AUSTRALIA-WORLD BANK GROUP STRATEGIC PARTNERSHIP IN VIETNAM Gender Theme HOW TO DESIGN THE VIETNAM LABOR CODE TO IMPROVE GENDER EQUALITY Copyright © 2019 The International Bank for Reconstruction and Development / The World Bank Group 1818 H Street, NW, Washington, DC 20433 USA All rights reserved. The findings, interpretations, and conclusions expressed in this report are entirely those of the authors and should not be attributed in any manner to the World Bank, or its affiliated organizations, or to members of its board of executive directors or the countries they represent. The World Bank does not guarantee the accuracy of the data included in this publication and accepts no responsibility whatsoever for any consequence of their use. Cover photo credits: Shutterstock. For more information on this note and the Gender Theme of the Vietnam Australia -Bank Partnership Program II, please contact Dung Thuy Vu, Team Assistant, World Bank Hanoi (dvu1@worldbank.org) or Task Team Leader Helle Buchhave, Senior Social Development Specialist, World Bank (hbuchhave@worldbank.org). PREFACE This advisory note is follow-up to a workshop hosted by the Social Affairs Committee of the Vietnam National Assem- bly and The World Bank on January 11, 2019, for members of the Social Affairs Committee and other National Assem- bly representatives. The workshop, conducted under the auspices of Australia-World Bank Group Strategic Partnership Program 2 (ABP2), was designed to inform a dialog on opportunities for how the 2012 Labor Code can be adjusted to balance the playing field between men and women so that they have equal access to and equal benefits from the labor market. The World Bank approached the participants with the overall objective to address the question how can the Labor Code include incentives that promote the narrowing of existing gender gaps in Vietnam? The workshop was implemented as part of the Vietnam Women’s Economic Empowerment Project under the ABP2, which is supporting the Government of Vietnam on its efforts to ensure that gender is addressed in legislation, including the Labor Code. The workshop was part of this more comprehensive Project, which is investing in enhancing available gender data and analysis that will assess women’s constraints to engage in paid work; investments in care services; research on the cost and benefits of pension age gender gap; and a large capacity building program for policy makers, key practitioners, and local officials on how to assess laws through a gender lens. The Social Affairs Committee members are in vital positions to ensure policies are meeting the high standards of ad- dressing gender equality laid out in the Promulgation of Laws from 2015. This note introduces some of the work under the ABP2 in supporting several levels of the Government of Vietnam to ensure that legislation addresses existing gender gaps and is not causing or increasing gender inequalities. The Workshop on January 11, 2019, was chaired by Mr. Bui Sy Loi, Deputy Chair of the National Assembly’s Com- mittee for Social Affairs with co-chair Keiko Inoue, Program Leader, World Bank. The presenting World Bank team included Wendy Cunningham, Lead Economist; Helle Buchhave (Task Team Leader), Senior Social Development Spe- cialist and; Cuong Viet Nguyen, consultant. 1 HOW TO DESIGN THE VIETNAM LABOR CODE TO IMPROVE GENDER EQUALITY I. INTRODUCTION Vietnam has made substantial progress along key gender equality measures. Although there are still several persis- Gender Defined tent gaps, Vietnam has gained a solid reputation as a coun- Gender refers to the social, behavioral, and cultural try with a relatively high level of gender equality, includ- attributes, expectations, and norms associated with ing in the area of women’s economic empowerment. being male or female. Gender equality refers to how However, a second generation of challenges is emerging these factors determine the way in which women and that may reverse previous gains and increase gender- men relate to each other and to the resulting differ- based disparities. These challenges are the result of an ar- ences in power between them (World Bank (2011) ray of socio-economic and demographic changes that are World Development Report 2012). shaping Vietnam’s future, such as regional and global economic competition, slowing growth in labor produc- tivity, aging, and urbanization. In Vietnam, as well as everywhere in the world, women and men take on gender roles throughout their life cycles The government is developing new policies to address the that have important implications for their relationship to impact of these trends. However, if policy changes are to the labor market. These roles sometimes change accord- ensure national targets are truly met, it is critical that pol- ing to life circumstance—from breadwinner, to single icy dialogue and legislation be well informed and build on head of household, to elder caregiver, etc. This makes data and evidence recognizing the opportunities for both gender assessment of laws complex but worthwhile, be- men and women to contribute to and benefit from devel- cause in legislation there is the opportunity to challenge opment; as well as knowledge of underlying causes to ex- existing gender norms so that women and men are less isting inequalities. This is why the detailed look at the constrained by their gender roles in the labor market. Labor Code is such an important and strategic approach. A Labor Code that addresses existing and potential gender inequalities is important to ensure that men and women can equally contribute to and benefit from Vietnam’s eco- nomic growth. It is also important from a rights-based per- spective. 