During the implementation of Directive 16, business associations have proposed that enterprises and employees be exempted from social insurance contributions.

These industry associations include: the Vietnam Electronic Industries Association (VEIA), Vietnam Plastics Association (VPA), Vietnam Leather, Footwear and Handbag Association (LEFASO), Association of Food Transparency (AFT), Vietnam Association of Seafood Exporters and Producers (VASEP), Vietnam Tea Association (VITAS), Food and Foodstuff Association of Ho Chi Minh City (FFA), Vietnam Dairy Association (VDA), the High-Quality Vietnamese Goods Business Association, the Handicraft and Wood Industry Association of Ho Chi Minh City (HAWA), and the Vietnam Pulp and Paper Association (VPPA).

The petition was submitted to Deputy Prime Minister Le Minh Khai and Vietnam Social Security (VSS) amid severe business hardships and a significant surplus in the social insurance and unemployment insurance funds.

Specific Proposals:

• For regions under Directive 16 or implementing “3-on-site” and “1 route – 2 destinations” models: The associations propose a suspension of social insurance contributions for at least 3 months after social distancing is lifted or the aforementioned production models cease.

• For “3-on-site” workers: A 50% reduction in social insurance contributions for 6 months is proposed.

• Late payment penalties: An exemption from penalties for the inability to pay insurance during lockdown periods due to production suspension or downsizing.

• Sickness benefits: Workers who stop working (due to factory closures, inability to join “3-on-site,” or mandatory quarantine) should receive sickness benefits equal to 75% of their insured salary during this period.

Justification: The associations explained that most of these industries are labor-intensive, with their largest expenses being personnel costs (wages, social insurance, and trade union fees). Currently, enterprises and employees must contribute a combined 32.5% of the total salary fund to social insurance. As production and revenue plummet while fixed costs remain constant or even increase, businesses struggle to survive long-term.

According to a recent online survey by the Private Economic Development Research Board and VnExpress, 30% of over 21,500 surveyed businesses stated that “suspending social insurance for 3-6 months” or “reducing personal income tax” would be highly effective. Many firms are currently facing a liquidity crisis, with remaining funds only sufficient to sustain operations for about one month.

Additional Requests:

• Health Insurance: Proposed coverage for COVID-19 testing costs.

• Emergency Support: The insurance fund should implement emergency policies for all workers who have fulfilled their contribution responsibilities.

• Direct Dialogue: Concerned about supply chain disruptions and the difficulty of recovery if production is not “safely eased” before September 15, the associations have requested a meeting with the Deputy Prime Minister before September 18 to present initiatives for safe business recovery.

Currently, whether operating at limited capacity under “3-on-site” (15-20% of factories) or suspended (80-85% of factories), businesses face common challenges: disrupted raw material supplies, loss of customers and market share, severe labor shortages, and high costs associated with responsibilities toward employees and supply chain partners.

Previously, 14 industry associations also proposed that businesses and workers in Directive 16 areas be exempted from Trade Union fees from August 2021 through the end of the year, with a suspension of fees until June 30, 2022, for businesses with over 15% of staff on temporary leave. They also requested permission to use surplus trade union funds at the enterprise level to cover rapid testing costs and worker support.

(Source: VnExpress)