associations signed a petition sent to the Government Office, 14 agencies and departments, and the National Assembly Delegation of 28 provinces/cities related to the Draft Law on Social Insurance.

Associations requested to consider and consider making new adjustments and additions so that the promulgated Draft would be not only consistent with the reality of Vietnam but also of other competing countries, serving as a driving force to promote production activities business of Vietnamese enterprises and ensuring social security for workers.

According to 13 business associations, the Draft stipulates that the rate of compulsory insurance contributions, including social insurance, health insurance, and unemployment insurance for employees and employers with labor contracts, remains the same as the Law on Social Insurance 2014. That means: 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 contribution rate of both employees and employers is 32%.

Associations believe that the total contribution rate to the social insurance fund of both employees and employers based on the contribution rate and regional minimum wage, the contribution rate in 2022 is nearly ten times higher than in 2007. On the other hand, compared to the regional and the world, the social insurance contribution rate of employers in Vietnam is higher than in many countries. Specifically, Malaysia contributes 16.5%, India 15.25%, Indonesia 10.26%, Cambodia 6.1%, Thailand Lan 5%, Myanmar 2%, Bangladesh 0%.... In Thailand, social insurance funds come not only from employees and employers but also from the Government.

"This social insurance payment rate is very high. Therefore, the recommendation for the compulsory social insurance payment rate of employees and employers is to bring it back to the 2009 level, that is, employees pay 5%, and employers pay 15%, a total of 20%, not the current 25.5% (employers pay 17.5% "including 3% maternity sickness fund, 14% pension and death fund and 0.5% labor accident insurance, occupational diseases (Occupational Accident and Worker's Disease Insurance) and employees pay 8%)", said representatives of the associations.

Regarding the unemployment insurance premium rate, the unemployment insurance fund currently has too much surplus. The purpose of the unemployment insurance fund is to ensure social security for employees. When the fund has too much abundance, it is necessary to reduce the contribution level to adjust it to a balanced level.

Therefore, 13 associations proposed to reduce the contribution rate to the unemployment insurance fund of employees to 0.5% and that of employers to 0.5% and have a roadmap for further reduction to suit actual conditions.

As for the contribution rate to the health insurance fund, employees pay 1%, and employers pay 2%. In addition, according to associations, the insurance contribution rate of employers and employees in Vietnam is too high compared to other countries. However, employees in these countries still ensure their life expenses when retiring. In fact, at the time of contribution to the fund, the value of money paid by employers and employees in Vietnam is not low.

Therefore, the associations proposed that Vietnam needs to consider the overall effective management of the social insurance fund and the calculation of price inflation and the macroeconomy to reduce the rate of social insurance contributions while still ensuring that employees' actual pensions meet their life spending needs.

Associations also believe that the level of maternity, retirement, and death benefits based on a specific amount of money or base salary is unreasonable. Recommendations and regulations for social insurance payment and benefit levels are based on the regional minimum wage.

The associations proposed to amend the draft content to say, "Participants and beneficiaries of social insurance benefits can choose to submit applications online or in hard copy."

Regarding retirement age and pension benefits, the Associations propose that in cases where employees reach the age of early retirement (maximum five years lower than the retirement age) according to regulations and have paid social insurance for more than 20 years, they should have the right to retire, each year of early retirement will have one month's salary deducted or at most a deduction of no more than 1% corresponding to 1 year as per the Law on Social Insurance 2006.

For employees who reach the age of early retirement (maximum five years lower than the retirement age) according to regulations and have paid social insurance for 30 years for women and 32 years for men, they will be able to retire immediately and enjoy retirement benefits maximum of 75%.

Regarding calculating the pension rate, the associations proposed that the maximum pension rate should be calculated based on the total time participating in social insurance and should not impose a ceiling of 75%.

Regarding the regulations on the time to enjoy sickness benefits, it is proposed to amend the rules in Clause 2 on the regime for employees taking time off work due to being sick on the list of conditions requiring long-term treatment. Specifically, it remains the same as the current social insurance law according to Clause 2, Article 26.

13 associations include Vietnam Association of Seafood Exporters and Producers, Vietnam Textile and Apparel Association, Food and Foodstuff Association of Ho Chi Minh City, Vietnam Leather-Footwear and Handbag Association, Vietnam Dairy Association, Vietnam Association of Beer, Wine and Beverage, Association of Transparent Food, American Chamber of Commerce Vietnam, Vietnam Timber & Forest Products Association, Vietnam Tea Association, Vietnam Plastics Association, Vietnam Association of Motorcycle Manufacturers, HAWA - Handicraft and Wood Industry Association of Ho Chi Minh City.