2 II. GENDER GAPS IN THE LABOR FORCE What does gender look like in the labor To further extrapolate, the 76 percent of working women (compared to 86 percent working men) does not take into market in Vietnam today? account the unpaid homecare that women and men This question might be answered by looking at various in- engage in. Taking into consideration housework time and dicators.1 defining labor force participation as the share of women age 15 or older who are either working in the market or A. Female labor participation working in the home, then about 85 percent of women are working and about 85 percent of men are working. The array of dots in Figure 1 represent female labor force Following, there is gender equity in “total” work (market participation in about 100 countries around the world. The and nonmarket), but this is often not observed since labor force participation rates of women in Vietnam is nonmarket work is ignored in official statistics. about 76 percent. This means that about 76 percent of women, age 15 or above, are working or are searching for B. Wages work, as a share of a total number of women who are age 15 or above. Vietnam has higher female labor force par- A second indicator for answering the question is wages. ticipation rates than most of the countries in the world. Figure 2 shows the wage gap measured in 2011–2014. However, more women are self-employed or do not re- Women—who are working in the same occupations as ceive any income for their labors, as compared to men. So, men, are the same age as the men, same demographic pro- while women have high labor force participation rates in file as the men, and living in the same region as the men— Vietnam, the kind of work that they are doing is less re- were earning about 15.4 percent less than the men in 2011. warded than the work that men are doing. This number dropped to 12.5 percent in 2014, a positive sign that the gender gap is closing. But, nevertheless, there is still the negative aspect of a continuing gender wage gap, which exists more in certain occupations. 1 For further reference see: World Bank (2018), Vietnam Future Jobs—The Gender Dimension. 3 export jobs as compared to 35 percent of men holding jobs in the export sector. By 2015, about 68 percent of workers employed by foreign-owned companies operating in Vietnam were women, which is equivalent to nearly 1.5 million workers. In fact, women are highly over-rep- resented in the textiles and apparel sectors. Since workers in foreign firms usually enjoy the full set of legally man- dated salary and social benefits, which is not always the case in other firms, women also enjoy a greater package of benefits from working. Looking at the skill levels in conjunction with jobs, women tend to cluster in low-paid occupations and in tra- ditional forms of work. Almost 52 percent of farm work- ers were women compared to 48 percent of farm workers who were men. And about 55 percent of household enter- prise owners were also women compared to 45 percent who were men. Family farmers and household enterprises on average earn lower incomes than employed workers. Women cluster into occupations with the least-required skill levels, the poorest work conditions, and the lowest wages; and they are significantly under-represented among managers. D. Ethnic minority women Female ethnic minorities are at a particular disadvantage, Photo: Tran Thi Hoa | World Bank particularly those from the poorer groups and not the more prosperous, majority Kinh or Hoa ethnic groups. Only 17 percent of poor ethnic minority women hold a wage- C. Job type and skill level paying job compared to Kinh or Hoa women at 22 percent with wage-paying jobs. In further comparison, 34 percent Another indicator for describing gender in the labor mar- of ethnic majority men from Kinh or Hoa groups have ket is job type along with skill level. Are women working wage-paying jobs. In terms of wages, women from ethnic in better types of jobs than men, worse types of jobs than minority groups earn almost 9 million VND annually (ap- men, or is it equal? prox. USD 387), which is half of what is earned on aver- Women hold a large share of modern jobs in exporting age by ethnic majority men. and/or foreign firms. By 2012, women held 53 percent of 4 III. LABOR CODE ADDRESSING GENDER EQUALITY What is the challenge? works for them but this structure also balances the needs of the hiring firms. The Labor Code should encompass The challenge is to adjust the Labor Code to reduce gen- means to alleviate female-specific employment costs so der disparities in the observed labor market outcomes. firms have a greater incentive to employ women. The There are a few underlying assumptions that will guide Labor Code should also set clear norms and expectations the exploration of this challenge. in a society with strong gender norms. The primary underlying assumption is that laws are in- The Vietnam Women’s Economic Empowerment Project tended to change people’s decisions so that the resulting supports the Government of Vietnam in its commitment behaviors are socially optimal. The assumption is that to assess new laws through a gender lens, as per the Law people choose behaviors that make