Jobless at 30: welfare crisis looms large in Vietnam

By Hoang Nguyen

Wed, 6/27/2018 | 11:18 (GMT+7)

Young employees dismissed by firms to save wages and social insurance costs are seeking ‘retirement’ benefits.

Vietnamese employees in their 30s are being let go to save wages and social insurance costs.

Hong Hanh, 35, sees a pattern in enterprises getting rid of their employees in their thirties.

Short-term contracts are not renewed and those with long-term contracts are given unsuitable jobs to pressurize them to quit on their own, she said.

The resident of Dong Anh District of Hanoi used to work for a company in the North Thang Long Industrial Park. After being transferred to another unit where she felt the job was not a good fit for her, she resigned.

Hanh said she was now looking for a job at Dong Anh job promotion center in the capital city. 

Duc Long, who has just quit his job as a mechanic at the Quang Minh Industrial Park in Hanoi, said: “I quit because I do not feel the job fit my physical well-being anymore.

“I’m nearly 40 years old now and I want a job with greater flexibility,” he said as he claimed his social security payment.

At a National Assembly session last week, Ngo Duy Hieu, head of the Department of Labor Relations under the Vietnam General Confederation of Labor (VGCL), noted that some companies, including FDI firms, have ended contracts with workers over 35 because they feel some of the jobs ‘no longer’ fit the workers’ ages.

He also conceded that there was another reason for the firms letting go off workers aged 30-35. He said employers do not want to spend more on wages and social security payments to senior employees.

The way firms make employees leave the companies is typical - give them more work pressure or just end their labor contracts without bothering to explain why, he added.

A survey by VGCL on reasons for the termination of labor contracts by FDI firms showed that 40 percent of the employees left their companies due to pressures of working overtime or unable to achieve high targets. Around 15 percent said they were told they were physically unfit fit for the job. Another 13 percent said they were fired with no explanation.

However, no thorough statistics have been compiled for employees in their 30s being sacked by FDI firms, Pham Minh Huan, Deputy Minister of Labor, Invalids and Social Affairs told Vietnam News Agency.

He said recent information about major layoffs of employees over 30 was specific to one place or one sector.

“Hiring or firing is up to employers and employees to decide together. In a market economy, companies will expand production and recruit new employees when they make profit. But if they face market challenges and have to reduce production, they will lay off employees. It is inevitable.”

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Social security impacts

Regardless of the reason employees are leaving the labor market in their 30s, one big impact of the exodus is being felt by the country’s welfare system.

Le Dinh Quang, deputy head of the labor relations department under VGCL, told the media at a briefing last month that the number of people claiming lump-sum social security payment has been increasing significantly.

In recent years, an average of 700,000 people have been submitting claims for lump-sum payments every year. The figure was 300,000 in the first five months on this year. What is noticeable is the high presence of people between 35-40 years in this group.

“More than 10,000 people have registered for unemployment benefits in Hanoi and 90 percent of them are just over 35 years old,” he said.

The situation can be found at labor-intensive industries like the textile and garment, footwear and seafood, he added.

Quang explained that workers in these sectors usually resign when they are over 30 years old because they no longer have the health to perform duties as well as they did in their 20s.

Besides, firms also try to persuade workers to leave the job and take the lump-sum health and social security payment, as the longer the employees work, the higher the social security payments the company has to make.

Dao Viet Anh, deputy general director of Vietnam Social Security, said employees leaving jobs seeking early retirement and withdrawing from social security scheme could lead to an imbalance in the pension fund.

Anh said the longer employees stayed in the social security scheme, the more benefits they would get; however, it is up to them to decide.

He said the social security reform plan has proposed to reduce the minimum compulsory time to pay for social security from 20 years to 15 years and later, to 10 years.

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