Coming to the rescue of laid-off workers

Editorial Desk
Viet Nam News
Publication Date: 02-07-2009

With unemployment insurance coverage not kicking in until 2010, the large numbers of workers laid off during the current economic crisis has caused the Vietnamese Government to take a stopgap measure.

Government Decision No 30/2009/QD-TTg, issued February 23 and further guided in Joint Circular No 06/2009/TTLT-BLDTBXH-BTC, issued on February 25 by the Ministry of Labour, Invalids and Social Affairs and the Ministry of Finance, introduced three policies aimed at keeping workers on the job, or supporting those who have temporarily lost their incomes.

First, enterprises may qualify for bank loans at zero-per-cent interest for up to 12 months to meet payrolls, social insurance premiums and job-loss or severance allowances. Companies that have been forced to trim their workforces by 30 per cent or lay off 100 or more employees (excluding seasonal workers employed under-three month labour contracts) and lack financial resources to pay wages, social insurance premiums and job-loss or severance allowances to laid-off workers would be eligible.

Laid-off workers would be defined as Vietnamese workers employed under labour contracts of an indefinite term or a term of 12-36 months or seasonal labour contracts or job performance contracts of a term of three months or more.

Enterprises facing a need to lay off workers are required to work out, in collaboration with grassroots trade unions, labour rearrangement plans that indicate the total number of employees, the number to continue to be employed, those entitled to social insurance benefits, and those whose labour contracts are to be terminated and made redundant.

The plan must then be submitted to the provincial-level Labour Service office in the province in which the enterprise is headquartered.

Within five working days of receiving the proposed plan, the provincial-level Labour Services would be required to send a written confirmation of receipt to the enterprise and the local branch of the Viet Nam Development Bank.

Enterprises are also required to submit their latest quarterly financial statements to provincial-level departments of finance, which will issue written confirmations of receipt to the enterprise and the local branch of the Development Bank.

The Development Bank may then decide on loan amounts and approvals, as well as manage and recover debts.

This policy is a one-time bailout of enterprises and employees in hard times. But the Viet Nam General Confederation of Labour has expressed concerns that some enterprises will use the programme to get interest-free loans for other purposes, by declaring a number of redundancies higher than actual figures to reach the prescribed level of 30 per cent, or colluding with employees to alter the terms of their labour contracts in order to meet the relevant requirements.

Many ineligible enterprises might also qualify for the loans by separating the payroll for executives from that of workers, thereby shirking the obligation to pay social insurance premiums for these workers.

The director of the Ministry of Labour, Invalids and Social Affairs’ Employment Department, Nguyen Dai Dong, admitted that most enterprises reported only their laid-off workers and omitted the number of newly-recruited ones, creating another possible loophole.

Second, the programme aims to pay wages to laid-off employees of enterprises which have become insolvent.

Payroll costs will be advanced from provincial budgets and refunded from proceeds from the liquidation of the assets of the concerned enterprise.

Finally, workers laid off in 2009 and Vietnamese guestworkers who lose their overseas jobs due to production cutbacks and must return home before their labour contracts expire will be entitled to loans from the National Fund for Employment under the National Target Programme on Employment; loans for job training under Prime Minister’s Decision No 157/2007/QD-TTg of September 27, 2007, on student loans and credit to be provided to workers for 12 months from the date they become unemployed; and loans from the Social Policy Bank as social policy beneficiaries under State Bank Decision No 365/2004/QD-NHNN of April 13, 2004, for 12 months from the date they become unemployed or return home.

As the policy only provides laid-off workers with loans while seeking new jobs, Deputy Minister of Labour, Invalids and Social Affairs Nguyen Thanh Hoa says Vietnamese guestworkers will be entitled to debt payment deferral or have their debts rescheduled.

On February 24, the Viet Nam General Confederation of Labour proposed that the National Fund for Employment give laid-off workers loans at an interest rate of 3.8 per cent per year, against the prevailing 7.8 per cent.

The labour export department also proposed a plan to the Ministry of Labour, Invalids and Social Affairs to grant assistance of up to VND5 million to guest workers forced to return home prior to the expiration of their contracts.

According to statistics accumulated by the ministry from 41 provinces and cities, there were already 66,700 laid-off workers in these localities in January. The labour export department also estimated that about 10,000 guest workers would be forced to return home in 2009.