them happy and what on Promulgation of Laws of 2015. It does so by helping affects their happiness may be money, may be relation- to inform policy dialogue based on data and evidence. ships, may be leisure time, may be psychological well- This advisory note is based on the observation that some being, or could be a litany of these and other factors. So, articles of the Vietnam Labor Code tend to broaden when individuals choose behaviors that might be good for gender gaps. Some articles reinforce gender roles and them, these same behaviors may not necessarily be good have negative implications for women and/or for men. for society as a whole. Laws are created to affect that de- And there are articles in the Labor Code that break with cision-making process so that when people make deci- traditional gender roles and lessen the gender gap. This sions that are good for themselves, those decisions also advisory note suggests proposals that would modify the have a socially optimal outcomes. The definition of so- Vietnamese Labor Law in such ways to: cially optimal outcome in this context means gender equality. • Balance the playing field between men and women so that both have equal access to and The challenge in the labor code is finding a balance be- equal benefits from the labor market; tween supporting women and men in a way that respects their autonomy while guiding firms on how to balance • Introduce incentives so that gender gaps nar- gender-specific challenges with firm profitability. In row; and terms of real-life experience, women are in a situation where jobs do not constrain their ability (or that of men) • Challenge existing gender norms so that to be workers, spouses, friends, and parents. Women have women and men are less constrained by the freedom to engage in the labor force in a way that gender roles during their lifetimes. 5 IV. REFORMS IN THE LABOR CODE TO ADDRESS GENDER GAPS It is imperative to first identify the articles in the 2012 There are six areas where reforming the Labor Code are Labor Code that could be revised to better close gender recommended. gaps by (a) taking into consideration how gender roles affect participation and decisions by men and women in REFORM AREA 1: the labor force, and (b) legislating underlying factors that may lead to the observed gender gaps. ESTABLISH EQUALITY FRAMEWORK TO ADDRESS WAGE GAPS The data and recommendations in this advisory note come mainly from World Bank analysis in Vietnam in partner- It has been noted that men and women are paid differently ship with the Ministry of Labor, Invalids, and Social Af- for doing the same work. Women earned about 10 percent fairs. Some of the data supporting the recommendations less than men in 2015. If men and women are compared are included in the publication titled “Vietnam’s Future with the same level of education and working in the same Jobs—The Gender Dimension” (World Bank 2018). occupation, the gender wage gap is about 12 percent. And women earn less than men in every occupational category What is the methodology used for the analysis? Evidence- except for clerks. So, whether they are managers or in un- based, cost-benefit analysis is assessed from the perspec- skilled occupations or services, women earn less than tive of two decision-making groups and their genders: men. (a) male and female workers and (b) employers of male and female workers. Vietnamese and international data There are 3 articles in the 2012 Labor Code that can be are used for two purposes: first, to identify labor market modified in order to address labor gaps. Article 3, outcomes and how they differ by gender; and second, to Section 9 provides several terms that are used throughout inform the assumptions that underpin the analysis. Two the Labor Code, but several existing terms should not be key assumptions are made: first, that women know what in the law. And Article 4, Section 1 “guarantees the legit- is best for themselves; and second, that firms are profit imate rights of workers; to encourage agreements provid- maximizers. Thus, the decision-making coming from both ing workers with more favorable conditions than those the workers and the firms is assessed in consideration that stipulated in the Labor Code”. Missing from these two ar- they are the most directly affected by the Labor Code. ticles is a definition of what is discrimination and a defi- Consideration is also given to how male/female biological nition of gender and equality. Article 90, Section 3 states differences and gender norms affect decision-making by “employers shall ensure that wage is paid equally without both workers and potential employers of males and of gender-based discrimination against employees perform- females. ing work of equal value.” There are factors that this analysis does not assess. It does Reform 1 recommendations. The Labor Code should not assume that gender roles are fixed. It does not assess define the principles underlying the concept of discrimi- the accompanying decrees or other regulations that gov- nation and the concept of gender and equality. And regu- ern the implementation of the 2012 Labor Code. It does lations should be passed to specify what is meant by equal not take into consideration compliance with the Labor value. This is particularly important because the data Code. It does not consider other laws or conventions that show that women in comparison to men in the same occu- are operating in parallel to the 2012 Labor Code. And, it pation, at same level of education, and in same geographic does not propose specific legal language but lays out prin- area are earning less. ciples to consider when drafting the legal language. 