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VIETNAM ACADEMY OF SOCIAL SCIENCES
GRADUATE ACADEMY OF SOCIAL SCIENCES
--------------

HO NGOC CHAM

SOCIAL SECURITY OF EMPLOYEES IN THE
INFORMAL SECTOR: A RESEARCH ON HEALTH
INSURANCE AND SOCIAL INSURANCE IN HANOI

Major: Sociology
Major Code: 9 31 03 01

THESIS SUMMARIZATION

Hanoi – 2019


The research work was completed in the Faculty of Sociology, the
Graduate Academy of Social Sciences.

Supervisor:
Professor-Doctor Dang Nguyen Anh
Doctor Bui Thi Thanh Ha

Comment 1: Associate Professor-Doctor Nguyen Xuan Mai

Comment 2: Associate Professor-Doctor Nguyen Chi Dung

Comment 3: Doctor Nguyen Thi Tra Vinh

The thesis will be defended against the Academy-level Thesis
Panel at:

The thesis is available at:


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INTRODUCTION
1. The urgency of the topic
Currently, the social security system in Vietnam consists of a
variety of components that may cover people from all walks of life.
However, health insurance and social insurance policies play
particularly important roles to people of working ages and those who
are participating in the labor market, facilitating them to have enough
resources to partially offset the income gap before the risks that may
occur in life.
The implementation of health insurance and social insurance in
Vietnam has recorded remarkable achievements in recent years.
According to the Ministry of Labor, Invalids and Social Affairs, 13,9
million people were covered by compulsory social insurance by 2017,
of which nearly one third of them were in the working ages. While
11.7 million people participate in unemployment insurance,
approximately 87.84 percent of the populations nationwide were
covered by health insurance (PAPI report, 2018: 22).
However, there remain several challenges during the course of
implementation of these two policies. Only a small percentage of
workers in the informal sector participate in the voluntary social
insurance program (less than 1 percent of the informal labor force).
Meanwhile, the implementation of health insurance policies remains
inadequate, resulted in difficulties and problems in medical

examination and treatment, registration of referral, registration of
initial medical examination and treatment institutions, as well as
payment methods for healthcare using health insurance, among
others.
To overcome the limitations of the social security system,
citizens are often seen relying on the "traditional security" method,


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also known as the support of their families, relatives and
communities, whenever they encounter difficulties or risk. However,
it is witnessed that the tendency of changing from a multigenerational extended family model to a nuclear model in which the
family includes only parents and children has been increasingly
dominant, resulted from the impact of the process of industrialization
and modernization. Moreover, the relationship between generations
has not been as strong as it was before, weakening the choice of
traditional family-based welfare.
Because of the above-mentioned reasons, I then select the topic
of “Social security of employees in the informal sector: A research
on health insurance and social insurance in Hanoi” as the topic of
my PhD thesis, with a desire to identify the situation of employees’
participation in voluntary health insurance and social insurance of
employees in the informal sector, as well as analyzing the factors
affecting their decisions. The thesis will also give some
recommendations to contribute to the expansion of social security
coverage in this group of workers.
2. Research purposes and tasks of the thesis
Research purposes: To study the situation of health insurance
and social insurance coverage of employees in the informal sector;
analyze the factors affecting employees’ ability to access to

insurance; and give recommendations to contribute to the expansion
of social security coverage in this group of workers.
Research tasks:
1) To formulate a theoretical basis on social security for
employees in the informal sector;
2) To identify the situation of health insurance and social
insurance coverage of employees in the informal sector;


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3) To analyze the factors affecting the participation of health
insurance and social insurance of employees in the
informal sector;
4) To propose a number of recommendations to enhance the
ability to participate in health insurance and social
insurance of employees in the informal sector.
3. Subjects and scope of research of the thesis
Subjects of the research: To study the participation in the
social security system of employees in the informal sector,
particularly in the health insurance and social insurance pillars.
Objects of the research: Hired employees and employers/selfemployed workers; commune/ward leaders and officials in charge of
invalids and social affairs in communes/wards.
Scope of the research: The thesis was conducted from 2016
through 2019 during the course of study of the student. The thesis’s
samples were conducted in Tan Lap commune, Dan Phuong rural
district and Nghia Tan ward, Cau Giay district, Hanoi, from May
through July 2018.
Research questions:
Question 1: How are employees in the informal sector
currently participating in health insurance and voluntary social

insurance?
Question 2: What are the factors that affect the ability to
participate in health insurance and voluntary social insurance of
employees in the informal sector?
Question 3: What have employees in the informal sector done
to ensure security for themselves and their families?


