Recently, the Government of Vietnam has issued Decree 135/2020/ND-CP stipulating retirement age. The retirement age for employees in Vietnam will be increased in 2021. So, is increasing the retirement age for employees beneficial or detrimental?
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Vietnam: Is increasing the retirement age for employees beneficial or detrimental? (Illustrative image)
According to the provisions in Article 4 of Decree 135/2020/ND-CP elaborating on Clause 2, Article 169 of the Labor Code 2019, since January 1, 2021, the retirement age of employees under ordinary working conditions Vietnam is 60 years 3 months for male employees and 55 years 4 months for female employees; and the age increases by 3 months for male employees each successive year until he reaches 62 in 2028 and increases by 4 months for female employees each successive year until she reaches 60 in 2035.
Thus, from 2021, the retirement age for males will be 60 years and 03 months (an increase of 03 months compared to the current age), and for females, it will be 55 years and 04 months (an increase of 04 months compared to the current age). Furthermore, this age will gradually increase according to the schedule until 2028 and 2035. So, is increasing the retirement age for employees from 2021 beneficial or detrimental?
Based on the current economic-social factors of Vietnam and to institutionalize the spirit of Resolution 28-NQ/TW dated May 23, 2018, increasing the retirement age for employees is necessary for the following 04 reasons:
Firstly: To avoid a labor shortage in the next 20 years due to the aging population.
Currently, Vietnam is undergoing a population aging process where the proportion of people of working age is decreasing, and the dependency ratio is increasing. The labor force participating in Vietnam's labor market in recent years has been slowly increasing in both quantity and percentage, posing a future risk of labor shortage. Therefore, increasing the retirement age for employees is essential to avoid a labor shortage in the next 20 years due to the aging population.
Secondly: To balance the social insurance fund expand the development of participants in social insurance, and adjust pension policies.
Increasing the retirement age for employees can adjust pensions and ensure the balance of the Social Insurance Fund. Specifically, according to calculations by Vietnam Social Security, without increasing the retirement age, by 2020, the revenue of the Social Insurance Fund will equal to the expenditure, and by 2037, the balance of revenue and expenditure will be equal, requiring budget supplements.
Thirdly: To learn from the experiences and practices of countries worldwide regarding retirement age determinations to integrate globally.
Statistics indicate that the retirement age in most countries is above 60 for women and above 62 for men. Increasing the retirement age for employees also aims to align with global norms, where the common retirement age is 60-62, without gender-specific limits.
Fourthly: Increasing the retirement age to 62 for men and 60 for women is necessary to avoid sudden adjustments to a much higher level in the future. Most countries increase the retirement age gradually to narrow the retirement age gap between men and women.
Thus, the reasons and analysis demonstrate that increasing the retirement age for employees is necessary to avoid a labor shortage in the next 20 years and ensure the long-term balance of the Social Insurance Fund. However, some concerns increasing the retirement age will not ensure employees' health, as their health deteriorates, and cognitive abilities decline with age, potentially leading to increased unemployment among young employees.
Therefore, to avoid a "shock" to the labor market and balance society's adaptation to the increasing retirement age, Decree 135/2020/ND-CP has adjusted the retirement age gradually. It increases by 03 months yearly until 2028 (for men) and by 04 months until 2035 (for women). The gradual increase in retirement age helps enterprises and employees adapt to the new regulations, prevents shocks to both enterprises and employees, and contributes to political-social stability.
>>> See also: Gradually increasing the retirement age each Year from 2021.
Ty Na
