Approaching to the ilo ui provisions and the recommendations to improve vietnamese ui

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FACULTY OF LAW University of Lund APPROACHING TO THE ILO UI PROVISIONS AND THE RECOMMENDATIONS TO IMPROVE VIETNAMESE UI Master thesis Dr. Bengt Lundell Unemployment Insurance 2009 Table of Contents Table of Contents ............................................................................................... 2 Summary .............................................................................................................. 3 Preface .................................................................................................................. 4 Abbreviation ........................................................................................................ 5 Chapter 1 THE CONCEPT OF THE UNEMPLOYMENT INSURANCE IN ILO PROVISIONS AND VIETNAMESE LAW ........................................ 6 1.1. Unemployment and UI............................................................................. 6 1.1.1. Unemployment and UI in ILO provisions .......................................... 6 1.1.2. Unemployment and UI in Vietnamese law ....................................... 10 Chapter 2. THE CONTENT OF UNEMPLOYMENT INSURANCE IN THE ILO PROVISIONS AND VIETNAMESE LAW .................................. 13 2.1. The subjects participate to UI ............................................................... 13 2.1.1. The subjects participate in the UI in the ILO provisions .................. 13 2.1.2. The subjects participate in UI in Vietnamese law ............................ 14 2.2. The conditions to get UI benefit ............................................................ 15 2.2.1. The conditions to get UI benefit in the ILO provisions .................... 16 2.2.2. The conditions to get the UI benefit in Vietnamese law................... 16 2.3. The level of getting the UI benefit......................................................... 17 2.3.1. The level of getting the UI benefit in ILO provisions ...................... 17 2.3.2. The level of getting the UI benefit in Vietnamese law ..................... 18 2.4. The duration of getting the UI benefit ................................................. 18 2.4.1. The duration of getting UI benefit in the ILO provisions:................ 18 2.4.2. The duration of getting UI benefit in Vietnamese law ..................... 19 2.5. The UI fund ............................................................................................. 19 2.5.1. The UI fund in ILO provisions ......................................................... 19 2.5.2. The UI fund in Vietnamese law ........................................................ 20 Chapter 3. THE RECOMMENDATIONS TO IMPROVE VIETNAMESE UNEMPLOYMENT INSURANCE................................................................. 21 3.1. The situation of employment and unemployment in Vietnam .............. 21 3.2. The recommendations to perfect UI law in Viet Nam. ....................... 23 3.2.1. The subjects participate and get UI benefit....................................... 23 3.2.2. The conditions to get the UI benefit.................................................. 25 3.2.3. The level of getting UI benefit ....................................................... 28 3.2.4. The duration of getting UI benefit .................................................... 29 3.2.5. The UI fund ....................................................................................... 30 CONCLUSIONS................................................................................................ 33 Supplement A..................................................................................................... 36 Bibliography ...................................................................................................... 38 2 Summary According to the provision of ILO in UI and unemployment situation in Vietnam, a lot of recommendations are raised to improve Vietnamese UI law. The thesis has three sections: Chapter 1. The concept of UI in ILO provisions and Vietnamese law; Chapter 2. The content of UI in ILO provisions and Vietnamese law; Chapter 3. The recommendations to improve Vietnamese UI Conclusion 3 Preface Demand for labour and supply of labour are of great importance in most countries. In the market economy, global integration and competition have become an indispensable part, which has greatly affected the workers’ jobs. The fact that many workers have lost their jobs has become popular in Vietnam. Therefore, this requires great efforts from workers as well as the State’s appropriate legal policies to support the labor market. Consequently, UI policy plays a very important role in ensuring social security of the nation. Labor market integration and social-economic development are important components for the birth of UI in Vietnam. Vietnamese UI is a regulation of social insurance. It will be excuted in 2009. Approaching to International Labour Organization (ILO) UI provisions and Vietnamese present UI law will be the solid legal premise of UI in Vietnam. Base on those premises, this thesis will present some petitions to perfect the model of a specific, modern and integrated UI of Vietnam. A perfect UI system will guarantee for human rights on labour and aspiration to overcome proverty. And this will contribute to improving the Vietnamese social security system. 