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Research hypothesis:
Hypothesis 1: Employees in the informal sector are less likely
to be seen participating in health insurance and voluntary social
insurance as they have not yet found out the interests of these two
programs.
Hypothesis 2: There are several factors affecting employees’
participation in health insurance and voluntary social insurance, in
which the awareness about and experience of benefits of health
insurance contribute to increasing employees' ability to participate in
health insurance. Meanwhile, low income and difficult economic
conditions are the factors that reduce employees' ability to participate
in health insurance because of the regulations on household health
insurance. For voluntary social insurance program, the provisions of
the voluntary social insurance policy on the extended payment period
and the low entitlement regimes are the main reasons that worried
employees from the informal sector. The regulations on the time of
payment and entitlement also make workers in families with lower
living standards less likely to participate in the program.
Hypothesis 3: Since only a small number of workers are
covered by social security programs, the workers themselves and
their families have prepared their own strategies to improve their

capacity to respond to incidents leading to the loss or decline of
incomes.
4. Research methodology of the thesis
This thesis applies secondary document analysis, comparative
research and synthesis methodology in the review process of research
documents. It also combines qualitative research and quantitative
research for the collection of information of research objects. The
thesis applies sociological theories such as rational choice theory,


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social network theory and life-cycle approach of social security to
answer research questions.
5. New scientific contributions of the thesis
The finding on employees’ senses of initiative in personal
security is a new point of the thesis compared to previous studies.
The thesis has applied the main points of the rational choice theory,
social network theory and life-cycle approach of social security to
explain the factors affecting accession to health insurance and
voluntary social insurance, thereby concretizing the role of the
middle-range theories in explaining employees’ behaviors.
6. Theoretical and practical significance of the thesis
Theoretical significance: By employing the mainpoints of
such sociological theories as the rational choice theory, social
network theory and life-cycle approach of social security, the thesis
has explained the participation in health insurance and voluntary
social insurance of employees in the informal sector. The pointing out
of the suitability in applying these theories to explain employees'
behaviors will contribute scientific and theoretical information to
related research fields.

Practical significance: In the context that the studies and
statistics on the informal sector in Vietnam remain neither systematic
nor comprehensive, the results of the thesis will contribute practical
information for this field of study.
The thesis’s limitations: The thesis has not yet analyzed nor
compared the level of social security coverage between the formal
sector and the informal sector. The thesis results cannot be considered
the entire results of the labor group of the informal sector in Hanoi as
the thesis was conducted in only 2 communes/wards.


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7. The thesis’s structure
Apart from the introduction, conclusion, the list of references
and appendices, the thesis is divided into 4 chapters.
Chapter 1: An overview of research issues
Chapter 2: Theoretical foundations and methodologies
Chapter 3: Employees’ participation in health insurance and
social insurance
Chapter 4: A number of factors affecting employees’ access to
health insurance and social insurance

CHAPTER 1: AN OVERVIEW OF RESEARCH ISSUES
Through the review of domestic and foreign research works
on, as well as the review of social security policies applicable to, the
labor group in the informal sector, it can be seen that workers in this
sector tend to face risks at work and life as they are working in unsafe
conditions with precarious work status and low income. The job's
uncertainties, together with the above-mentioned risks, have made
them vulnerable to poverty, leading to a serie of difficulties for their

families. In particular, female workers in the informal sector are more
disadvantaged than men. On the other hand, because of the lack of
labor contracts, a large number of workers in the informal sector are
not entitled to any of the social security regimes.
In terms of policies, although the Labor Code and the Law on
Social Insurance have clearly identified the benefits of social security
programs (health insurance and social insurance) of employees in the
informal sector, their employers have failed to implement such
regulations. Despite the fact that different types of voluntary


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insurance have been created to facilitate employees in the informal
sector to have more options in ensuring social security, such
insurances have not yet attracted the majority of workers in this
sector.
Studies have revealed that such job-related factors as uncertain
works, vulnerability, low wages, or household characteristics such as
economic conditions, marital status, family size, age, migration
status, gender, awareness of social security programs, among others,
have affected the workers' decisions to join the insurance system. In
addition, the contents of health insurance and social insurance
policies also affect the participation of employees in these two
programs. According to previous studies, employees in the informal
sector are also beneficiaries of health insurance and social insurance
policies. However, most of them have limited access to these policies.

