Hanoi, 5 October 2022 (TDI): As per the World Bank (WB) lower middle-income country poverty line, Vietnam has had great progress in the past ten years in lowering poverty, particularly extreme poverty, which had decreased from 16.8% in 2010 to 5% in 2020, remarked World Bank’s Country Director for Vietnam, Carolyn Turk.
Carolyn Turk gave these remarks at the high-level workshop on “Key social policies in Viet Nam,” which was held last week.
According to her, this significant improvement was mostly caused by economic expansion, which was aided by the demographic dividend and an increase in the share of formal employment as workers left poor-productivity agriculture.
However, informality is still widespread and the demographic window is shrinking. The economy will need to attain much-improved productivity, efficiency, and social inclusion as well as strong resilience against shocks, especially those related to climate change, in order for Vietnam to reach its aim to become an upper middle-income nation by 2030 and a high-income country by 2045.
The challenges for Social Protection System
According to the Country Director, three issues must be addressed by the social protection system in this situation.
Firstly, the share of workers in the informal sector is stubbornly high, despite the country’s outstanding economic performance. Approximately 76 percent of all workers and between 55 and 60 percent of non-agricultural workers are still in the informal sector.
Secondly, Vietnam is at a turning point in its demographics as it is one of the countries with the fastest-aging population in the world.
Thirdly, Vietnam is already experiencing the effects of climate change, and in the coming years, these effects will worsen, making the country’s economy and households more vulnerable to shocks.
Actions of the government
She also highlighted the actions taken by the government and its policy choices to meet the challenges.
The retirement age began to rise gradually earlier this year. Resolution 28 includes social insurance reforms that improve financial sustainability and increase coverage expansion.
To resolve the coverage gap, the government is prioritizing the revision of the social insurance law. To meet the government’s ambitious 2030 targets, there are also evolving suggestions to enlarge the scope of non-contributory or social pensions.
Moreover, she stated that the World Bank is assisting the Ministry of Labor, Invalids, and Social Affairs as well as the Vietnam Social Security in these efforts.
Subsequently, she made some additional suggestions to resolve the challenges.
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