4 Abbreviation - ILO: International Labour Organization - Unemployment Insurance: UI 5 Chapter 1 THE CONCEPT OF THE UNEMPLOYMENT INSURANCE IN ILO PROVISIONS AND VIETNAMESE LAW 1.1. Unemployment and UI 1.1.1. Unemployment and UI in ILO provisions The problem of employment and the unemployees protection are legal problems. They are stipulated in the Human Right internationl documents. The employees have the working right. Besides, the employees have the enjoy insurance right when they are unemployed. These right are stipulated in article 23, 25 of the Universal Declaration of Human Rights. “ Everyone has the right to work, to free choice of employment, to just and favourable conditions of work and to protection against unemployment”1 “ Everyone has the right to a standard of living adequate for the health and well-being of himself and of his family, including food, clothing, housing and medical care and necessary social services, and the right to security in the event of unemployment, sickness, disability, widowhood, old age or other lack of livelihood in circumstances beyond his control”2 The right to social insurance, the right to work are one of the basic rights of humans. It isn’t only to be stipulated in national laws but also to be acknowledged in international law. The introduction of UI is an effective method to create conditions for the basic rights of human beings, so that the right of citizens can become reality. The ILO set up the ineternational document system to protect the employees right. These conventions acknowledged the relation of employment and the Humans Right’s employment. The employees are treated equal and get the welfares. Article 23 of the Universal Declaration of Human Rights Article 23 of the Universal Declaration of Human Rights 6 According Convention No. 102 (1952) of ILO: "Convention on minimum standards of social security" has been approved by the meeting of the whole organization, including the following policies: health care; illness, unemployment, old age; labour accidents; family assistance payments; pregnancy; loss of workers; death allowance. The countries that ratified this Convention have applied the provisions of the convention on the legal system of their country and established a minimum system. To overcome and solve the situation of unemployment which is currently increasing in the countries in the globalized economy is an urgent issue. Accordingly, depending on the conditions of each country, there will be solutions to solve unemployment such as population policy, restricting migration from rural to urban areas, reducing the age of retirement, strengthening government and investment in the economy, pension dismissal, loss of employment, UI ... The concept of unemployment as it is defined in ILO regulation3: Unemployment is the phenomenon of workers losing income ”due to inability to obtain suitable employment in the case of a person protected who is capable of, and available for, work. After that, it was added “workers actively looking for work Then to, the concept is completed that “….the employees look for works activity” in the Convention No. 168 (1988) - ILO considers the phenomenon of workers suffering "suspension of earnings" as the criterion to identify the “unemployed” worker. Additionally, the conditions to determine if a person is unemployed is if a worker do not have the ability to find a suitable job but they are capable of working and ready to work to generate income. When the "permanent income" is lost by unemployment, workers must "actively look for work". Thus, according to the provision of ILO, being without permanent income (by losing their job) is the only sign of Article 20 of the ILO convention 7 unemployment. To determine workers who are being unemployed when have the additional conditions are not getting job, although workers have actively sought and desired to get a job. We know that "unemployment" and "work" always is related relation. Both have close relation with the "income". “Unemployment” is the phenomenon of workers without work. Thus, The unemployees are the employees have not income when they lost jobs. The working help the employees to get income. The employees work to get income and look after their family’s life. So, when the employees lost job, their life and family’s life will become bad. The birth of the UI which are seen the effective measure for the uemployees insurance Most developed countries in the world have built a system of UI to ensure life for the unemployed such as the United Kingdom (1911), Italy (1919), to early 1930 with the additional countries such as Sweden, Canada, the United States ... The countries have recognized the right of the unemployed and quickly made UI a branch of the social insurance system Most countries don’t considered UI just as measures to solve the consequences of unemployment. They considered UI as a policy of an active labor market. And UI is not only a payment but also has the important function to promote the transition the structure of industries, job protection, enhancement of worker career, finding jobs for the unemployed. These activities are associated with the functioning of thelabor market, and the activities to create jobs. According Convention No. 102 of ILO about payments of UI The UI is a part of social insurance to protect workers in case of loss of employment. In addition to payments for the unemployed, UI also has additional measures between the unemployed and the labor market such as: vocational training, re-training, job brokers, career counseling, support expenses of the unemployed to establish business ... The original legal recognition of UI is a regulation in the system of social insurance. The appearance of this regulation makes insurance rights of human 8 beings better.The right to enjoy social insurance, also one of the basic rights of citizens, are regulated in most of the constitutions of the countries in the world. Look at the social insurance system, and through the pension we can evaluate the advantages of a social mode. UI is paid for the package as "unemployed". It does not stop at the function to pay the income of the unemployed when losing their job. UI, according to ILO, is a part of social insurance to protect workers in case of loss of employment. UI takes care of the rights of workers who have lost their jobs. The issuing and implementation of the UI contributes to effect on social security policies of the country. UI are