CHAPTER 2: THEORETICAL FOUNDATIONS AND
METHODOLOGIES
2.1. Research concepts

Social security means the system of policies and programs
conducted by the State and social partners to ensure a minimum level
of income, health and social welfares, and improve the capacity of
individuals, households and community in managing and controlling
risks of job loss, aging, illnesses, natural disasters, structural
transformation and economic crisis that resulted in the reduction or
loss of income and access to fundamental social services. Social
security performs the function of risk prevention, mitigation and
remediation. Currently, the Vietnam's social security system consists
of 4 components. However, the scope of the thesis focuses only on


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understanding the participation of employees in the informal sector
with regards to health insurance and social insurance.
Self - security means the measures takwn
hospitals and doctors instead of health insurance because of
cumbersome medical procedures (21.3 percent). Last but not least,


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there are 10 cases of employees not purchasing health insurance
because they are unsure about the information and procedures for
insurance purchase.
3.4. Employees’ participation in social insurance
A number of fundamental characteristics of employees
participating in social insurance: Employees participating in
voluntary social insurance are characterized by a high level of
education, usually self-employed, having stable jobs and belonging to
occupational groups with high income. These are important

prerequisites for employees to be able to maintain their participation
to social insurance because the premium payment period is relatively
long.
Employees’ awareness on social insurance: The limited and
uneven awareness of voluntary social insurance policies is the general
situation of surveyed employees in the informal sector. Most workers
are unaware of this insurance. Some have heard of the voluntary
social insurance program but do not understand it clearly nor wishing
to find out more about it. Meanwhile, it seems like local authorities
and insurance agencies have not yet paid enough attention to the
propagandizing and provision of regular and updated information on
voluntary social insurance program to locals. This is one of the
reasons why employees in the informal sector do not participate in
voluntary social insurance.
Assessment of employees over social insurance: About one
third of the workers (35.6 percent) considered voluntary social
insurance unnecessary or difficult to assess the necessity. Although
most workers think that social insurance is necessary, voluntary
social insurance is not a suitable option for the majority of workers as
the jobs in the informal sector are often precarious and unstable, with


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a long-term requirement on payment period and insufficient state
supports.
Barriers in employees' participation in social insurance: One
of the biggest barriers that obstruct employees to participate in
voluntary social insurance is the lack of money to pay for premiums
(34.5 percent). Another reason why employees do not participate in
voluntary social insurance is the lack of information, making

employees unaware of the program (20.2 percent). Meanwhile, some
workers manage to have different sources of revenue to accumulate
and prepare for later life (20.2 percent). This is an obvious evidence
of "personal security" strategy of employees in the informal sector.

CHAPTER 4: A NUMBER OF FACTORS AFFECTING
EMPLOYEES’ ACCESS TO HEALTH INSURANCE AND
SOCIAL INSURANCE
4.1. Factors affecting employees’ access to health insurance
Policies: By participating in health insurance, employees may
express their sharing responsibilities, and at the same time, enjoying
state policies on payment of health insurance premiums and support
for medical examination and treatment costs covered by health
insurance. However, due to a number of procedural inadequacies,
migrant workers without permanent residence in localities often find
it difficult to participate in health insurance. The regulation on
purchase of health insurance by households has obstructed a group of
workers to participate in the program because of high participation
costs. In addition, there remain several problems related to the
benefits of the insured during the course of medical examination and
treatment covered by health insurance in a number of hospitals,
leaving the citizens idle in using health insurance.


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Personal and family characteristics: Upon consideration of
the impacts of individual and family characteristics of the employee
on the ability to participate in health insurance, provided that the
other independent variables remain unchanged, it can be found that
the variables of "working age", "families with seriously ill people in

the past 12 months", "living conditions of households" and "necessary
health insurance" have strong impacts on the ability of health
insurance purchase. The probability of purchasing health insurance
for workers in families with good living conditions is 91.6 percent
compared to the original probability of 68.7 percent. This number is
98.6 percent among the group of workers that considered health
insurance necessary. In terms of "age", when the age variable
increases by 1 unit, the probability of purchasing health insurance of
employees increased from 68.7 percent to 69.5 percent. Compared to
workers from families without seriously ill member(s) in the last 12
months, 84.4 percent of members of families with seriously ill
member(s) are probable of purchasing health insurance.
4.2. Factors affecting employees’ access to social insurance
Policies: The entitlement regimes of voluntary social insurance
are relatively poor, including only two regimes, namely pension and
death. This program has failed to satisfy the initial interests of
employees, such as maternity benefits for women, illness, diseases,
occupational accidents and the risk of unemployment. Employees are
also struggled verifying the benefits of voluntary social insurance
because of long payment period. In addition, the propaganda and
implementation of voluntary social insurance policies at the local
authorities are unnecessarily formal and ineffective. The focal points
of social insurance agencies are located at commune and ward levels,
but do not have direct access to employees. Meanwhile, insurance
agency officials have not yet proactively met nor made direct contact