6 REFORM AREA 2: and physiological characteristics and for motherhood functions. The article is intended to help develop women DO NOT PUT WOMEN AT A professionals while being respectful of traditional gender DISADVANTAGE EX ANTE roles in the household, and yet it puts women at a disad- vantage. Noting the earlier discussion of assumptions, that The main idea underlying this reform area is that men and women know what is best for them, Article 153 puts em- women should have more freedom to work in any job type ployers in a situation to determine what is best for women regardless of gender. Figure 3 looks at the concentration in terms of their physical and physiological characteris- of gender by occupation in different country income tics; this is the woman’s choice. The third, Article 160 groups. Across the world, even in more industrial devel- defines work that is harmful to childbearing and parenting oped countries that presumably pay more attention to gen- functions, as specified by the list of works stipulated by der equity, men and women work in different occupations. the government. Again, employers are not in a situation to choose what is harmful; that is up to the worker, whether Vietnam’s legislation has two areas that focus on giving the worker is a man or a woman. women the freedom, if they choose, to work at the same jobs as men. The first area focuses on those aspects of the The second area, which focuses on women’s freedom to law that may suppress women’s engagement and growth choose what job they want, identifies 4 articles that relate in the labor market. The second area focuses on the legal to not putting women at a disadvantage ex ante through aspects of not putting women at a disadvantage ex ante, laws that increase the cost of hiring women. While these namely laws that increase the cost of hiring women. laws may intend to support women by providing addi- tional support to working women, the law may have the Under the first area are three articles that appear to put opposite effect and actually discourage firms from hiring women at a disadvantage even before entering into the la- women. Article 154, Section 3 states that employers shall bor force. Article 19 prohibits acts of employers when provide sufficient toilets appropriate for female employ- signing and implementing employment contracts. Article ees. Article 155, Section 5 states that “during her men- 153, Section 5, specifies regulation to develop various struation period, a female employee shall be entitled to a forms of training to enable female employees to acquire 30-minute break in every working day; a female employee additional occupational skills that are suitable to physical 7 nursing a child under 12 months of age shall be entitled to to employers for hiring men or women. Similarly, in Ar- 60-minute breaks in every working day with full wage as ticle 155, both men and women need regular breaks for stipulated in the employment contract—menstrual pe- health throughout the day at all times of the month; and riod.” Article 153, Section 6 states “to develop plans and the article should reflect this. Article 108 on rest breaks measures to organize day care facilities and kindergartens during working hours, should be considered whether it in areas where a large number of female employees are would be sufficient to provide protection to men and employed” and Article 154, Section 4, “Employers shall women and to equalize the cost of hiring men and women. assist and support in building day care facilities and kin- Articles 153 and 154 clearly state that employers should dergartens, or in covering a part of the childcare expenses provide childcare support for women employees. The law incurred by employees.” should be broadened that it also covers fathers, at the same cost to an employer as hiring mothers. Does the Labor Law in Vietnam REFORM AREA 3: prevent women from working in the ENSURE PROTECTIONS IN TYPES same occupations as men? OF NONSTANDARD WORK THAT Vietnam Labor Law has specific stipulations about preg- WOMEN TEND TO ENGAGE IN nant women and nursing women. In some countries such as Cambodia, Indonesia, Laos PDR, the Philippines, Three statistics are provided here to illustrate that women and Singapore, pregnant women and nursing women and men participate in the labor force differently. First, can be engaged in any job that men are engaged in, But domestic cleaners and helpers are significantly over-rep- other countries such as China, Korea, Mongolia, Taiwan, resented by women at about 96 percent compared to men and Vietnam say no; their laws assess that women have at 4 percent. Second, women are over-represented among biological functions that prohibit their engagement in part-time workers, with approximately 20 percent, work- the same kinds of work as men. ing 30 hours weekly or less, as compared to men at about 14 percent. And third, home-based piece workers are over-represented by women at about 62 percent while Reform 2 recommendations. One behavior that Arti- only 38 percent of men fill these types of jobs. cle 19 does not regulate that it should regulate is to stipu- late that employers may not ask or use other means to ac- Reform 3 recommendations. Article 34 regulates part- quire