A vendor walks in an empty street of Hanoi after the city started to impose stricter social distancing measures amid a surge in COVID-19 cases on July 13. (Photo: VNA)Hanoi (VNS/VNA) - With the second COVID-19 support package fromGovernment being disbursed for a wide range of recipient groups includinginformal workers, vendors like Nguyen Thi Chien is counting the days for themoney to arrive.
For her, the relief can't come soon enough.
Chien, a resident of Nam Dinh province who moved to Hanoi in 2000s, hascollected used plastics and paper to resell for more than 10 years.
Travelling around the city for up to eight hours a day pushing her oldbicycle in all weather conditions, the single mother could still manage tosupport her family of three with a monthly income of 4 million VND (170 USD).But things have been much tougher since the pandemic hit.
Informal workers like Chien, who work for themselves and have nocontract are not eligible for social protection and suffer hard because ofCOVID-19.
“When the social distancing measures were made stricter and restaurantsclose, I come home earning nothing,” she said, adding that her main collectingplaces include restaurants where she can find used plastics and offices whereused paper stuff is given free or sold.
Less income made her more creative in cutting spending.
As her only daughter, a university student, has shifted to onlineclasses due to COVID-19, she sent her back to the hometown with her grandmotherto save money.
“I save money on whatever I can, whether it’s food or accommodation,”the 49-year-old said, adding that going vegetarian turns out to have doublebenefits, helping her skip meats and saving money in times of crisis.
Though economic growth picked up to some extent in the second half oflast year, and more strongly in the first half of 2021, it has not beensufficient to fill the job creation gap. As a result, employment quality hasbeen deteriorating, according to the International Labour Organisation (ILO) inVietnam.
Since the beginning of 2020, the informal employment rate has been on anupward trend both in manufacturing and in market services, the organisationsaid.
According to the latest report by the General Statistics Office, thenumber of informally employed workers in the country in the second quarter of2021 was 20.9 million, up 1.4 million over the same period last year.
Valentina Barcucci, ILO in Vietnam’s Labour Economist and Officer inCharge told Viet Nam News: “It can be easy to see how informal workers will besignificantly affected by the current wave, and possibly, even more in thesecond half of June and this month, as the virus spreads and businesses andservices are closed in large affected areas.”
Informal workers are not just limited to street vendors, they also includeemployees of businesses, who have an agreement with an employer but do notexist in the employer’s books, she said.
“Employers experiencing economic hardship might have to resort toretaining a worker without paying social protection contributions, forexample,” the economist said.
With the drop in earnings, no support sources and no savings at all, Chienhad to resort to borrowing money from her friends, relatives and fellowworkers.
Barcucci added: “In a way, cash transfers can play a double role ofsupporting families maintain their consumption levels through a crisis, but atthe same time mitigate the drop in demand for goods and services faced bycompanies.
“More than a cost, such a package can be an investment in stabilisingthe economy, keeping families away from poverty, and thus leaving no onebehind.”
Vietnam has approved a package worth 26 trillion VND (1.13 billion USD)for labourers and businesses affected by the pandemic, in which informalworkers will be a beneficiary.
One of the updates in the new package compared to the previous one islocal authorities will directly allocate funds to informal workers.
Cities and provinces will set up their own categories to recognise thisgroup of workers, who will receive at least 1.5 million VND each.
In April last year, the Government approved the first support packageworth 62 trillion VND (2.7 billion USD).
According to the Ministry of Labour, Invalids and Social Affairs, by Maythis year, the package had disbursed just 13.1 trillion VND, equivalent toabout 22 percent
The number of beneficiaries receiving cash from this package was nearly13.2 million.
According to an assessment from labour experts, groups of policybeneficiaries and poor households were paid quickly and on time due to theavailable lists and standard data systems while for the remaining targetgroups, especially workers without labour contracts and household businesses,the support was slow due to many administrative procedures and regulations onconditions and standards to receive the assistance.