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with employees to advise them to understand the benefits of this
policy. Therefore, informal-sector employees in the two selected

localities have not grasped the contents of policies and benefits of
insurance participation.
Personal and family characteristics: there are several factors
affecting the employees' decisions to participate in voluntary social
insurance. They must take into account their ages, economic
conditions and family income as the voluntary social insurance
program requires long-term payment. Changes in life cycles are also
factors that affecting employees’ possibility of participation.
Accordingly, the participants of voluntary social insurance are mainly
in the married group. In addition, whether or not a male or female
worker is aware of the voluntary social insurance program, this factor
could affect his/her participation behavior. Also, the employees'
experiences on the compulsory social insurance program from his/her
previous jobs (with the group of employees who have participated in
the compulsory social insurance) and the network of social
relationships that he/she is linked to contribute to their opportunity to
participate in social insurance.
4.3. Employees’ self security strategy
To rely on the support of relatives and families: Currently, the
traditional form of family-based security still plays a supporting role
for workers in difficult times, making them relying mainly on these
close relationships for personal security instead of relying on stateprovided welfare. 80.4 percent of workers said they would seek help
from family members such as parents or siblings whenever they
encounter unexpected difficulties.
To participate in commercial insurance: Purchasing
commercial insurance is a form of personal security strategy.


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Employees participating in commercial insurance are mainly selfemployed, with higher income and more stable jobs than other

groups. The role of an immature child (under 18 years old) greatly
influences a husband and wife’s decision to join commercial
insurance. At the same time, the participation in commercial
insurance of employees is also influenced by the network of social
relationships in which they are members.
Savings with cash: Employees tend to keep cash for selfprotection because they think that although this form of saving does
not give much interests, it is safe because they can proactively control
the their cash reserve and at the same time quickly solving
unexpected difficulties. Saving money for living the old age is
considered the best option when employees are no longer able to
make income and have poor health.
Tontines: This form is mainly popular among employees
doing small business or services in Tan Lap commune. Tontine is a
form of savings that attract many employees in Tan Lap partly
because of interest rates, while another part is because participants are
in need of money for business, consumption, debt payment or
investment in education for children, labor export, among others.
While borrowing loans from local banks or mass organizations
requires complex procedures and collateral, tontine appears to be a
rational option for many employees to maximize their income.

CONCLUSIONS AND RECOMMENDATIONS
The welfare system in Vietnam has been increasingly
developed with a view to better ensuring fundamental human rights,
including the labor group in the informal sector. Previously, the
components of the social security system targeted mainly the formal


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sector, but have now expanded to informal-sector workers with two

important programs, namely health insurance and voluntary social
insurance. However, not all workers fully understand the social
security system that is being implemented nationwide. The research
results of the thesis have shown that a majority of workers in the
informal sector in Nghia Tan and Tan Lap are not fully aware of the
social security system because the current welfare system includes
different components that are deployed to specific target groups.
Most of their knowledge stops at social aids for vulnerable and
disadvantaged subjects. The awarenesses of employees over health
insurance and voluntary social insurance programs, two important
insurance programs that they are beneficiaries, are uneven.
Regarding the health insurance program, most of employees in
the informal sector are covered by health insurance with the desire to
reduce medical expenses in case of illness. Currently, employees are
quite knowledgeable and highly appreciate the necessity of this type
of insurance. However, not all workers are able to participate in
health insurance. The decision to participate in the health insurance
program depends on many factors, including factors that belong to the
individual and family characteristics of the employees, the factors of
policy content as well as the implementation process of policies in
practice.
Firstly, regarding the factors related to individual and family
characteristics of employees, the research results of the thesis show
that the factors of age groups, assessment of the necessity of
insurance programs, family economic conditions and the factor of
families having seriously ill members affect one’s decision to
participate in health insurance. Employees tend to participate in social
insurance when they are older or have better family economic
conditions, or their families have members with serious illnesses.

