Proposal to Increase Unemployment Benefits to 75%

The Vietnam General Confederation of Labor has proposed increasing the unemployment benefit rate to 75% instead of the current 60% and removing the maximum 12-month limit, making the benefit duration proportional to the period of unemployment insurance contributions.

In the draft amendment to the Employment Law currently under public consultation, the Ministry of Labor, War Invalids, and Social Affairs (the agency responsible for drafting the law) has proposed that the monthly unemployment benefit be set at 60% of the average monthly salary on which unemployment insurance (UI) contributions were paid during the six consecutive months prior to job termination, with a maximum cap of five times the regional minimum wage. The maximum benefit duration is 12 months.

In response to the draft, the Vietnam General Confederation of Labor has proposed increasing the monthly unemployment benefit to 75% of the average UI-contributed salary before job termination. This is because most businesses pay UI contributions based on the regional minimum wage, resulting in very low unemployment benefits for workers.

With the average UI-contributed salary at approximately 5.56 million VND in the 2022-2023 period, unemployed workers currently receive around 3.3 million VND per month in benefits. Meanwhile, according to trade union statistics, the average household expenditure for workers in mid-2023 was around 11.7 million VND per month. The current unemployment benefit covers less than 30% of actual living expenses, making it insufficient to meet workers' basic needs.

Workers seeking new job opportunities at the Hanoi Employment Service Center. Photo: Ngoc Thanh

The labor union has also proposed amending the duration of unemployment benefits by removing the fixed maximum limit of 12 months and instead allowing workers to receive benefits in proportion to their contribution period. The purpose of unemployment insurance is to support workers using the funds they have contributed. Eliminating the 12-month cap would enable long-term contributors to receive financial assistance for sustaining their livelihood and employment.

"The 12-month limit may encourage workers who have contributed for 12 years to quit their jobs to avoid losing out on benefits, or even withdraw their social insurance in a lump sum. This would result in businesses losing experienced workers," the labor union stated. They emphasized that when workers do not see clear benefits, they are less likely to continue participating in unemployment insurance and may opt for alternative forms of coverage.

The draft amendment to the Employment Law proposes that workers who unilaterally terminate their contracts, are dismissed, or are disciplined with forced termination will not be eligible for unemployment benefits. However, the Vietnam General Confederation of Labor has called for reconsideration of this provision to ensure fairness and support workers in transitioning to new jobs. Labor unions and businesses in southern Vietnam have collectively voiced concerns that excluding workers who unilaterally terminate their contracts or are dismissed from receiving benefits is too restrictive. They argue that termination or dismissal can occur for various reasons, not always due to the worker’s fault.

The labor union highlighted that many businesses unjustly dismiss workers or use tactics such as increasing KPIs and cutting bonuses to pressure employees into resigning and avoid legal liabilities. Denying unemployment benefits during the job-seeking period contradicts the purpose of unemployment insurance as a financial safety net, the labor union stated. Under the current law, employees contribute 1% of their monthly salary to the Unemployment Insurance Fund (UIF), while businesses contribute 1% of the total payroll of insured workers. Within three months of contract termination, workers must submit an application at their local Employment Service Center to claim benefits.

The benefit duration is based on months of contributions, with 12 to 36 months of contributions entitling workers to three months of benefits, and each additional 12 months granting one extra month, with a maximum duration of 12 months. The monthly unemployment benefit is 60% of the average salary on which UI contributions were paid for the six months before termination. However, benefits cannot exceed five times the base salary or regional minimum wage. Currently, the maximum benefit per month is 9 million VND for state-sector employees and 23.4 million VND for private-sector employees.

The Employment Law draft, under public consultation since late March, includes several new policy proposals, such as requiring workers with contracts as short as one month to contribute to UI, revising the fixed 1% UI contribution rate, limiting students to working no more than 20 hours per week, and allowing elderly individuals to receive loans to start businesses and create jobs.

- Hong Chieu - Source: https://vnexpress.net/ 

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