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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: 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: INTRODUCTION 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 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, 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 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; 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 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? 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 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, social network theory and life-cycle approach of social security to answer research questions 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 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 communes/wards The thesis’s structure Apart from the introduction, conclusion, the list of references and appendices, the thesis is divided into 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 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 components However, the scope of the thesis focuses only on 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, 17 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 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 not have direct access to employees Meanwhile, insurance agency officials have not yet proactively met nor made direct contact 18 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 19 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 20 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 21 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 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 know but 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 22 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: 23 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 24 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 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 (pages 48-58) 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) ... 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... 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... families? 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