evaluating the implementation of umemployment insurance in thai nguyen province

Thai Nguyen University
Socialist Republic of Vietnam




Southern Luzon State University
Republic of Philippines


EVALUATING THE IMPLEMENTATION
OF UNEMPLOYMENT INSURANCE
IN THAI NGUYEN PROVINCE



DOCTOR
OF BUSINESS ADMINISTRATION



BY
PHUNG THI CAM CHAU – ROSE



August, 2013
i

ACKNOWLEDGEMENTS

I would like to extend my sincere thanks to Thai Nguyen University (Vietnam),
International training center (Thai Nguyen University, College of Agricultural and
Forestry), Southern Luzon State University (Philippines) for having organized this
doctorate training course in business administration training, which I have found a
valuable opportunity for me to further upgrade my knowledge and capacity.
I feel grateful for my lectures have provided their students with their great
knowledge and guidance throughout the course.
I am indebted to the administrators of Thai Nguyen College of Economics and
Finance, and Vietnam Trade Union University for their facilitation for my attendance
to this course.
I owe my deep gratitude to Assoc Prof Dr Do Anh Tai, my supervisor and
instructor, for his kind instructions and valuable remarks towards my completion of
this thesis.
I would also like to say thanks to my relatives, friends and colleagues. Without
their donations of materials, data processing, and translation, this thesis would not
have been made possible.
I am indebted to many other people. They are writers of useful materials in
books, internet, and newspapers.
And finally, my big thanks to my family whose encouragement and supports
have always been with me from the beginning to completion of this thesis.


ii

TABLE OF CONTENTS
ACKNOWLEDGEMENTS i
TABLE OF CONTENTS ii
ABSTRACT v

LIST OF TABLES vii
LIST OF FIGURES viii
CHAPTER I: INTRODUCTION 1
BACKGROUND OF THE STUDY 3
STATEMENT OF THE PROBLEM 5
SIGNIFICANCE OF THE STUDY 6
SCOPE AND LIMITATIONS 8
DEFINITION OF TERMS 8
CHAPTER II: REVIEW OF RELATED LITERATURE AND STUDIES 11
REVIEW OF RELATED LITERATURE 11
Unemployment insurance 11
Coverage of unemployment insurance 19
Conditions for the enjoyment of unemployment insurance 21
Unemployment insurance fund 23
Unemployment insurance regimes 25
Procedures for unemployment insurance regimes 28
REVIEW OF RELATED STUDIES 34
CONCEPTUAL FRAMEWORK 35
CHAPTER III: METHODOLOGY 37
LOCALE OF THE STUDY 37
iii

RESEARCH DESIGN 41
POPULATION AND SAMPLING 41
RESEARCH INSTRUMENTATION 42
VALIDATION OF THE INSTRUMENT 43
DATA GATHERING PROCEDURE 43
DATA PROCESSING METHOD 44
STATISTICAL TREATMENT 44
CHAPTER IV: PRESENTATION, ANALYSIS AND INTERPRETATION OF DATA 46

PROFILE OF RESPONDENTS 46
THE IMPLEMENTATION OF UNEMPLOYMENT INSURANCE IN THAI
NGUYEN PROVINCE 51
Coverage of unemployment insurance 51
Conditions for the enjoyment of unemployment insurance 58
Unemployment insurance fund 62
Unemployment insurance regimes 66
Procedures for unemployment insurance regimes 70
CHAPTER V: SUMMARY, FINDINGS, CONCLUSIONS AND RECOMMENDATION 78
SUMMARY OF THE FINDINGS 78
Characteristics of the respondents 79
The respondents ’perception on the implementation of unemployment insurance 80
The differences between the perceptions of employees are grouped in terms of
type of unit that employees had worked before unemployment 83
CONCLUSIONS 85
RECOMMENDATION 86
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Recommendations on the coverage of unemployment insurance 86
Recommendations on conditions for the enjoyment of unemployment insurance 88
Recommendations on unemployment insurance fund 88
Recommendations on unemployment insurance regimes 89
Recommendations on procedures for unemployment insurance regimes 89
BIBLIOGRAPHY 91
APPENDIX A 94
APPENDIX B 95
APPENDIX C 100
APPENDIX D 104