information from men or women about marital sta- time work and is complete and very supportive to part tus, parental status, child care responsibilities, pregnancy time workers, who tend to be women. This Article does status or pregnancy plans. Under Article 153, employers not need change. Article 153, Section 2 encourages em- should not be in a situation to assess the physical and ployers to create conditions for providing employees with physiological characteristics of an employee, only the em- regular employment and to apply widely the systems of ployee can assess this. The Article should be eliminated flexible work hours for part time or home-based work. As and instead refer to the article that defines workers’ rights well, this article is fair and well represents women under to training and occupational development. Article 160 these provisions, needing no change. should also be dropped. And to reflect the intent of the article to protect workers regardless of sex, Chapter 9 of However, Article 185, Section 2 is much weaker and not the Labor Code and the Occupational Safety Hazards Law within the scope of application of the Labor Code. Arti- should be revisited and recommended to workers and em- cle 185, Section 2 specifies the regulations for employees ployers to ensure that nobody is working in harmful situ- who perform home-based processing work. But the Labor ations. Code does not regulate this work primarily done by women, putting them at a disadvantage, particularly as It is not difficult to agree with Article 154; women do women must negotiate the terms of the contract with em- need toilets, but so do men. The article should specify this ployers. The government should define the regulations as a right for all workers, men, and women. Employers under the article so that the stipulations are explicitly and should provide appropriate facilities for all workers. So, clearly defined, similarly as Article 34 in defining part- in essence, this revision protects women by providing toi- time work. lets, but it will also protect men and will equalize the costs 8 Chapter 10 Section 5 in the Labor Code focuses on do- engaged in home-care work (illustrated by the thick yel- mestic work but requires more details differentiating be- low band on the left graph). Women work an average of tween live-in and live-out domestic workers. Specifically, 35 hours per week in home care, compared to 21 hours per for live-in workers, policy-makers should develop a sepa- week for men. And women with less than a primary edu- rate section that would include terms for wages, in-kind cation work more than 9 hours of unpaid care work daily payment, hours worked, overtime, rest time, severance (Action Aid 2016: Make a House Become a Home). An- pay, pregnancy and maternity stipulations, sexual harass- other qualitative observation of collected data shows that ment, OSHA stipulations, and grievances. These changes parents choose jobs for their daughters that allow their would take into consideration quite a bit of in-kind pay- daughters to be mothers and wives. Work would be a sup- ment as well as irregularities in terms of hours and the plemental activity. Given the demographic transitions that other conditions of work. This section will differ for live- are happening in Vietnam, home care demands are likely out workers who can follow the stipulations of the Labor to increase as the elderly dependency ratio increases. Code. Which is to say, women and girls will increasingly have greater demands on their times in the household. REFORM AREA 4: Positive provisions with no real need for change have MAKE WORK MORE FEASIBLE GIVEN been noted in the 2012 Labor Code that fall under this re- THE FEMALE- AND GENDER-SPECIFIC form area. Alleviating the conflict between work and homecare, Article 37, Section 1, states “an employee with DEMAND ON WOMEN’S TIME a definite term employment contract shall have the right The Labor Code can do more to align work with women’s to unilaterally terminate the employment contract prior to biological- and gender-imposed time constraints. Biolog- its expiry in one of the following circumstances: … ical-imposed time constraints are pregnancy and mother- (d) The employee is unable to continue performing the hood. Gender-imposed time constraints tend to be home employment contract due to personal or family difficul- care. ties.” This article does not specify gender, making it applicable to both men and women. By keeping the lan- In a side-by-side comparison of time use by female and guage as it exists in this article, both men and women can male (by age), Figure 4 shows that women are much more adjust their employment based on personal and family 9 difficulties. Alleviating the physical and time demands of competent health care institution which affirms that the pregnancy and early motherhood, Article 156 states early resumption of work does not adversely affect her “where an employee is pregnant and obtains a medical health.” Policy-makers should stipulate the total time for certificate from a competent health care institution, which pregnancy and maternity leave. This allows the female states that if the employee continues to work, it may ad- worker to decide for herself whether she takes such leave versely affect her pregnancy, the employee shall have the before or after the birth of her child. She will decide with right to unilaterally terminate the employment contract, or her doctor when