Sunday,  Oct 21,2018,12:05 (GMT+7)

Retirement age in suspense

Son Nguyen
Friday,  Apr 27,2018,20:19 (GMT+7)
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Retirement age in suspense

Son Nguyen

The plan to adjust the retirement age gets stuck again when the issue is revisited this week. The Ministry of Labor, Invalids and Social Affairs submitted the plan to the National Assembly’s Social Affairs Committee this Monday, seeking approval to gradually extend the retirement age to 65 years for men and 60 for women. Though it is agreed that such a change is inevitable to keep the social insurance fund from going bust, there is no single viable way to do so, as seen in debates covered in local media these days.

Minister of Labor, Invalids and Social Affairs Dao Ngoc Dung, speaking to the committee, stressed that changing the retirement age is imperative, as the social insurance fund has neared the brink of collapse. To win lawmakers’ support, Dung reasoned that “not a single country in the world offers such generous social insurance policies like Vietnam, where pensioners earn more (from the fund) than what they have contributed, and enjoy longer years of entitlement than the period of payment,” according to Dien Dan Doanh Nghiep.

Dung, therefore, presented two options for extending the retirement age. In the first option, the age will be raised to 60 for women and 62 for men, and each year, the extension will be limited to three months. For the second option, the respective ages are 60 and 65, and the extension will be four months each year.

Many experts agree that the adjustment is by all means necessary to safeguard the fund.

Mai Duc Chinh, vice president of the Vietnam General Confederation of Labor, says in Tuoi Tre that extending the retirement age is the suitable way to keep the social insurance fund balanced. Citing a study conducted by the International Labor Organization, Chinh says if current social insurance policies stay put, revenue for the fund will be equivalent to payouts by 2021, and by 2034, the fund will be totally depleted as payouts will far outpace revenues.

Some others say another way to safeguard the social insurance fund is either to raise ratios of contribution by laborers or lower benefits for pensioners. However, such an idea has been squarely rejected by enterprises, as high social insurance payments will erode their competitiveness.

The Vietnam Association of Seafood Exporters and Producers in a letter to the labor ministry says that payments to the social insurance fund have been the highest among ASEAN countries, according to Phap Luat. In the petition, the association says the total payment has amounted to 32% of a worker’s salary, comprising 22% paid by the employer and 10% by the worker, let alone a labor union fee of 3%. “Within ASEAN, the payment is only 13% of the monthly wage in Malaysia, 10% in the Philippines, 8% in Indonesia, and 5% in Thailand,” the association’s letter is quoted in Phap Luat. It therefore suggests that the payment in Vietnam be reduced by 4 percentage points to the same level as in 2010.

Pham Minh Huan, former Deputy Minister of Labor, Invalids and Social Affairs, agrees that it is impossible to increase payments to the social insurance fund, given the high ratio now. He therefore observes in Tien Phong that the only way available is to extend the retirement age, but there will emerge numerous problems.

“The pressure on job creation will be huge when many old people are retained, resulting in a severe shortage of jobs for newcomers,” Huan is quoted as saying.

In fact, the initiative to extend the retirement age has been revisited time and again over the past several years, without any consensus achieved. According to Dien Dan Doanh Nghiep, the issue was first raised when the National Assembly discussed the Law on Gender Equality, reviewed when authorities made amendments to the Labor Code, and included in the draft Law on Social Insurance. In all those occasions, the initiative was always rejected by the National Assembly due to negative impacts on the society.

And such impacts are unlikely to be addressed this time.

In a recent NA session, Bui Sy Loi, vice chair of the NA Commission for Social Issues, said that the retirement age should be considered on the basis of laborers’ health, according to news site Vnexpress. Even in Japan where life expectancy is much longer, at 90, the retirement age is still set at 60, he stressed. Another more worrying problem is the rising unemployment rate among young people, especially fresh graduates from higher-education institutes. “If the retirement age is extended, how should we secure jobs for fresh graduates?” pondered Loi, adding measures should be weighed so as to prevent braindrain.

Nguyen Dinh Quang, a senior official at the Vietnam General Confederation of Labor, says in Lao Dong that extending the retirement age is an extremely complicated issue, and the Government should weigh all pros and cons of such an approach. According to Quang, Vietnam should learn from experiences of those countries with similar conditions. The retirement age is just 55 years in Indonesia, Malaysia and Thailand. It is not suitable for manual workers as well as those working under toxic conditions to work longer years, he stresses.

In fact, almost all manual workers reject the scheme.

Tran Van Trieu, head of the Legal Consultancy Center under the HCMC Labor Union, says in Tuoi Tre that “almost 100% of manual workers disagree with the retirement age extension…, while among white-collar workers, the proportion is 50%.”

Similarly, a survey conducted among 5,000 blue-collar workers in textile, fishery, sugar and electronic industries shows that nearly 100% do not want to extend the retirement age, and only 11%-15% agree to work after the designated age provided that the pay is higher, according to news site kinhtedothi.vn

If the retirement age is extended as proposed, the social insurance fund may benefit, but such a change will exert greater pressure on the State budget, since State employees with higher seniority enjoy much higher salaries than young recruits, according to Tuoi Tre. That is not to mention numerous laws must be changed or amended if the retirement age is extended as sought by the labor ministry.

The Ministry of Labor, Invalids and Social Affairs will submit the draft law on extending the retirement age to the National Assembly for preview in May next year, and expects the law to be passed in October, according to Nguoi Lao Dong. However, given numerous complications to ensue upon the change, the retirement age extension will most likely remain in suspense.

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