Social welfare in the socialist – oriented market economy of Vietnam at present

1. Overview of social Welfare and Social Welfare in Vietnam

Concept and perception of social welfare

Social welfare is a part of national income used to satisfy the material, spiritual and social human needs of a society mainly redistributed, in addition to the distribution according to labor. The three basic factors  in ensuring social welfare are the state, the labor market and the population (individuals/families).

Social welfare includes social expenses, such as pension benefits, social insurance benefits; scholarships for pupils, students, and expenses for free education; health care, respite care, convalescence, kindergarten, preschool, purified water and communication services. With such content, social welfare’s aim is to reduce social inequality, ensure equitable distribution among all members of society  so that they can enjoy the fruits of social progress. Depending on the level of socio-economic development, the welfare funds are usually divided into  three basic groups: State welfare fund; welfare fund of enterprisesand collective welfare fund of cooperatives and manufacturing corporations⁽¹⁾.

Ensuring social welfare for the people is always concerned by the Party and the State of Vietnam. From the early days of the country's establishment, in the context of the raging starvation, on September 28, 1945, President Ho Chi Minh called for  the people nationwide to “fast for one meal every 10 days and 3 meals every month and  give the saved rice  (a cup of rice for each meal) to the poor.” As a result, by mobilizing resources among the people, tens of thousands of poor people have received food, foodstuff and clothing which helped them overcome the threat of  famine. In 1945, the State issued a policy  stipulating that fired workers are entitled to unemployment benefits. The 1946 Constitution and several decrees issued thereafter prescribed social welfare benefits to the people who have sickness, accidents or retirement⁽²⁾. In 1947, the “disability benefits” policy for war invalids and the “widower benefits”  policy for martyrs’ families were also promulgated.

After peace was restored in 1954, Vietnam built a centrally planned economy in the North and applied this model  to the whole country when the country was reunified in 1975 and oriented towards the welfare state model (subsidized state). During this period, specific regulations on social insurance were issued, contributing to ensuring an alternative income for employees in case of illness, occupational accident - industrial disease, medical incapacity, maternity leave, retirement, death⁽³⁾; Moreover, social objects, people suffering from war accidents were also supported⁽⁴⁾. During the period of resistance against the US imperialists to save the country, pensioners, wounded soldiers, martyrs' families and those entitled to similar benefits were assisted  at home, in person, on time and fully.

After the country's reunification, even during the 1980s economic crisis, besides general policies, the State of Vietnam encouraged enterprises to ensure the workers’ lives and welfare.

Implementing the renovation policies (launched since 1986), the economy changed from a subsidized economy towards a socialist-oriented market economy. From the perspective of social management, the welfare state model is gradually transformed into the social state model to promote the roles and responsibilities of the actors (the State, the enterprises, the people and other social partners) in contributing to economic development and enjoying the fruits of social progress. The documents of the 12^th National Congress of the Communist Party of Vietnam stated  that the people can enjoy better and better the fruits of the national renovation, construction and development. Article 34 of the 2013 Constitution states: “Citizens have the right to social security” and Clause 2, Article 59 stipulates: “The State creates equal opportunities for citizens to enjoy social welfare, develops the social security system, adopts policies to assist the elderly, the disabled, the poor and the disadvantaged”.

Through institutionalization of the Party’s policies and the State’s constitution, the regulations concerning sickness, maternity, occupational accident - industrial disease, retirement, widower benefits , monthly cash allowance for subjects of social protection, support for the whole or a part of the health insurance value, tuition fee exemption and reduction, cash support and preferential credits for the disadvantaged to have housing, residential land and to get access to clean water, information and communication, public transport facilities and art works/programs, scenic spots, historical sites, etc… are specified in laws and policies. Basically, the social welfare regulations have performed well their function of income redistribution, supporting people to enjoy the fruits of social progress .

Thus, it can be seen that: 1-Social welfare is a part of national income used to contribute to satisfying the material and spiritual needs of the members of society; 2-Implementation of social welfare means the implementation of redistribution, in addition to distribution according to labor; 3-Social welfare is a measure to reduce social inequality. In Vietnam, social welfare is funded  through 3 financial sources: 1-State’s budget; 2-Contributions of market participants; 3-Mobilization from the community.

Regarding  the  level of satisfactions of the current welfare system

The document of the 10^th Party Congress clearly states that it is required to  combine economic goals with social goals nationwide, in each field and locality as well as ensure  social progress and justice in each step and policy of development; economic growth and  development of culture, health care, education, among others, must go hand in hand. Besides, social problems need to be well resolved for the sake of human development. It is necessary to implementing the distribution according to labor, economic efficiency, and to  the contribution of capital and other resources through social welfare. The document of the 12th Party Congress continues to affirm that it should strengthen the link between economic and social policies and between economic development and human well-being  to ensure that people enjoy the fruits of the renovation, construction and development of the country. All people have equal access to opportunities development.

However, at present, the coverage of social welfare is still limited. It mainly targets the better-off (essentially through insurance policies) and the poor and the near-poor (principally  through social assistance policies funded  by the state budget and the community)⁽⁵⁾. The emerging middle-income group does not seem to be given adequate attention. This group does not participate in social insurance and is not entitled to social assistance benefits funded by the state budget although it is an active but vulnerable-to-risk and prone-to-poverty group. Income inequality also leads to disparities of some population groups and regions in access to health and education services.

