Experts support higher retirement age
VietNamNet Bridge – The Ministry of Labour, Invalids and Social Affairs (MoLISA) has proposed raising the retirement age for workers, especially highly skilled employees and those in management, by 5 years (the current retirement age is 55 for women and 60 for men).
Two options have been suggested: raising the retirement age by 5 years at once and raising it gradually. The proposal, which would be implemented in 2014, has received mixed feedback from the public.
Viet Nam News reporters Minh Thi and Thanh Hai spoke to experts about the proposal.
What do you think of the proposal? Is the current retirement age in Viet Nam appropriate? If not, how should it be adjusted?
Carlos Galian, Programme Officer in Social Protection, International Labour Organisation (ILO):
It’s very lucky that Viet Nam will have to increase the retirement age. This is good news because it means Viet Nam has succeeded in social terms: people are living longer and will continue to live longer.
Viet Nam has to adapt to this situation. But this has to be done carefully and slowly. You have to increase the retirement age and also do other things like taking more care of the elderly.
Currently there are two discussions. One is about the labour code; later on social insurance law reforms will be on the table. Obviously, the fact that people are living longer means that the country and its policies need to adapt.
Increasing the retirement age by 5 years - or even 10 years in the case of women - is quite common. All developed countries have their retirement age set at 65, and more importantly, men and women usually have the same retirement age.
In the Asia-Pacific region, there are basically two groups of countries: some countries that still have retirement ages lower than 65 and others that are moving towards 65 or have already reached 65, like [South] Korea and Japan.
As far as I know, there is no other country that has as low a retirement age for women as Viet Nam. Usually other countries set 60 or 65 as the retirement age. So in Viet Nam the retirement age is a bit lower than in other countries in Asia as well as developed countries.
Dr Dang Quang Dieu, director of the Institute of Workers and Trade Union:
To determine whether the current retirement age is appropriate, we need to consider many factors including working conditions, working environment and the characteristics of a profession.
For example, there should be scientific research on whether it would be good to decrease the retirement age for workers working in toxic and risky working environments such as in the textile, seafood processing or rubber production industries.
But for office workers, raising the retirement age should be considered, as this group has good working conditions in a better environment and the physical requirements are not as stringent as for factory workers.
However, raising the retirement age should not be done at once. There should be a gradually planned increase. First, we might raise the retirement age by 2-3 years – for example, increasing it to 60 for women.
For men, the increase should be slower, so that it will eventually reach 62-63. That way, the age gap in retirement age between men and women will only be about three years.
Dieu Ba Duoc, Head of the Social Insurance Policy Implementation Department, Viet Nam Social Security Agency:
Article 187 of the Labour Code regulates increasing the retirement age for highly skilled workers or those working in management in certain fields.
The retirement age should be increased step by step and calculated based on scientific research because it has a huge impact on the country’s human resources.
The social insurance sector has put forward some proposals, such as prolonging the time of paying social insurance and adjusting fees or premiums.
Increasing the retirement age would be the most feasible plan at the moment because the retirement age of Vietnamese people is still low compared to the world average level of 65.
We face some challenges in that many employees would not want to increase the retirement age, while those working in more favourable or comfortable conditions would prefer to pay social insurance fees for another few years.
We need scientific research and specific criteria for priority groups in order to issue good regulations. Creating a bad policy would pose a risk to the social insurance fund.
There are concerns that the retirement fund will be used up if the retirement age is not adjusted. Do you agree?
Dieu: According to economists’ projections, if we keep the current retirement age and the current amount of social insurance payment, by 2029 the social insurance fund will not be sufficient to cover pensions for workers.
I think this is true because the life expectancy of most people has increased considerably compared to 20 years ago.
During the past 20 years, the life expectancy of workers has increased by 10 years. Thus, the time workers will enjoy pensions will last longer than ever before. If we keep the situation this way, it is certain that the social insurance fund will be used up.
Galian: Potentially the fund might be depleted. However, the important thing is that countries have to adjust the social insurance system - including the retirement age - when the context changes.
In Spain, where I come from, the Government was forced to increase the retirement age to 67, so there is no need to panic. It is just time to act. When the context changes, the system has to adapt.
Duoc: According to current regulations, the retirement age of males is 60 while for females it is 55. In fact, up to 60 per cent of workers have retired early after paying enough social insurance fees within 20 working years. Most of them are workers in transport, construction, agriculture and forestry.