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Particularly, the proportion of employees participating in health
insurance was reported increasing significantly when employees are
aware of the necessity of health insurance.
Secondly, in terms of policies, the health insurance program
shows humanity because it has helped reduce healthcare costs and
increased access to health services for employees. However, some of
the current policy contents such as regulations on purchasing health
insurance by household, premium rates as well as the regulation on
the place of initial medical examination and treatment have struggled
the groups of employees with difficult economic conditions and
migrant employees. This will do nothing but increase the
vulnerability of these groups of workers.
Thirdly, during the process of policy implementation, the
cooperation of grassroots administrations and socio-political
organizations in propagandizing and mobilizing employees to
participate in health insurance has increased the participation rates of
the whole citizenry in general and employees in the informal sector in
particular. Meanwhile, procedural inadequacies for participation in
insurance as well as shortcomings in the process of medical
examination and treatment with insurance cards also make employees
less involved in insurance as well as medical examination and
treatment covered by health insurance cards.
Due to different reasons, only a few of employees have
participated in the voluntary social insurance program. On the side of
employees, most of them are not aware of the voluntary social
insurance program or they do know but do not understand it properly
and fully. A small number of workers are aware of the role and
necessity of voluntary social insurance policies but are tied to such

problems as unstable employment and income, making them unable
to maintain the insurance payment period.


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Meanwhile, in terms of policies, the lack of regulations on
entitlement regimes, together with long payment period that fail to
verify the program’s benefits, have made the voluntary social
insurance program unattractive for employees. In addition, in the
process of policy implementation, the propaganda for workers to
understand the benefits of the program has not been paid enough
attention by the local authorities, resulting in a low rate of
participation in voluntary social insurance.
The results of the thesis also show that traditional forms of
security are still performing well in dealing with risks. Employees
still rely on the help of family members and relatives when they are in
trouble or need. At the same time, employees have improved their
capacity to prevent and cope with risks by developing appropriate
personal security strategies. Participating in commercial insurance,
saving cash or joining tentions are ways of saving of employees in
Tan Lap and Nghia Tan.
The results of the thesis have fully analyzed and proved in all
aspects to accept the three hypotheses given by the thesis. At the
same time, the application of such sociological theories as rational
choice theory, social network theory and the life-cycle approach of
social security has helped explaining employees’ participation in
health insurance and voluntary social insurance.
The findings of the thesis show that the participation in health
insurance and voluntary social insurance of informal-sector workers
depended on many factors. These factors, on the one hand, come

from the employees themselves, but on the other hand are dominated
by policies and their implementation process. Thus, the thesis
proposes the following recommendations:


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Regarding the health insurance program, lawmakers, policy
enforcement subjects and employees in the informal sector must
closely coordinate with each other to increase the participation rate of
health insurance among informal-sector workers.
On the employee's side, the research has shown that workers
will opt for health insurance once they consider it necessary.
Therefore, during the process of policy enforcement, it is necessary to
increase propaganda to raise employees’ awareness, helping them
understand the benefits of health insurance as well as the risk-sharing
nature of health insurance.
In terms of policy contents, although the health insurance
program has managed to increase the proportion of workers covered
by health insurance by targeting the group of employees in the
informal sector in the form of household purchases, which are also
supported by the state, it can be seen that not every group of workers
has equal opportunity to access such policy. Despite working in the
same informal sector, those with extremely difficult economic
conditions or migrant workers often have less access to health
insurance policies than the rest. Therefore, it is necessary to have a
more flexible mechanism for purchasing household health insurance
to create more favorable conditions for this group of workers.
Regarding the voluntary social insurance program, a large
number of employees have refused to participate in voluntary social
insurance because of the inappropriate insurance regime and payment

period. Therefore, the regulations on payment period should be more
flexible, with greater importance attached to the supplementation of
suitable benefits for employees in the informal sector, making them
willingly participating in voluntary social insurance program.


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Propaganda works should also be promoted during the process
of policy enforcement, with new forms of direct propaganda to
workers to raise their awareness about voluntary social insurance
programs, contributing to expanding the coverage of the social
security system to employees in the informal sector.-


LIST OF PHD STUDENT’S PUBLISHED THESISRELATED ARTICLES

1. Ho Ngoc Cham, 2018: “Employees’ accession to social
security in the informal economic sector (An overview of
research

documents

in

a

number

of

developing

countries)”. Journal of Family and Gender Studies, No. 5
(pages 48-58).
2. Ho Ngoc Cham, 2019: “A number of factors affecting
employees’ insurance participation in the informal
sector”. Journal of Social Sciences Manpower, March
Publication (pages 60-69).