Social security system “races” with changes in Industry 4.0

Monday, 2018-09-24 17:37:24
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An Indonesian delegate raises issues for discussion at the workshop.
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NDO – According to forecasts, over the next two decades, 56% of workers in five ASEAN countries (including Vietnam) will face the risk of losing their jobs, while 86% of Vietnam’s textile and garment workers will be in danger of becoming unemployed due to automation in the Fourth Industrial Revolution (Industry 4.0). The redesigning of suitable social security policies in the new context is now a problem for countries in the face of the evolution of the labour market.

At a workshop themed “Opportunities and challenges of ASEAN social security systems in the context of Industry 4.0 and free movement of labour”, within the framework of the recent 35th ASEAN Social Security Association (ASSA) Board Meeting, international experts issued warnings and analysis that Industry 4.0, with revolutionary changes in science and technology, will offer an opportunity for the change of society’s modes and forces of production. However, in the opposite direction, if failing to catch up with the common pace of development, this revolution can possibly present many countries with multiple challenges, causing negative and unexpected impacts on the labour market and affecting the goal of ensuring social security.

Assoc. Prof. Dr. Tran Dinh Thien, former director of the Vietnam Institute of Economics, emphasised the restructuring of the Vietnamese economy and the implications for the development of social security. The world is facing a technological revolution and Vietnam needs to promptly realise those challenges and opportunities, including the area of social security. Apart from the risks of causing unemployment and declining incomes for workers, which will directly damage the social security system, this revolution will have significant impacts on the Vietnamese economy in the medium and long term. With the country’s young and dynamic population advantage, Industry 4.0 will surely facilitate and create the aspiration and determination for Vietnam to catch up with the world’s more advanced countries.

Putting forward recommendations on how to adapt to this revolution, Assoc. Prof. Dr. Tran Dinh Thien stated that there is an urgent need for Vietnam to develop strategies for digital transformation as well as for the building of digital infrastructure and digital human resources, in addition to dealing with the existing social security, socio-economic and environmental issues. The flow of positive trends blown in by Industry 4.0 will also be the premise and motivation for the Vietnam Social Security (VSS) to continue vigorously renovating its capabilities to manage and organise the implementation of social insurance, health insurance and unemployment insurance policies.

Talking about the opportunities and challenges for social security systems in the new context, Jens Schremmer, chief of the Office of the International Social Security Association (ISSA) Secretary General, said that the digital economy and digital technology will provide opportunities to promote social security systems in expanding their coverage and narrowing the gap in coverage, and integrating the mobile data system, mobile registration and social security payment applications, which will reduce transaction costs for social insurance agencies and participants. Schremmer also highlighted some of the challenges to be faced by Vietnam, which, he said, are also development opportunities for the country. He suggested that Vietnam utilise its capacity, institutions and mechanisms to ensure social security, especially the ability to use information technology to provide services, expand coverage and improve the access of people to social insurance and health insurance.

Vietnam currently has about 18 million unofficial and non-agricultural workers, just 0.2% of whom participate in social insurance.

Raising the issue that Industry 4.0 and shifts in employment trends help to elevate the significance of social security systems in the world, Robert Palacios, global head of the pensions and social services group at the World Bank, stated that workers have to improve their skills to meet these changes. The problem is the training of human resources and the redesign of social security policy in order to increase coverage in the direction of increasing the relationship between employers and employees, and between the Government and the unofficial economy. This is seen as a race between the transformation of social security systems and the changes in the labour market in the new era. In making recommendations on these issues, Palacios emphasised that the problem needing to be urgently resolved is that countries must rapidly increase the coverage of social insurance by more modern and effective means of management, such as applying new technologies and digital biometric identity, and making payments via the Internet with the support of IT applications in their management software. He added that each country needs to develop a single social security code of policies for the people, aiming to create consistency and convenience in managing and supporting the target population.

According to statistics, Vietnam currently has about 18 million unofficial and non-agricultural workers, only 23% of whom have an employment relationship on a legal aspect and just 0.2% participate in social insurance. By the end of June, 2018, Vietnam had 231,000 voluntary social insurance participants, with an average monthly premium of over VND2.1 million (US$90.3) per capita.

Discussing the challenges Vietnam is facing in the development of voluntary social insurance participants, deputy head of the VSS’s collection department Dinh Duy Hung said that the monthly average income of this group is VND3.9 million (US$167.7) per capita, much lower than the average national income of VND6.7 million (US$288.1 per capita per month). Therefore, the problem here is that there are still about six million people aged between 45-60 who have yet to sign up for social insurance, affecting not only the social security system but also the socio-economic development of Vietnam. In the forthcoming social insurance policy reforms, Vietnam will have policies to ensure that this group’s social insurance participation, either compulsory or voluntary, with specific reforms, such as increasing the attractiveness of voluntary social insurance policies through the extension of beneficiary regimes, and increasing support funding for participants using the state budget, linked with compulsory social insurance. Meanwhile, in the current trend of labour migration, Vietnam now has about 500,000 people working abroad, and the figure increases by hundreds of thousands every year. Of these, only about 6,000 people have signed up for social insurance. In order to effectively manage and ensure social insurance for this group, it is necessary to build bilateral and multilateral cooperation policies on social insurance for migrant workers in foreign countries, in parallel with the modernisation of the methods of management or coordination to manage migrant workers.

Deputy Director General of the VSS Tran Dinh Lieu said that the analysis and discussion of experts at the workshop, to some extent, demonstrated the development trend of social security systems in the world and the free movement of labour under the impacts of Industry 4.0, alongside the requirements set for social security systems in the time ahead. Thereby, the Governments of countries, as well as policy makers and the entire social security systems of nations in the region, will continue to improve their policies aiming to ensure that workers and migrant workers enjoy the full rights and benefits due to them.