she can return to work. to temporarily suspend the employment contract.” This provision protects women if there is a medical reason that REFORM AREA 5: work may be affecting the health of their unborn child and of the women herself. TACKLE GENDER NORMS The Labor Code does attempt to erode some gender norms Reform area 4 recommendations. Two articles in the that may put women at a disadvantage, but can do more to 2012 Labor Code could be adjusted in order to alleviate breakdown gender barriers. Figure 5 signals where the La- the conflict between work and home care. Article 116 (1) bor Code can address gender norms. First, the Labor Code states that “an employee is entitled to take a fully paid can do more to encourage the role of fathers. There are leave of absence for personal reasons … marriage …. nearly 50 countries that stipulate parental leave rather than death” of a family member. Article 116 should be ex- only maternal leave. There are also about 45 countries that panded to include stipulations that an employee is entitled have stipulations for paternity leave. And there are about to take fully paid leave of absence for personal reasons, 25 countries that stipulate both paternity leave and paren- including family care (child or elder relative) and be ap- tal leave. There appears to be a commonality across coun- plicable for male and female employees. Similarly, tries at every level of development, from the poorest to Article 159 states that “when a female employee takes richest, that there is space for parental leave and there is leave from work for pregnancy check-up … taking care of space for paternity leave in the labor markets. a sick child who is under 7 years of age … employee is entitled to social insurance allowance…”. Article 159 Figure 5 also illustrates the occupational segregation that should stipulate that men are also entitled to social insur- exists in Vietnam by showing the hiring practices in lu- ance when accompanying their partner for pregnancy crative or emerging occupations where women are under- check-ups or when taking care of a sick child who is under represented. Males tend to be over-represented among sci- 7 years of age (and for elder care). ence, technology, engineering, and mathematics (the STEM fields) while women are over-represented in social Two articles should be adjusted to alleviate the physical and behavioral studies and medical fields, education, and and time demands of pregnancy and early motherhood. business administration. Data show that even before The recommendations should be approached with sensi- young girls and young boys enter the labor force, there is tivity as not to incur costs to the employer that could already a gender differentiation in the fields of study, disincentivize the employment or support of female em- which naturally will lead to occupational segregation ployees. Article 32 has stipulations for an employee who when they do enter the labor force (World Bank (2018) is pregnant (in accordance to Article 141). Policy-makers Gender Gaps in Earnings in Vietnam). should consider expanding the stipulations to include employees who are on maternity leave. Article 157 (1) Reform area 5 recommendations. The Labor Code states “prenatal leave should not be longer than 2 months. should encourage the role of fathers by stipulating family- Section (4) states that the female employee may return to related rights to men. Particularly adding to the Labor work before the expiry of her statutory maternity leave as Code those stipulations for paternity leave that give men stipulated in Clause 1 of this article, if so demanded and the right to take time off with their newborn children and is agreed by the employer, provided that the female the mothers; and this time away would be covered by so- employee has taken at least 4 months of prenatal and post- cial insurance, just like it is covered for women. Revisions natal leave and she obtains a medical certificate from a to the Labor Code (Article 153 (6) and Article 153 (3)] 10 REFORM AREA 6: DELAY RETIREMENT There is a gender gap in the retirement age of men and women. The retirement age is 60 years of age for men and 55 years of age for women. According to the World Health Organization life expectancy of healthy years in Vietnam beyond age 60 is 13.8 years for men and 16.1 years for women (2010 data), suggesting that the ma- jority of men and women have significant work ability well beyond 60. Household survey data from Vietnam in- dicates that well over half of urban men and over half of urban women over 55 year of age continue to work be- yond 60 years of age (based on World Bank analysis of VHLSS 2012). The ongoing dialog around the update of the Vietnam Labor Code involves debate on increasing the pension age and decreasing the gender pension gap. To inform this dialog, the World Bank is conducting a cost benefit analysis to outline the benefits and costs of extend- ing the retirement age and decreasing the gender pension gap. Three scenarios are explored: • Scenario 1. Increasing the retirement age of women from 55 to 60. The retirement age of men is unchanged at 60. • Scenario 2. Increasing the retirement age of women from 55 to 60, and the retirement age of men from 60 to 62. (This scenario has been pro- posed by the Ministry of Labor, Invalid and So- cial Affair). • Scenario 3. Increasing the retirement age of both men and women to 62 Table 1 summarizes the preliminary estimates