Our calculations also showed that the social insurance sector would risk breaking the fund if we do not increase the retirement age.
For example, the social insurance fee is equal to 26 per cent of the basic salary a worker earns in 20 years. However, in fact the average life expectancy of Vietnamese people is very high and retirement pensions are at the lowest level of 45 per cent. So we should either prolong the time of paying insurance fees or increase the retirement age of workers.
It is assumed that raising the retirement age will help Viet Nam cope with its aging population. What do you think of this assumption?
Dieu: Viet Nam is enjoying a golden population structure with a large number of young people of working age. This is a good opportunity for us to achieve breakthroughs in socio-economic development.
However, after 10-15 years, the population will enter the aging period. The aging speed will be very fast, according to sociologists.
If we don’t raise the retirement age, the labour supply-demand balance will be affected. The working population will decrease while those enjoying pensions will increase. Raising the retirement age is one way to solve the problems of our future.
What challenges might the country face if the retirement age is raised (for example, decreased job opportunities for youth)?
Dieu: Increasing the retirement age has advantages and disadvantages.
The advantages are that workers will have more time to learn the ins and outs of their trade and the country can make use of highly skilled workers for a longer time.
It will, however, pose challenges to the creation of jobs for the youth.
Therefore, I think the increase should not be made at once. It should be done gradually to make sure young workers don’t experience difficulty in finding jobs given the current situation of socio-economic development.
Galian: The retirement age cannot be changed from one year to the next. It is important that any change in retirement age be done carefully and gradually.
That means the retirement age will not change abruptly from 60 to 65 in 2015.
Viet Nam has to gradually increase the retirement age so that young people will not be negatively affected and people who are close to the retirement age will not see that the context has changed too dramatically.
Someone who’s 49 this year can still expect to retire next year.
One example of another country suffering extreme demographic change is China.
In around 7-10 years, they will start suffering a shortage of labour and will have to hire workers from overseas. That will happen to Viet Nam soon if the country does not start acting now.
We could increase the retirement age by one year every two years. That means that to increase the retirement age from 55 to 65 will take 20 years. So the retirement age for women would be 65 by 2036, which is a long time from now.
The public have expressed concern about the potential abuse of power among senior public officials and managers, who would hold positions of power for longer if the retirement age is raised. What solutions can you propose to this problem?
Dieu: According to the draft proposal, the retirement age will only be raised for those in management positions: specifically, deputy heads of State departments and those holding higher positions.
I think this proposal will not help solve the problem of the social insurance fund (as the group that will see their retirement age increasing is small) and might lead to the problem of “group interests”.
The new retirement age should be determined based on the working conditions and working environment of workers. This matter is best suited for scientists and researchers.
Galian: Again, it is important to emphasise that changes in retirement age need to be done carefully and gradually so that there will be no socio-economic effects.
People in management positions aged 55-59 will retire as planned provided that the retirement age will not change until 2018.
This way is better not only for society, but also for individuals.
Imagine you are planning to retire next year, but suddenly the law changes, so you have to continue working for four to five additional years. That doesn’t make sense. So usually changes in retirement age occur slowly.
As a retired civil servant, what do you think of the proposal?
Nguyen Trong Van, retired office worker, 62:
Personally I don’t think the retirement age should be increased. In Viet Nam there are currently about 1 million people who are unemployed. A large number of these are young people, including university graduates.
If older people keep their jobs, that will eliminate many job opportunities for young people. We have all seen what happens when youth idle away their years without work: the increase of social evils.
Besides, without a doubt, young people are often quicker to keep up with new technologies and sciences. The elderly, in contrast, are usually slower.
In certain fields such as information and technology, banking and communications, the majority of the staff are often younger people.
I understand the problem of the social insurance fund, but I think it is better to pay pensions to older people than to let them keep their positions, which would prevent many young people from getting jobs.
Only highly skilled workers such as scientists and researchers should be allowed to keep working, as they are much needed for the country’s development.
But many scientists and researchers are already able to keep their jobs despite having reached retirement age. So there is no need for a new law on retirement age.
As for women, I see many women reach retirement age who really want to retire. That is partly because their health has deteriorated so they want to rest, and also because they want to stay at home to take care of their families. Young couples nowadays are very busy so many of them need the help of their parents to take care of their children.