Delivery and implementation of the second package is a great challengethat needs to be addressed to ensure the support is delivered timely to thosedesperate for cash assistance like Chien.
Barcucci said: “Ideally a relief package should identify those thatneed government support the most, and be tailored and delivered to them.However, this is a very complicated, time-consuming and resource-heavy task,particularly in a country with high levels of informality.
“There will always be a trade-off between the fairness of supportprovided, the speed of implementation, and the fiscal space needed for eachdifferent COVID-19 support package.
“It is up to the State to discuss and decide where optimal balance liesbetween these different dimensions.”
Stronger social protection reform needed
After the first round of support was offered, there were a number ofallocation problems that arose.
Barcucci added: “From the experiences with the first package, there areclear challenges of the existing social protection system which should beaddressed.”
They include the “fragmentation, limited coverage and adequacy” of thesocial protection schemes that lead to the “limited ability” of the socialprotection system to act as an automatic stabiliser in case of shocks.
The 'missing middle' is also a challenge that needs to be solved as theyare mostly workers in informal economy who are in need of immediate support butare not covered by any existing social protection mechanisms, she said.
Besides, the current emergency support mechanisms are not prepared torespond to large scale co-variant shocks and are neither linked to the regularsocial assistance schemes nor to social insurance, thereby they fail to serveas an automatic stabiliser in a shock-resilient social protection system, shesaid.
“The Government should take into account the lessons learned from thelimitations of the previous package, to accelerate the reforming of socialprotection system towards a more shock-responsive social protection system thatwill allow to protect affected people in the COVID-19 and future crises.”
She said there is no single winning approach to the informal economythat a country can learn from others and apply directly.
“Rather, it is necessary to understand in detail the drivers andcharacteristics of informality in each specific context, before moving on witha response,” she added.
Chien doesn't not know if, or when, she will be given any governmentassistance. She plans to contact her local authorities to see if she iseligible.
In the meantime, she continues to take inspiration in life from herdaughter, a fourth year university student who will graduate soon. When thathappens she will no longer have to worry about paying the huge tuition fee.
“I hope she can find a good job after graduation and have a better lifethan me,” the single mother said./.
For her, the relief can't come soon enough.
Chien, a resident of Nam Dinh province who moved to Hanoi in 2000s, hascollected used plastics and paper to resell for more than 10 years.
Travelling around the city for up to eight hours a day pushing her oldbicycle in all weather conditions, the single mother could still manage tosupport her family of three with a monthly income of 4 million VND (170 USD).But things have been much tougher since the pandemic hit.
Informal workers like Chien, who work for themselves and have nocontract are not eligible for social protection and suffer hard because ofCOVID-19.
“When the social distancing measures were made stricter and restaurantsclose, I come home earning nothing,” she said, adding that her main collectingplaces include restaurants where she can find used plastics and offices whereused paper stuff is given free or sold.
Less income made her more creative in cutting spending.
As her only daughter, a university student, has shifted to onlineclasses due to COVID-19, she sent her back to the hometown with her grandmotherto save money.
“I save money on whatever I can, whether it’s food or accommodation,”the 49-year-old said, adding that going vegetarian turns out to have doublebenefits, helping her skip meats and saving money in times of crisis.
Though economic growth picked up to some extent in the second half oflast year, and more strongly in the first half of 2021, it has not beensufficient to fill the job creation gap. As a result, employment quality hasbeen deteriorating, according to the International Labour Organisation (ILO) inVietnam.
Since the beginning of 2020, the informal employment rate has been on anupward trend both in manufacturing and in market services, the organisationsaid.
According to the latest report by the General Statistics Office, thenumber of informally employed workers in the country in the second quarter of2021 was 20.9 million, up 1.4 million over the same period last year.
Valentina Barcucci, ILO in Vietnam’s Labour Economist and Officer inCharge told Viet Nam News: “It can be easy to see how informal workers will besignificantly affected by the current wave, and possibly, even more in thesecond half of June and this month, as the virus spreads and businesses andservices are closed in large affected areas.”