The state budget expenditure on social welfare has gradually increased annually, but its proportion of spending in the total state budget expenditure and compared to GDP tends to decrease regularly. In particular, the proportion of state budget spending on social security in total state budget expenditure has decreased from 10.58% in 2012 to 5.67% in 2018; compared to GDP, it fell from 2.95% to 1.9% during the same period (6). Meanwhile, according to the Asian Development Bank (ADB), Asian countries’social security spending  between 2009 and 2015 increased from 3.4% to 4.2% of GDP⁽⁷⁾.

In the private sector (enterprises), social welfare for employees and the community has not been given due attention.

2. Solutions to enhance social welfare in the socialist-oriented market economy in Vietnam at present

In the process of developing a socialist-oriented market economy, the Party and the State of Vietnam have always paid great attention to formulating and implementing social policies and social welfare, considering this as both a goal and a driving force for sustainable development and socio-political stability, demonstrating the human nature of the socialist regime. To enhance social welfare in the current market economy, Vietnam must focus on the following solutions:

Firstly, it is compulsory to have proper awareness and well implement  programs on social welfare, create  a social environment in which all people live in safety and security with minimum risks of instability in life. Stabilizing the people's lives will  avoid the risks of disagreements and social conflicts. Some social welfare regulations towards social justice (benefits are distributed and redistributed, in addition to distribution according to labor) will create equality for everyone (This depends on the extent and the level of policy implementation). This is really necessary to get better social relationships. Furthermore, good social welfare also creates a basis (material and non-material) to form living values and cultural standards in human behavior in society, between human being, between individuals and organizations, communities, society and between human being and the living environment (both natural and social).

Secondly, social welfare has been becoming one of the central economic and social issues of any country. At the same time, it is also an international issue common to all countries in the world. The State has the responsibility to well implement relevant procedures, programs and policies in the current situation as well as in the future. In Vietnam, the whole political system needs to play the core and nuclear role in implementing the Party's policy on ensuring social security and social welfare, as well as strengthen coordination between sectors and localities and promote the role of the Vietnam Fatherland Front, the socio-political organizations, the participation of the whole society and the people.

Thirdly, the implementation of social welfare must be considered as an important part of the socio-economic development strategy. The importance and significance of effectuating all aspects of social welfare must be increasingly emphasized and better implemented in association with the development process and and it must be considered  as one of the most essential conditions to ensure sustainable development.

Fourthly, through policies and programs related to social welfare, a due attention must be paid to appropriate subjects of social welfare on the basis of their needs to fulfil their  essential  need in the timely manner

Fifthly, along with socio-economic development, it is necessary to design assistance programs in a flexible way which can be adjusted rapidly, especially to meet the needs of people and communities after epidemics, natural disasters and catastrophes; ensure timely support for the disadvantaged to overcome risks, boost their resilience and encourage them to proactively surmount  economic and social shocks, contributing to ensuring social stability and justice, social security, human security and narrowing the inequality gap; extend coverage of social benefits, promptly meet the needs of people. During the  implementation process, because many social benefits  follow the principle of redistribution, in addition to distribution according to labor, it is necessary to have an appropriate method and a reasonable set of criteria and indicators to effectively reduce social inequality, enabling a gradual narrowing of the income gap  and quality of life...

Sixthly, it is necessary to strengthen the dominant role of the State in all aspects of the social welfare implementation. Appropriate mechanisms, institutions, policies and solutions are needed to increase understanding, consensus on awareness and to expand the participation of all walks of life in social welfare. The role of organizations, especially enterprises and other economic organizations should be strengthened. The quantity and the quality of basic social services need to be improved. The healthcare system should be developed to be more equitable, high-quality and effective; the grassroots healthcare and preventive healthcare should be paid more attention; it is necessary to well solve the child malnutrition problem. Facilities should be improved to ensure the quality of educational activities for ethnic minorities and people living in mountainous areas and islands. Socialization should be continuely promoted to ensure housing for people, especially migrants and people affected by natural disasters and climate change. Besides, it is indispensable to diversify investments as well as to encourage people's participation in clean water supply and rural environmental sanitation. It should focus on remote, saline, drought-prone, flood-prone and water resources depletion areas. Establishing a support system and criteria should be emphasized to ensure the most effective implementation./.

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(1) Encyclopedic Dictionary of Vietnam, Vietnam Encyclopedia Publishing House, Hanoi, 2003, Vol. 3

(2) See next page

(2), (3) Decree No. 218-CP, dated December 27, 1961, of the Government Council on “the Provisional regulation on social insurance regimes for civil servants and public employees".

(4) Circulars of the Government Council: No. 157-CP, dated August 25, 1966, on “policies towards people suffering from war accidents”; No. 202-CP, November 26, 1966, “On policies towards the elderly, the helpless orphans and the disabled”

(5) Ministry of Planning and Investment: The Vietnam Economic Policy Framework (December 2018) has shown that the well-off group, also known as the global middle class, has a consumption level of more than $15 PPP/person/day; the poor and near-poor groups are the populations with a consumption level of less than $5.5 PPP/person/day; emerging middle class with a consumption of $ 5.5 – 15 PPP/person/day (currently accounting for nearly 60% of the population)

(6) Calculated from the data of the state budget spending on social security of the Ministry of Finance and the annual GDP from Statistical Yearbooks of the General Statistics Office

(7) ADB: Fiscal and Financial Challenges for Social Security, 2018