made of the annual benefits and costs of delayed retirement. We first look at the benefits caused by the retirement age being ex- should also provide day-care services, family leave, and tended and therefore people can work longer and earn reproductive rights to fathers, husbands, sons, and part- more wages. The benefit is computed by the total wages ners. The government should review Article 136 (4), that can be earned by women working after 55 and men which provides tax incentives to firms that are hiring working after 60. For example, according to Scenario 2, if women, and consider further developing this article in or- women work until age 60, they can collectively earn an der to provide additional tax reductions for hiring women additional 10,619.4 billion VND (around US$483 mil- lion). If men work until age 62, they can collectively earn in STEM-related jobs. an additional 4,595.4 billion VND (around US$209 million). 11 TABLE 1. Estimated Benefit and Cost of Delayed Retirement Benefit: Cost of Not Doing Self-Employed Net Income Groups Who Have Share in Scenario Increased Wage Housework Income Increased Late Retirement GDP (%) (billion VND) (billion VND) (billion VND) (billion VND) (1) (2) (3) (4) (5) (6) (7) Scenario 1: Women retire Women retire at 60 10,619.4 915.6 2,812.0 6,891.9 0.153 at 60 Scenario 2: Women retire at 60 10,619.4 915.6 2,812.0 6,891.9 0.153 Women retire Men retire at 62 4,595.4 329.0 1,327.9 2,938.6 0.065 at 60, and men at 62 Total 15,214.9 1,244.6 4,139.8 9,830.4 0.218 Scenario 3: Women retire at 62 13,714.5 1,250.9 3,612.3 8,851.3 0.197 Both women Men retire at 62 4,595.4 329.0 1,327.9 2,938.6 0.065 and men retire at 62 Total 18,309.9 1,579.9 4,940.1 11,789.8 0.262 Source: APB2 Gender Task Team estimate. Benefit of delayed retirement Benefit = Wage * Proportion of working people; Cost = Cost of not doing housework + self-employed income. However, there is an associated cost of delayed retire- is increasing. By year 33 (using projected demographics ment. Working in the labor market means less time spent for 2049), the benefit of the extending the retirement age completing housework and forgone self-employed in- accounts for 1.21 percent of GDP in Scenario 1; 1.51 per- come. Different estimation methods are used to predict cent of GDP in Scenario 2; and 1.89 percent of GDP in these costs: the net benefit gained is equal to the differ- Scenario 3 (the net benefit decreases slightly between year ence between the benefit and the cost (the last column of 32 and year 33 since the total population of women ages Table 1). The net benefit is higher if the age of retirement 55-62 and men ages 60-62 decreases in this year because is higher. If the gender pension gap is eliminated and the of a decreasing fertility trend). retirement age at 60 for women is kept, then the net annual benefit of Scenario 1 is 6,891.9 billion VND (US$313 To assess the impact of keeping different retirement ages million), equivalent to 0.152 percent of GDP. In Sce- for men and women, the cost benefit analysis also looks nario 2, with a pension at 60 for women and 62 for men, at the benefits from raising the retirement age from 60 to then the benefit to women is the same as the first scenario; 62 for each (Figure 7). The lower wages among women but there is additional benefit for men. The annual net ben- means that, initially, the gains from raising women’s age efit of Scenario 2 is around 0.218 percent of GDP. In Sce- are lower than those of raising men’s (especially since, in nario 3, the annual net benefit is the largest, and it is pre- these projections, women’s retirement age would not rise dicted at 0.262 percent of GDP. above 60 for another ten years given the staggered imple- mentation). Once the retirement age is the same for both Figure 6 projects the net benefit of the policy over time men and women (after 20 years), we can see that the ben- (from the first year to the 33rd year of implementation). efits of this rise are fairly similar. However, the gains from This projection assumes that the retirement age is raised raising women’s age eventually surpass that of raising gradually, by 6 months per year for women and 4 months men’s age, since women are projected to make up an ever- per year for men (following MOLISA’s proposals). These growing part of the formal labor force. In effect, should also account for the changing demographics in Vietnam, Vietnam retain a lower retirement age for women, the so that the benefit of increasing the retirement age grows foregone benefits would effectively cancel out and even- significantly over time given that the number of older peo- tually surpass the gains from raising men’s retirement age. ple is higher and the share of people having a formal job 12 Reform area 6 recommendations: There is a gender pen- sion gap included in Article 187 (1) which refer to the law on social insurance, stating that an old-age pension shall be provided to eligible at the age of 60 for men and 55 for women. A cost benefit analysis finds that increasing the pension age to 62 for both men and women results in the highest net benefit to GDP and to women and men. Revi- sions to the labor code should update Article 187 (1) to eliminate the gender pension gap, by allowing men and women to retire at the same age. 13 V. LOOKING FORWARD The law and how it creates and perpetuates legal barriers Revisions to the Labor Code should establish basic prin- to women working is key