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Increasing social insurance coverage in Viet Nam’s SMEs

Author

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  • Paulette Castel
  • Alexander Pick

Abstract

Viet Nam has made significant progress in expanding social insurance coverage in recent years. However, coverage amongst small and medium-sized enterprises (SMEs) remains very low and very few workers in this sector are expected to receive a pension in retirement. Drawing on two datasets for SMEs in Viet Nam, this paper seeks to explain this phenomenon by examining the characteristics of enterprises that are enrolled and those that opt out, and it identifies possible barriers to enrolment, such as high contribution rates. It also examines how enforcement mechanisms and formalisation policies might deter enterprises from enrolling. Drawing on lessons from international experience, the paper recommends a series of policy responses that seek both to address these barriers and to protect the livelihoods of those workers who are not yet covered.

Suggested Citation

  • Paulette Castel & Alexander Pick, 2018. "Increasing social insurance coverage in Viet Nam’s SMEs," OECD Development Policy Papers 13, OECD Publishing.
  • Handle: RePEc:oec:dcdaab:13-en
    DOI: 10.1787/ec14725e-en
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    File URL: https://doi.org/10.1787/ec14725e-en
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    Keywords

    formalisation; minimum wage; SMEs; social insurance; social protection; Viet Nam;

    JEL classification:

    • H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies
    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs
    • J32 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Nonwage Labor Costs and Benefits; Retirement Plans; Private Pensions

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