important for social - political stability and can create sustainable development for each country. The employment and job creation in order to limit unemployment is a category under human rights, an issue which is legal in depth has been expressed in international documents on human rights: "Freedom exit the fear of poverty has been declared as the highest aspiration of all humanity ". And "Everyone has the right to work, freely chosen profession, has been working conditions favorable and legitimate, are protected against unemployment”1 To overcome and solve the situation of unemployment which is currently increasing in the countries when we access the period of globalization is an unrgent issue. Accordingly, depending on the conditions of each country, there will be solutions to solve unemployment such as population policy, restricting migration from rural to urban areas, reducing the age of retirement, Government strengthening and investment in the economy, pension dismissal, loss of employment, UI ... According Convention No. 102 (1952) of ILO: "Convention on breaking the rules on minimum social security" has been approved by the meeting of the 1 Academy of Country political Ho Chi Minh, the international documents on human rights, Publisher Political countries Ha Noi. P.62, 67. 9 whole organization, including following policies: health care; illness, unemployment, old age; labour accidents; family assistance payments; pregnancy; loss of workers; death allowance. The countries that ratified this Convention have applied the provisions of the Convention on the legal system of their country and establish a minimum system. The right to social insurance, the right to work are one of the basic rights of human. It isn’t only be stipulated in national laws but also be acknowledged in international law. The introduction of UI is an effective method to create conditions for the basic rights of human beings, the right of citizens to become reality. 1.1.2. Unemployment and UI in Vietnamese law The concept of unemployment in Vietnam The concept of unemployment in Vietnam is: “Unemployment is a phenomenon of no work in the determined period of time (paid work and the self-made), ready to work (a job be paid and the self-made) and looking for work”4. However, because of the purpose of statistics, that concept has only shown "signs" of unemployment, but it has not shown the nature and content of the unemployment. To make it the accurate concept of unemployment , according to Dr. Le Thi Hoai Thu, one must consider the concept of "unemployed" in accordance with "employment" as "all activities generating a source of incume and not prohibited by law "5 In consideration of the relationship with a job to make the definition of unemployment: "unemployment is the state of those without income who have Guide social spending professional in Viet Nam - General Statistics published in 1995 Article 13- The Labor Law of 1994 10 the ability to work, at age by the law stipulated that have no jobs or have lost their jobs, and who are looking for job "6 The legislation on UI in Viet Nam has provisions on unemployment: "The unemployed who contributes to UI and has lost job or terminated work contract but has not found job "- according to chapter of the UI in social insurance law. Determining the subject of adjustment on UI and the basis for reviewing the benefit of UI, the concept of unemployment is central. Thus, comparing the concept of unemployment as stipulated by ILO and stipulated in the law of UI Vietnam, the similarity with each other in the regulation of unemployment is shown through the following characteristics: - Being a person who used to be employed and have income from work but has lost income because of job loss; - Not being able to find a job despite having the ability to work and desire for work. UI according to Vietnamese law UI is a part of social insurance in the system of social security of the country. Until now, no official concept of UI has exsisted in Viet Nam. However, on the one hand, UI in Vietnam aims at ensuring income for the unemployed. On the other hand, UI create opportunities and favorable conditions for unemployed people to go back to the labor market. Unemployment benefit is paid to people who are unemployed. Vietnamese UI is similar to the provisions of ILO. UI is a mode-related worker policy, aiming at ensuring the workers a stable life. However, depending on the economic conditions of each country, the UI is placed in social insurance system or independently as "UI". UI is different from other human insurance in the system of business insurance. UI is a part of the system of social security in The support workers lose jobs and the method of construction mode of unemployment insurance in Viet NamDr. Le Thi Hoai Thu – Ha Noi national university -2005 11 the country. In each country, a well functioning of UI will improve positive social-economic efficiency. 12 Chapter 2. THE CONTENT OF UNEMPLOYMENT INSURANCE IN THE ILO PROVISIONS AND VIETNAMESE LAW 2.1. The subjects participate to UI The unemployment and the birth of unemploymnet insurance is a necessary consequens of a market economy. Each country must have a policy for market adjustments adjustments appropriate to take care of benefits for workers, especially the unemployed workers. Defining the subject of UI is an important issue in the a country. The State, employers and employees participate in UI. Workers are the center of UI and the subject. The workers get the benefit of UI when they participate in UI. But not all the workers who participate in UI can get unemployment benefit. Depending on the conditions and circumstances of each country, they regulated the law appropriately and most effectively for that country. 