to Vietnam’s foundations as a ciples; specific language can be provided in the regula- prosperous, creative, and dynamic nation. The 2012 Labor tions so as to not over-define the Labor Code leading to Code has many provisions that support gender equality, constraints that are much more difficult to address than if yet gender gaps persist in many aspects of the labor mar- they were simply regulated. The recommendations were ket. Articles in the Labor Code should be reformed to (a) detailed in Section IV. give women greater agency over their work lives; (b) even the playing field between men and women in terms of It is important to consider implementation and enforcea- their work lives and their roles as parents and family bility when assessing the effectiveness of changes to the members; and (c) encourage greater gender equality in the Labor Code to enhance gender equity. In this regard, we labor market. recommend a key question for policy makers and the pub- lic consultation be: How does the Labor Code make pro- visions that balance incentives for employers so that men and women have equal access, and that men and women are equally valued as employees? Photo: Shutterstock 14 VI. HOW TO LEARN MORE ON GENDER AND LEGISLATION IN VIETNAM Launched in October 2018, a comprehensive e-learning Academy of Social Sciences (VASS) who have taken the course, “Legislation and Gender Equality in Vietnam", e-course. Leading the effort, the Ministry of Labor, Inva- was designed in Vietnamese language by the World Bank lids, and Social Affairs has also requested the e-course be under the ABP2 supported project Vietnam Women’s Eco- tailored to officials at the provincial and commune levels nomic Empowerment and in close consultation with the who inform new laws and monitor implementation of National Assembly Social Affairs Department, the Minis- laws and regulations. The full e-course is available to the try of Labor, Invalids and Social Affairs and, the Ministry public through the World Bank’s Open Learning Campus of Justice. The e-course is developed for, but not limited site, under the title Bình đẳng giới và Lập pháp ở Việt to, professionals who prepare and assess laws and evalu- Nam. (find it at: olc.worldbank.org) ate their impacts. The e-course is divided into 3 modules, designed to be self-paced for convenient study at conven- The e-learning course is enriched with video-messages ient times by any person with access to the internet from experts in the Government of Vietnam, the World through a personal computer, tablet, or mobile phone. Bank, and the Australian Embassy in Hanoi. The course is in Vietnamese. Each module takes around 3 hours to While e-learning is a new concept in Vietnam, this inno- complete and includes a number of quizzes and tests. An vative approach has already generated a lot of interest electronic certificate is issued after successfully complet- with members of staff from the National Assembly, key ing the course. Box 1 describes in more detail the cover- ministries, the Vietnam Women’s Union, and the Vietnam age in the 3 modules. Box 1. Modules for E-learning Course: Legislation and Gender Equality in Vietnam Each of the 3 inter-linked modules focuses on one main topic that then serves as background for the next module. Module 1 discusses key concepts related to gender and gender equality. The objective is to explain the relevant gender equality concepts and how gender equality matters in the 3 main domains of (a) human endowments; (b) access to economic opportunities; and (c) voice and agency. Module 1 also provides an overview of the national and international policy and legal frameworks related to gender equality (e.g. the ASEAN Gender Equality Instruments). Module 2 focuses on the policy framework for gender equality in Vietnam, particularly the National Strategy on Gender Equality and the requirements of Article 35 of the Vietnam Law on Laws of 2015. The module also discusses how to carry out a gender assessment and what are good sources for data, including recommendation from experts from, for example, the General Statistical Office. Module 3 focuses on monitoring and evaluation from the perspective of how to track and evaluate gender impacts. It discusses how monitoring and evaluation can be used to track and report on progress, results, and impacts of laws on gender issues. One key question answered in this module is the ways in which gender-sensitive monitoring and evalu- ation differs from other types of evaluation in areas such as team composition, disaggregation of data, and the types of outcomes that are measured. Does the Labor Law in Vietnam prevent women from working in the same occupations as men? Vietnam Labor Law has specific stipulations about pregnant women and nursing women. In some countries such as Cambodia, Indonesia, Laos PDR, the Philippines, and Singapore, pregnant women and nursing women can be engaged 15 in any job that men are engaged in, But other countries such as China, Korea, Mongolia, Taiwan, and Vietnam say no; their laws assess that women have biological functions that prohibit their engagement in the same kinds of work as With support from: 8 Dao Tan Street, Ba Dinh District, Hanoi, Vietnam Telephone: +84 24 37740100 Facsimile: +84 24 37740111 Website: www.dfat.gov.au 8th Floor, 63 Ly Thai To Street, Hoan Kiem District, Hanoi, Vietnam Telephone: +84 24 39346600 Facsimile: +84 24 39346597 Website: www.worldbank.org/en/country/vietnam 16