Proposal to not fix unemployment insurance contribution rate at 1%

The Ministry of Labor, War Invalids and Social Affairs proposes flexible unemployment insurance contribution rates, with a maximum of 1% for employees and businesses instead of the current fixed 1% for each side.

The draft proposal for the revised Law on Employment is being solicited for comments for two months, starting from March 15. The Ministry of Labor, War Invalids and Social Affairs, the drafting agency, proposed amendments in the direction that employees contribute a maximum of 1% of their monthly salary, and employers contribute a maximum of 1% of the monthly salary fund of the total number of employees participating in unemployment insurance (UI). The State will support a maximum of 1% from the budget.

Current law stipulates that employees and business owners must make a fixed monthly contribution to the Fund of 1% of their salary and total salary fund. This is a regime that partially compensates employees for their income when they lose their jobs, supports vocational training, and helps them maintain or find new jobs.

The drafting agency believes that the above regulation has not been flexibly adjusted during natural disasters, epidemics, and economic crises, while the surplus source is large. For example, the VND38,000 billion support package from the Unemployment Insurance Fund issued in 2021 actually paid to nearly 13 million workers and more than 346,000 businesses.

Workers apply for unemployment benefits in Ho Chi Minh City, July 2023. Photo: Thanh Tung — Workers apply for unemployment benefits in Ho Chi Minh City, July 2023. Photo: *Thanh Tung*

The Ministry of Labor, War Invalids and Social Affairs also proposed to remove the basic salary as the basis for calculating the maximum number of months of unemployment benefits and only keep the regional minimum wage. Specifically, the monthly unemployment benefit is equal to 60% of the average monthly salary for social insurance contributions of the 6 consecutive months before leaving work, not exceeding 5 times the regional minimum wage.

The time for workers to receive unemployment benefits is also proposed to be earlier, on the 11th day from the date of submitting complete application for benefits instead of the 16th day as currently.

With the average salary for social insurance contribution reaching about 5.56 million VND in the period of 2022-2023, unemployment benefits that workers receive are about 3.3 million VND per month.

The proposal to reduce the contribution rate and increase the unemployment insurance benefits has been continuously proposed by enterprises in recent times. When giving comments on the draft revised Law on Social Insurance, 13 business associations proposed to reduce the unemployment insurance contribution rate of employers to 0.5% and employees to 0.5% instead of the current fixed rate. At the same time, all levels are studying the roadmap for further reduction to suit the reality.

The workers proposed to increase the unemployment benefits because they believe that the current level of 60% of the average salary for the 6 consecutive months before quitting the job is too low. However, the Drafting Committee has not considered adjusting the benefit level when amending the law this time.

The unemployment insurance policy, implemented since 2009, includes unemployment benefits, job placement advice, vocational training support and health insurance. This is considered an "anti-shock" tool for the economy caused by unemployment.

The fund comes from contributions from employers and employees, state support, profits from fund investment activities and other legal sources. The participating group is formal sector workers with contracts, paid according to the principle of "contribute - receive".

Hong Chieu

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