The government must inflict heavier fines on enterprises who default in social insurance payments, as many companies have dodged payments at the expense of salaried workers.
Many companies circumvent regulations as the punishment of evading social insurance payments are very mild (only VND30 million for the severest case).
Nguyen Dang Tien, deputy chief of the city Social Insurance Agency, said if enterprises are late in payments they are only charged interest of 10.5 percent, which is much lower than bank loan interest. Moreover, to dodge social insurance payments some businesses understate wages in labor contracts or sign seasonal contracts.
According to the Ho Chi Minh City Social Insurance Agency statistics, more than 19,000 companies have evaded social insurance payments of over 687,000 laborers of a total amount of VND373 billion (US$18 million). There is a company who owes social insurance payments worth VND10billion (US$482,000) and some have owed large amounts for years.
As of 2010, the city insurance company filed lawsuits against 150 companies who owed social insurance payments worth over VND11billion and currently against 130 firms.
The companies, most of which are locally owned, had defaulted in payments of more than 2,500 employees for many months. However, “lawsuits were time-consuming and in some cases the companies had filed bankruptcy or owners had fled before the court could issue a conviction hence workers are the main losers,” said Tien.
Claims for social insurance payments are difficult to acquire because violators only face civil not criminal charges and ignore the courts final decisions. Many labor experts said slight fines of VND30million are reasons of default payments. Employers accept paying fines to insurance companies instead of paying insurance amounts of hundreds of million.
Hence, Tien proposed that employers who owed large payments must face criminal charges to warn other offenders. The present Vietnamese criminal law has no mention of such a crime, so relevant agencies can hardly prosecute the violators.