v

ABSTRACT
The main purpose of this study is evaluating the implementation of
unemployment insurance (UI) in Thai Nguyen province in 2012 and propose some
recommendations to improve the implementation of the policy in the coming years.
In solving the research problem mentioned previously, this study has the
following objectives: (1) to describe the characteristics of the respondents, (2) to
determine the perception of the respondents on the implementation of UI in terms of:
coverage of UI; conditions for enjoying UI; UI fund; UI regimes; procedures for UI
regimes, (3) to compare the perceived implementation of the UI when the respondents
are grouped in terms of: type of unit that employees had worked before
unemployment, (4) to propose some recommendations to improve the implementation
of UI in Thai Nguyen province in the coming years.
In terms of structure, the thesis has five chapters. The thesis begins by defining
the research problem and questions, and providing a justification for the research study.
Chapter one also reviews the research background, and presents definitions of
terms, significance and scope of the study.
Chapter two examines the UI theory, current UI policy in Vietnam and its
implementation. This chapter also reviews previous research related to UI.
Chapter three discusses aspects of the research methodology including
research design, data collection and data analysis methods, and hypothesis testing to
support the model. Objectives of this chapter are: (1) to justify the research
methodology of this study, (2) to explain research methodology used in the study, and
(3) to demonstrate how research design, and data collection and analysis can be
utilized in this study to answer the research questions outlined in the chapter one.
vi

Chapter four presents descriptive findings of the profile of respondents, the
implementation of UI in Thai Nguyen province. Objectives of this chapter are present
gathered data, analyze and interpret about them.
Finally, chapter five where findings and conclusions are summarized and
recommendation are indicated for the current UI policy and its implementation in
Thai Nguyen province.
This study attempts to know the status of the implementation of UI in Thai
Nguyen province in 2012, especially points out shortcomings of UI and the
difficulties and limited problems of implementation process of this policy. It also
provides valuable recommendations refer to the UI policies promulgate agencies and
the UI management agencies in Thai Nguyen province in particular and the country in
general, have issued this policy more completely, have many solutions to implement it
more effectively.











vii

LIST OF TABLES
Table 1: Profile of respondents 46
Table 2: Respondents’ perceptions on implementation of UI in Thai Nguyen province
in terms of coverage of UI 54

Table 3: Implementation of UI in Thai Nguyen province in terms of coverage of UI
based on the evaluation of the respondents have been grouped 55
Table 4: Respondents’ perception on implementation of UI in Thai Nguyen province in
terms of conditions for the enjoyment of UI 60
Table 5: Implementation of UI in Thai Nguyen province in terms of conditions for the
enjoyment of UI based on the evaluation of the respondents have been grouped 61
Table 6: The respondents’ perception on implementation of UI in Thai Nguyen
province in terms of UI fund 64
Table 7: Implementation of UI in Thai Nguyen province in terms of UI fund based on
the evaluation of the respondents have been grouped 65
Table 8: The respondents’ perception on implementation of UI in Thai Nguyen
province in terms of UI regimes 68
Table 9: Implementation of UI in Thai Nguyen province in terms of UI regimes based
on the evaluation of the respondents have been grouped 69
Table 10: The respondents’ perception on implementation of UI in Thai Nguyen
province in terms of procedures for UI regimes 72
Table 11: Implementation of UI in Thai Nguyen province in terms of procedures for
UI regimes based on the evaluation of the respondents have been grouped 73
Table 12: Implementation of UI in Thai Nguyen province based on the evaluation of
the respondents have been grouped 75
viii

LIST OF FIGURES
Figure 1 Conceptual Model Showing the implementation of Unemployment insurance
in Thai Nguyen province 36
Figure 2 Map of Vietnam 39
Figure 3 Map of Thai Nguyen province 40