2.1.1. The subjects participate in the UI in the ILO provisions According to Convention No.102 of ILO provisions, the people who participate in UI must be workers and get salary. The Convention No.168 of ILO expanded the subjects participating in UI. The Convention stipulates in some articles that in special cases, it can apply to some types of persons who work for the first time, those who don’t relate to unemployed, those who never have been unemployed or have not participated in the protection of unemployment. According to this Convention, the subjects participating in UI are the workers who work to get salary and other subjects that also may have the right to participate in the UI. Provisions apply to some employees working for the first time, working at home, getting salary in the range of public services of the state, the workers who have not reached to the age conditions, people that have reached the age of retirement and having enough income to ensure participate in UI. We can list as below: - The youth who finish vocational training program; 13 - The young people who have completed the school program; - The young people who have completed military obligations required; - Those who leave job to look after children, take care of sick people, the handicapped, the elderly; - People who are windowed; - People who does not get to allowance while at school; - People who divorced; - Those who expires imprisonment; - People who have grown-up; - Handicapped people who have graduated from training courses; - The overseas people who return to the country, unless in the case they get benefits according to the law of the country where they have worked previously; - People who previously have been self employed. Thus, from the Convention 168 ILO has encouraged the expansion of subjects participating in UI, and apply to the UI for all part-time employees, and the subjects who do nothing, and the part-time employees want to find full-time job. UI can to apply to most subjects. This reflected the improvement of the social welfare. 2.1.2. The subjects participate in UI in Vietnamese law According to the law of Vietnamese UI, the subjects participating in UI consist of employees and employers. The provisions on employees states: employees who are Vietnamese citizens who work on employment contracts without limit the time, or those who work on contracts from 12 to 36 months. The provisions on employers states: employers participating in UI is regulated: those who have 10 or more employees. The employers are state 14 agencies, political-social agencies, political organizations, social career organizations, foreign organizations, international organizations operating in the territory of Vietnam; companies or small individual business. These employers hire employees and pay salary. The UI is a part of the social insurance system and belongs to the social security policies. Therefore, the nature of the UI is to take care the employees and their interest. The UI stipulated by the ILO Convention has various participating subjects. Every employee has the right to participate in the UI. Vietnamese law limits the subjects participating in UI by the following regulations: - The UI is applied to the employers using from 10 and more employees; - The articles regulate to the term of employment contract as below: + The contract has unlimited term; + For the limited labour contracts, the term is 12-36 months. The term of employment contract ensures the employees have enough time to contribute to the UI fund. These regulations help the management and makes the benefit payment more convenient. The conditions on the term of labour contracts stipulated to be 12-36 months is enough for the employees to contribute the UI fund. Almost all employmnet contracts in Vietnam are short-term because of the socio-economy characteristic. Most of the employees sign only daily-contracts informally. It is difficult to determine the unemployment situation of the employees. Therefore, with this in mind, the management of insurance fund is not easy. 2.2. The conditions to get UI benefit To get the UI benefit, the employees must participate in the UI. But all the unemployed have right to get the UI benefit. 15 2.2.1. The conditions to get UI benefit in the ILO provisions UI law is a part of the legal social insurance system. The nature of UI is to support and to take care of the unemployee’s interests. Who will have right to get the UI benefit? According to article 20 of ILO Convention No.102 Convention regulates about the conditions to get the UI benefit as follows: + The unemployeds’ income from work is interrupted but they can not find another suitable work to do and really want to work + The employee must satisfy the term of contribution to the UI fund; + The cause of unemployment is not caused by the employee. In this case, the unemployed has the duty to prove; + The unemployed must register to find job at the labour office during the unemployment; + In some cases, national law may have special exception provisions. The conditions stipulated above is appropriate to determine effectively the object of the UI payment. Besides, the unemployed can be denied the right to get the UI benefit when the unemployee does not approve to do an appropriate work - [Section 1 of article 21- Convention No. 168]. The purpose of these provisions restricts the UI payment to the unemployed who do not want to work. 2.2.2. The conditions to get the UI benefit in Vietnamese law The unemployed who get the UI benefit as regulated must satisfy the following conditions - [Article 81- The Vietnam social insurance law] - During the 24 months before unemployment, the employees must have contributed the UI fund for 12 months or more; - After 15 days of unemployment registration at social insurance office, the unemployed have a right to get the UI benefit. 