Informal workers are not just limited to street vendors, they also includeemployees of businesses, who have an agreement with an employer but do notexist in the employer’s books, she said.
“Employers experiencing economic hardship might have to resort toretaining a worker without paying social protection contributions, forexample,” the economist said.
With the drop in earnings, no support sources and no savings at all, Chienhad to resort to borrowing money from her friends, relatives and fellowworkers.
Barcucci added: “In a way, cash transfers can play a double role ofsupporting families maintain their consumption levels through a crisis, but atthe same time mitigate the drop in demand for goods and services faced bycompanies.
“More than a cost, such a package can be an investment in stabilisingthe economy, keeping families away from poverty, and thus leaving no onebehind.”
Vietnam has approved a package worth 26 trillion VND (1.13 billion USD)for labourers and businesses affected by the pandemic, in which informalworkers will be a beneficiary.
One of the updates in the new package compared to the previous one islocal authorities will directly allocate funds to informal workers.
Cities and provinces will set up their own categories to recognise thisgroup of workers, who will receive at least 1.5 million VND each.
In April last year, the Government approved the first support packageworth 62 trillion VND (2.7 billion USD).
According to the Ministry of Labour, Invalids and Social Affairs, by Maythis year, the package had disbursed just 13.1 trillion VND, equivalent toabout 22 percent
The number of beneficiaries receiving cash from this package was nearly13.2 million.
According to an assessment from labour experts, groups of policybeneficiaries and poor households were paid quickly and on time due to theavailable lists and standard data systems while for the remaining targetgroups, especially workers without labour contracts and household businesses,the support was slow due to many administrative procedures and regulations onconditions and standards to receive the assistance.
Delivery and implementation of the second package is a great challengethat needs to be addressed to ensure the support is delivered timely to thosedesperate for cash assistance like Chien.
Barcucci said: “Ideally a relief package should identify those thatneed government support the most, and be tailored and delivered to them.However, this is a very complicated, time-consuming and resource-heavy task,particularly in a country with high levels of informality.
“There will always be a trade-off between the fairness of supportprovided, the speed of implementation, and the fiscal space needed for eachdifferent COVID-19 support package.
“It is up to the State to discuss and decide where optimal balance liesbetween these different dimensions.”
Stronger social protection reform needed
After the first round of support was offered, there were a number ofallocation problems that arose.
Barcucci added: “From the experiences with the first package, there areclear challenges of the existing social protection system which should beaddressed.”
They include the “fragmentation, limited coverage and adequacy” of thesocial protection schemes that lead to the “limited ability” of the socialprotection system to act as an automatic stabiliser in case of shocks.
The 'missing middle' is also a challenge that needs to be solved as theyare mostly workers in informal economy who are in need of immediate support butare not covered by any existing social protection mechanisms, she said.
Besides, the current emergency support mechanisms are not prepared torespond to large scale co-variant shocks and are neither linked to the regularsocial assistance schemes nor to social insurance, thereby they fail to serveas an automatic stabiliser in a shock-resilient social protection system, shesaid.
“The Government should take into account the lessons learned from thelimitations of the previous package, to accelerate the reforming of socialprotection system towards a more shock-responsive social protection system thatwill allow to protect affected people in the COVID-19 and future crises.”
She said there is no single winning approach to the informal economythat a country can learn from others and apply directly.
“Rather, it is necessary to understand in detail the drivers andcharacteristics of informality in each specific context, before moving on witha response,” she added.
Chien doesn't not know if, or when, she will be given any governmentassistance. She plans to contact her local authorities to see if she iseligible.
In the meantime, she continues to take inspiration in life from herdaughter, a fourth year university student who will graduate soon. When thathappens she will no longer have to worry about paying the huge tuition fee.
“I hope she can find a good job after graduation and have a better lifethan me,” the single mother said./.
VNA