1

CHAPTER I
INTRODUCTION

Today, besides the development of all aspects, the world is faced with many
challenges of economic, political and social. Along with large uncertainties such as
war, violence, crime, social inequality, etc., unemployment is also becoming a hot
concern, exceeding all matters of common worrying, especially when the economic
financial crisis knock to each individual, each household in each country .
Unemployment affects not only for each employee and their families.
Unemployment of large numbers of individuals will also have very negative impacts
on society: for individuals, for economy, for the nations.
However, in market economies, unemployment is inevitable phenomenon. It
means that if there is a market economy, there is still unemployment. The problem
posed is to control the allowed unemployment rate. According to economists,
maintaining a certain unemployment rate can stimulate economic growth. But the
unemployment rate increase exceeding the permitted level will affect greatly to the
socio-economic development of the country. Because of the impact of scientific and
technological revolution and globalization, unemployment is worsening.
Unemployment became one of the problematic issues in lots of countries, which
influences strongly on the development and stability of economic - political - social
status of each country. So governments have the responses policies to resolve these two
issues depending on their conditions in each period. Among them, the UI policies are
built or improved in many countries to protect workers avoiding the feeling of
uncertainty about the economy and society.

2
When workers lose their jobs, they lose income. Hence, one of the positive
solutions is to invest to create new jobs. However this is not always possible.
Sometimes putting more money into the not strong capital economy can lead to
inflation and economic crisis, exacerbated unemployment. There is another solution

to protect workers avoiding the inadequacy of the lost jobs, so that society needs to
give them an income to offset income lost through UI. This is one of the measures
which have been interested in many countries because it not only ensures life for
individuals who are unemployed but also contributes to social stability. UI is the
process of formation and use of funds through the financial contributions of the
employee, the employer and the help of the state, in order to support of income for
workers in period they have lost their jobs, enabling them to find new jobs in the
labor market. This has important implications for individual workers and companies,
contributing to balancing role in the economy, helping to decrease social stress
caused by unemployment. That is one of the tools to implement social security
policies of each country.
Since Vietnam has begun its switch to market economy and integration into
the world economy, besides the economic - social achievement, unemployment has
been one of the very urgent problems. In our labor market, labor supply is greater than
labor demand. Every year, from 1.1 to 1.2 million people entered the work force, but
the labor’s absorptive capacity of the economy is limited. In addition, no trained or
skilled workers are high, basic training and technical workers is short. This is the
cause of unemployment or underemployment is increasingly severe. Although the
labor market needs but the level of workers do not meet the criteria of the job.
Besides, in the process of industrialization, modernization and economic

3
restructuring, innovation, sort of state enterprises, quite huge number of workers, so
many different cases, are terminated their work contracts. Moreover, in the context of
economic crisis in recent years, many small and medium enterprises, department
accounting about 98% of enterprises in Vietnam, to cut staff, proceed to or went
bankrupt, leaving workers lose their jobs. The unemployed workers fell into economic
difficulties, depressed in spirit, very easy to fall into evils. This effects to social order
- security largely.
In this situation, UI, as a mode of social insurance and a component of social

security, has been built and was officially implemented in 2009.
BACKGROUND OF THE STUDY
In Vietnam, UI was adopted formally from 01/01/2009 under the provisions of
Law on Social Insurance was enacted in 2006 with the following main contents:
coverage of UI; conditions for the enjoyment of UI; UI fund; UI regimes; procedures
for UI regimes.
UI is a policy to assist the unemployed to replace or partially offset the income
of workers when they lose income due to unemployment and more importantly
support the unemployed receive vocational training, supported employment for
workers soon have a job, have a stable income and life.
Nationwide, the total number of employees was 49.322 million in 2009, nearly
50.393 million in 2010, over 51.398 million people in 2011, the unemployment rate
(calculated width in urban areas) was 4.60% in 2009, 4.29% in 2010, 3.60% in 2011.
Particularly in Thai Nguyen province, the total number of employees was 665,652 people
in 2009; 677,070 people in 2010; and 685,630 people in 2011; unemployment rate
(calculated width in urban areas) was 4.46% in 2009, 4.24% in 2010, and 3.75% in 2011.

