Compulsory Social Security Participation Revealed Preferences

Abstract

Since 1947, the Vietnam Social Security has provided social insurance to public servants and armed forces personnel in Vietnam. In 1995, the Government merged the social insurance unit of the Ministry of Labour, Invalids and Social Affairs with that of the Vietnam General Confederation of Labor. At the same time the system became mandatory to the employees of the newly developing private sector. The consolidated system is publicly managed by the Vietnamese Social Security administration (VSS) that collects contributions and pay social insurance benefits (in case of sickness and sick leaves, maternity and family planning related leaves, work injury and professional disease, survivorship and to people that reached pension ages). The mandatory coverage 2 of the private sector was first restricted to the enterprises with 10 or more employees. Since 2005, all the types of enterprises, whatever their size, have the obligation to register to VSS the employees with a labor contract of 3 months or longer.

Social security and firm performance: The case of Vietnamese SMEs

“…9 Moreover, when contributions are paid they generally do not correspond to the rates specified by law. 10 For instance, Thanh and Castel (2009) found that the average social insurance contribution rate was around 7.6 per cent of current wages, while the statutory rate was 23 per cent. This discrepancy may be due to various factors, including under-reporting of wages, payment of contributions based on minimum wages rather than actual wages, and failure to register all 6 Based on the notion of employment as "social exchange" (Blau, 1964), the availability of various inducements, such as pay, benefits and internal mobility, can lead employees to perceive their organization as valuing their contributions (Allen, Shore and Griffeth, 2003;Rhoades and Eisenberger, 2002).…”

Sécurité sociale et résultats des entreprises: l'exemple des PME au Viet Nam

“…En outre, lorsque les cotisations sont effectivement versées, elles ne le sont pas forcément au taux spécifié par la loi 10 . Ainsi Thanh et Castel (2009) ont-ils constaté que le taux moyen de cotisation à l'assurance sociale se situait autour de 7,6 pour cent des salaires effectifs, alors que le taux légal était de 23 pour cent. Ce décalage s'explique par plusieurs facteurs: sous-déclaration des salaires, versement des contributions sur la base du salaire minimum plutôt que du salaire effectif, déclaration partielle des salariés à la sécurité sociale.…”