16 Thus, the UI benefit is clearer than the receiving of other social insurance benefits. In brief, the conditions of the unemployment contribution term in Vietnam is clearer than the stipulations of ILO. The conditions of unemployment registration are considered very important to manage and control the UI fund. The Vietnamese UI emphasize the interruption of income during the unemployment term. In Vietnam, it is difficult to determine the relationship between the unemployment and the interruption of income because in the unemployment term, the unemployed lose the revenue. Actually, the unemployed can get another income in this period. In the Article 87- The social insurance law, the UI benefit termination is regulated: - The expiration of getting unemployment benefit; - The unemployed have a new job; - The unemployed join the army; - The unemployed get retirement pension; - After twice refusing to take an appropriate work introduced by social insurance office (except for good reasons); - Do not set up UI file for three successive months; - The unemployed go abroad to settle; - Serving a penalty; - The unemployed dies. - In case of terminating the benefit due to a new job or joining the army in the unemployment term, the unemployed can get the benefit once. 2.3. The level of getting the UI benefit 2.3.1. The level of getting the UI benefit in ILO provisions The level of subsidies is based on the contribution level and the contribution term to UI fund. 17 The benefit level must guarantee the poverty line of the unemployed. The amount of benefit is calculated based on previous income. The benefit amount will be fixed to not less than 50% the minimum wages or the wages of ordinary employees, and guaranteeing the basic living standard. In general, the provisions of the Convention guarantee the principle of creating the best conditions for employees to get a stable life. 2.3.2. The level of getting the UI benefit in Vietnamese law According to the law of Vietnam, when a person fully satisfies the conditions of getting the unemployment benefit, the subsidies for the unemployed are calculated as 60% of the average salary of six months before unemployment. This amount of money can be paid every month for the unemployed - [Article 82 - the law on social insurance in Vietnam]. The purpose of the UI payment is to help the unemployed to have a stable life and create opportunities for them to seek a new job in the unemployment period. If the payment level is too high, the UI fund will not guarantee for the full payment of previous salary. Besides, the employees will not seek jobs actively if they just expect the UI benefit. 2.4. The duration of getting the UI benefit The maximum duration of UI benefit depends on the contribution to the UI fund and participatting term The regulations differs due to the socioecomomy conditions of the country. With a low rate of unemployment and the employees have the ability to look for work, the period of getting UI benefit will be shorter. 2.4.1. The duration of getting UI benefit in the ILO provisions: Article 19 ILO Convention No.168 says: Each countries can limit the UI period to 26 weeks if the unemployed has contributed to the UI of 24 months. 18 The UI fund does not pay in the case the unemployed until after 7 days. 2.4.2. The duration of getting UI benefit in Vietnamese law In Vietnam, the period of getting UI benefit stipulated in Article 87 - the law on social insurance is: - The Duration is 3 months if the unemployee contributes enough from 12 to 36 months to UI fund; - The Duration is 6 months if the unemployee contributes enough from 36 to less than 72 months to UI fund; - The Duration is 9 months, if the unemployee contributes enough from 72 months to less than 140 months to UI fund; - The Duration is 12 months if the unemployment contributes enough 144 months to UI fund; - The Duration of getting the UI benefit is calculated based on the UI fund, but the maximum does not exceed 12 months. Beside getting UI benefit, the unemployee can also be supported for 6 months vocational training. After being supported by short-term vocational training (the unemployee can move to new job) in this term, the unemployee can be adviced to seek for a new job for free. The unemployed also can get the health insurance. The social insurance office has the responsibility to provide this insurance for the unemployed 2.5. The UI fund 2.5.1. The UI fund in ILO provisions The UI fund is formed from the contributions of the parties which participate to UI. This fund is used to pay benefits and help the unemployed to return to labour market. The UI fund is administrated by two rules: - Provisions on who will contribute to UI; - Provisions on the management of the UI fund. 19 Depending on the socio-economic situation of each country, they will have different regulations on the contributions to UI and how to operate the fund in their country. Normally, they stipulate that both the employers and the employees must contribute to the UI fund. The provisions about UI contribution must ensure not to have to big effects on the monthly income of the employees and UI fund. 2.5.2. The UI fund in Vietnamese law As the other developing countries in the world, in Vietnam, there are three parties participating to the contribution to UI fund: the employees, the employers and the state with the following regulations: - The employees contribute 1% of the monthly salary; - The employers contribute 1% the monthly salary fund ; - Monthly, the state supports 1% salary fund for the participation in UI and gives it once a year; - The UI fund invest and its profits are added to the fund. Presently, the provisions for contribution is suitable and can reduce the burden for the attending subject. The state can not bear alone the UI as a social welfare. The UI fund is used for the following purposes: - Payment for the unemployed; - Support for vocational training; - Support for seeking a new job; - Contributing to health insurance for the unemployed; - The management cost; - All forms of legal, safe investments to develop the UI fund; Provisions of UI fund management: The cost of UI fund management is equal to the management cost of administration. 20
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