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The author mentions a few figures briefly to help the readers see that the
number of people is likely affected by the UI policy in Thai Nguyen province, as well
as across the country, especially in urban areas, is quite large.
In such a situation, 4-year experience, the implementation of this policy has
made significant achievements, but also has some limitations that should soon be
adjust to this policy performs its role in a better way.
After being in use, UI has achieved certain success. It is one of the policies
into practice quickly, are received by the employers, workers in a positive way. This
is the right policies, has a direct, practical impacts to the employees, the employers. It
contributes to ensuring social security in the country in general, in Thai Nguyen
province in particular.
However, the implementation process UI also generate many problems to be

completed, related issues: coverage of UI; conditions for the enjoyment of UI; UI fund;
UI regimes; procedures for UI regimes. Many labors did not know, or was not insured
UI, many companies "hide" the UI, contribution and regimes of UI were unreasonable,
entitlement procedures were not favorable, there were many scenes of UI fraud, etc.
What are the inadequacies of the current UI program? What do difficulties
exist in the implementation of UI? What solutions can help to improve the
effectiveness of UI? The author has spent a lot of concern before those questions.
Having all these premises in mind, the researcher attempted to find out successful and
limitation of the implementation of UI in Thai Nguyen province, then give some
recommendations based on the research results. As a law lecturer with passion for
researching and teaching law of labor and social security, also derived from the
responsibility of a person was born and raised in the land of Thai Nguyen, in the

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above problem, the authors decided to select the topic "Evaluating the implementation
of unemployment insurance in Thai Nguyen province" for her research.
STATEMENT OF THE PROBLEM
The main purposes of this study are evaluating the implementation of UI in
Thai Nguyen province in 2012 and propose some recommendations to improve the
implementation of the policy in the coming years.
In solving the research problem mentioned previously, this study has the
following objectives:
1. To describe the characteristics of the respondents.
2. To determine the perception of the respondents on the implementation of UI
in terms of: Coverage of UI; Conditions for the enjoyment of UI; UI fund; UI
regimes; Procedures for UI regimes.
3. To compare the perceived implementation of the UI when the respondents
are grouped in terms of: Type of unit that employees had worked before
unemployment.
4. To propose some recommendations to improve the implementation of UI in

Thai Nguyen province in the coming years.
Specifically, it sought answers to the following questions:
1. What is the profile of the respondents in terms of: Age; Sex; Type of unit
that employees had worked before unemployment; Type of labor contract/ work
contract had been signed before unemployment; Current job status; Time has
participated in UI; UI enjoy status.
2. What is the perception of respondents on the UI in Thai Nguyen province in
terms of: Coverage of UI; Conditions for the enjoyment of UI; UI fund; UI regimes;
Procedures for UI regimes.

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3. Is there significant difference between the perception of the employees are
grouped in terms of type of unit that employees had worked before unemployment (who
were entitled to UI in 2012) on the implementation of UI in Thai Nguyen province?
4. What would be the proposed recommendations to improve the
implementation of UI in Thai Nguyen province in the coming years?
SIGNIFICANCE OF THE STUDY
This study attempts to know the status of the implementation of UI in Thai
Nguyen province in 2012, then propose some solutions to improve the
implementation of UI in Thai Nguyen province in the coming years, would be
beneficial to the following:
- Employees:
This study provides employees aware of the meaning of UI for them more
clearly. Participation in UI helps for employees to work in a comfortable, because if
unfortunately unemployment, UI will create favorable conditions for them to have the
opportunity to return to the labor market, stimulating the unemployed find work in a
positive way and ready to work. Employees also have deep understanding of their
rights, their responsibilities and the responsibilities of involved agencies and
organizations in the implementation of UI. Since then, the employees will perform UI
well, to protect their UI rights.

- Trade unions in enterprises:
This study helps to organize unions in enterprises, as a collective
representation for workers, have a sense of responsibility made UI more clearly to
help employees be guaranteed the UI right. With the support of unions in the
enterprise, employees have more opportunities to participate in UI, and if

7
unemployed, they will be entitled full and timely coverage. Trade unions fulfill their
roles on UI to employees is to help business grow, contribute to progress social.
- Enterprises:
This study also helps enterprises, as the employers, aware of their obligations
on implementing UI more clearly, thus showing their responsibilities towards their
labors in particular, social responsibility in general. Good performances of UI, there
are many benefits to the enterprises. Thanks to UI, if employees loss of works,
businesses would not have to pay additional allowances for them. Moreover, when
employees know if they unemployed they would get much unemployment beneficial,
they will be more assured to work for business. This will encourage businesses to use
labor more efficiently, enabling to develop production and business of enterprises.
- The UI policies promulgate agencies and the UI management agencies:
Through the evaluation of the implementation of UI in Thai Nguyen province,
this study also points out shortcomings of UI and the difficulties and limited problems
of implementation process of this policy. The study also provides valuable
recommendations refer to the UI policies promulgate agencies and the UI
management agencies in Thai Nguyen province in particular and the country in
general, have issued this policy more completely, have many solutions to implement it
more effectively.
- Researcher:
Performing this study is an opportunity for the author to be relatively deep
understanding of one of her passion areas - UI. This also helps the author to supplement
knowledge, serve her teaching at the university where she is working better.

8
- Future Researchers:
This study could provide references for future proponents who wish to venture
a study similar to the nature of this on-going research. Thus, basic tenets on the UI
and the implementation of UI could serve as resources for other studies.
SCOPE AND LIMITATIONS
The primary intent of this study is to evaluate the implementation of UI in
Thai Nguyen province in 2012. There were 348 employees who were entitled to UI in
Thai Nguyen province used as respondents in this study.
Measurement of the implementation of UI in Thai Nguyen province is limited
to the use of questionnaires with a limited number of involved people. Checklist is
developed for the purpose of the study.
The time frame of this study covered the period from January 2012 to April 2013.
DEFINITION OF TERMS
- A definite term labor contract is a contract in which the two parties
determine the term and the time for termination of the validity of the contract as a
period of twelve (12) months to thirty six (36) months;
- A labor contract is an agreement between the employee and the employer on
the paid job, working conditions, and the rights and obligations of each party in the
labor relationship.
- A working contract is an agreement in writing by an officer or officer is
recruited and the head of public service units of the location of employment, wages,
treatment regime, working conditions rights and obligations of each party.
- An employee shall be a person of at least fifteen (15) years of age who is able
to work and has entered into a labor contract.

9
- An employer shall be an enterprise, body, or organization, or an individual who
is at least eighteen (18) years of age, employing and paying wages to an employee.

- An indefinite term labor contract is a contract in which the two parties do not
determine the term and the time for termination of the validity of the contract.
- Service unit of the State is organization which is held by the competent
authority of the State, political organizations, political organizations, socio -
established under the provisions of law, have legal status, service providers public,
state management service.
- Large enterprise is a business which is not on the scale of small and medium
enterprises.
- Small and medium enterprise is a business with a total capital of 50 billion
dongs or less, using no more than 100 employees if it operates in the field of trade and
services, and is a business with a total capital of 100 billion dongs or less, using no
more than 300 employees if it operates in other areas.
- Social insurance means the guarantee to fully or partially offset a laborer's
income that is lost or reduced due to his/her sickness, maternity, labor accident,
occupational disease, unemployment, retirement or death, on the basis of his/her
contributions to the social insurance fund.
- The labor force (economic activity population) includes all persons aged 15
years or more have a job and unemployed people in the observation period.
- The social insurance organization is a non-business organization functioning
to materialize the social insurance regimes and policies, to manage and use the social
insurance funds under the provisions of the “Law on social insurance”.
- The unemployed are those not working but seeking employment and willing
to work to generate income in cash or kind in the observation period, including those

10
who have never worked. Unemployed also include those have no active job search in
the observation period because they are arranged a new job after the observation
period, who were suspended without pay, with or without time limit or those not
actively seeking employment because they cannot find the notion that job.
- The unemployment rate is the percentage of unemployment than labor force

(economic activity population).
- Trade Union means a great socio-political organization of the working-class
and laborers. Trade Unions are founded on the voluntary basis and are a component
part of the political system of the Vietnamese society, placed under the leadership of
the Communist Party of Vietnam. Trade Unions are representatives of cadres and civil
servants, public employees, workers and other laborers (hereinafter referred to as
laborers), together with state agencies, economical organizations, social organizations
shall care and protect for laborers’ legitimate and legal rights and interests. Trade
Unions join in state management, eco-social management, inspection; examination,
supervision of activities of state agencies, organizations, units, enterprises; and
mobilization, propagation for laborers to study, improve knowledge, professional
skill, observe law, build and defend the socialist fatherland of Vietnam.
- Unemployment insurance (UI) is a federal program whereby eligible
unemployed persons receive cash benefits for a specified period of time. These benefits
are paid out of funds derived from employer, employee and government contributions.

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CHAPTER II
REVIEW OF RELATED LITERATURE AND STUDIES

This chapter presents the discussion of topics that served as background
information in conducting this study.
REVIEW OF RELATED LITERATURE
Unemployment insurance
Unemployment insurance concept
UI is a federal program whereby eligible unemployed persons receive cash benefits
for a specified period of time. These benefits are paid out of funds derived from employer,
employee and government contributions (www.entrepreneur.com/encyclopedia).
Hai Pham Van (2010) wrote: “UI is the process of organizing and using focus
monetary fund - the UI fund - is formed by the contribution of stakeholders

(employees, employers and support state) to ensure a stable life for workers and their
families facing risks of employment”.
On the other hand, Hong Do Thu (2010) said that: “UI is all legal, make
regulations on the contributions, the use of the UI fund, the payment of
unemployment allowance to offset income for workers lost employment and
performance measures for the unemployed to return to work”.
Thu Le Thi Hoai (2008) writes: "UI is a part of social insurance to protect
employees in case they lose their jobs. In addition to the payment of benefits for the
unemployed, UI was the link between the unemployed to the labor market, such as job
training, retraining, job brokerage, career counseling, support funding for the
unemployed up now"…

12
Milan Vodopivec and Minna Hahn Tong (2008) in their work named “China:
Improving UI” stated that: “The objective of a UI program is precisely that implied by
its name: compensation for income loss due to unemployment. The program provides
income protection to workers by partly replacing their lost wages with social
insurance payments. Social insurance mimics market insurance arrangements but
deviates from actuarial principles. Such payments help cushion the reduction in
consumption in the wake of job loss - that is, they smooth consumption - and may
also help alleviate poverty. Viewed from a broader, societal perspective, other
objectives of the UI program include encouraging workers to learn new skills,
providing workers with the means to conduct more extensive and more effective job
searches, redistributing income from high - to low - wage earners, and increasing
output and efficiency by promoting restructuring of enterprises or encouraging
workers to accept higher wages and thus higher-productivity - but also riskier - jobs.
Depending on the level of development of the economy and labor market, these
objectives may vary, and the relative importance of these objectives may also change
as these circumstances change. With economic development, the emphasis may shift
to preserving consumption so that the program becomes a consumption-smoothing

tool by offering a higher level of benefits”.
Milan Vodopivec and Minna Hahn Tong (2008) also stated that UI as part of
the general labor market risk management framework. They said that in order to
design the UI program appropriately, it should be recognized that there are various
labor market risk management mechanisms - informal and formal, private and public -
and that they interact in many important ways. These mechanisms can be divided into
three categories: (1) those that reduce the risk of unemployment, reducing the

13
probability of becoming unemployed or increasing the probability of leaving
unemployment if unemployed; (2) those that mitigate that risk, reducing the impact of
a future unemployment spell, and (3) those applied in response to the undesirable
event, known as coping mechanisms. Within all three categories, informal and formal
mechanisms are usually available. Formal mechanisms include both market-based and
public mechanisms. The labor market risk management framework thus enables one
to position the UI program in the context of other mechanisms that may be used to
manage the risk of unemployment and thereby allows one to pinpoint diverse
interactions that usually exist among them. Two types of interactions are particularly
important: Interactions with other policies and programs; Interactions with private risk
management mechanisms.
Characteristics of unemployment insurance
Tiep Nguyen (2011) said that UI is one of many national social economic
policies. However, this policy has distinct characteristics:
- Subject to the application of UI are in working age, with labor, lost his job
and is ready to return to work.
- The purpose of UI is not only to supply the unemployment benefits but also
to put the unemployed back to the labor market.
- UI comes from labor relations but made are mainly associated with the field
work. The collection and payment of insurance, financial assistance for unemployed
workers to stabilize life is tied to their employment, education or vocational training,

job placement, held temporary jobs for the unemployed and implementation of
policies to support the unemployed self practice, businesses receive support
unemployed people into work.

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The role of unemployment insurance
According to Tiep Nguyen (2011), UI is a very important role in the economic
life - of every national society, that is:
- UI incomes are partially offset for workers when they lose a job
In labor relations unavoidable cases workers lost their jobs, so the relationship
should be mutual interaction between three parties: The employers, insurance
agencies and social workers offset to ensure income for workers when they lose a job.
The employer shall contribute to the UI funds for laborers working for themselves and
employees also have the responsibility to contribute part of their salaries to their own
insurance. The contribution of the employer and employee is required and in
accordance with the level of play, play regularly for social insurance agencies. Social
Insurance Agency was assigned the task of managing revenues and expenditures and
UI when the insured (the employees) are eligible to get a new set of UI benefits.
- UI is a tool to redistribute income
In fact, only one department workers lose their jobs, become unemployed.
Therefore, the effect of unemployment inevitably less than the number of people
contributed to the UI fund, established the principle of UI "take cover the majority of
the few". This principle shall redistribute income among workers with incomes ranging
between high-income and low income, between those who contribute regularly and
steadily into the UI fund now, through the implementation of social justice.
- UI encourages workers to work energetically
When employees are working, they have income, even if they lose their jobs,
they are entitled to unemployment benefits. Thus, workers have "safety prop" to
ensure his life when work is temporarily unavailable. This will help workers get on

15
with the work, actively work to increase revenues, increased UI, assured of the
insurance policy when necessary.
- UI fund formed to do business development
Because raising compulsory UI for workers, as well as the employers and the
support of the state budget should have accrued a centralized monetary fund. During
idle time, the fund may invest a part of the economic activity for profit, increase income
for UI fund. This investment has contributed to business development, while ensuring
the safety of the UI fund against loss price to pay UI benefits for workers.
- UI facility attachment between the interests of the State and the employees
Social standpoint, UI is a means of spreading risks, losses in both space and
time, a means of sharing the risks damage to the people, from the ability to increase
settlement risks, damage to the small number of workers have UI.
On the government side, UI payments for employees are spending less income
when they are working, but still have a good deal of risk, loss, life tough for workers
and their families, contributing to stability and social security, but for glowing
employers and employees as well as that which is beneficial and protects their rights.
Implementing Agency of unemployment insurance - Vietnam Social Insurance
A brief history of formation and development of Vietnam Social Insurance
Before 1995, the social insurance is implemented by both Labor - Invalids and
Social Affairs and the management team. Since Social Security was born and came
into effect from 01.01.1995 the implementation of social insurance policies have a
fundamental change in the way it has assigned a well-defined functional state of
security management social functioning and social insurance career.
Vietnam Social Insurance was established by Decree No. 19 dated 02/16/1995

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of the Government, as a system is organized hierarchically, centralized and uniform
from the central to local levels to implement the professional activities of social
insurance and have the following structure:

- In the Central Vietnam Social Insurance.
- In the provinces and cities directly under the Central Social Insurance
provinces and centrally-run cities (hereinafter referred to as provincial Social
Insurance) under the Vietnam Social Insurance.
- In the districts, towns and provincial cities as social insurance districts, towns
and provincial cities (collectively, the District Social Insurance) under the provincial
Social Insurance.
Vietnam Social Insurance has legal status, independent accounting and are
protected by the State, its own seal, bank accounts, headquartered at No. 7 Trang Thi -
Hoan Kiem - Ha Noi.
Management functions of the State Social Insurance agency assigned to Labor
- Invalids and Social Affairs. Functioning of social insurance is assigned to the new
organization - Vietnam Social Insurance done. Vietnam Social Insurance shall be
administered by the state Department of Labor - Invalids and Social Affairs on Social
Insurance, Ministry of Health on health insurance, the Ministry of Finance of fiscal
regime for social insurance, health insurance.
Functions, tasks of the system of Vietnam Social Insurance
According to Decree No. 94 dated 22/8/2008 of the Government, the Vietnam
Social Insurance is an agency of government, functional implementation mode, social
policy, UI, health insurance; organization revenue and expenditure social insurance,
UI, medical insurance, management and use of funds: social insurance, UI, Health
insurance provided law.