Workers sell social insurance books to survive Covid-19 finance crunch

The law stipulates that people can get onetime unemployment payments one year after they stop working. But due to the economic stress caused the Covid-19 outbreak, many workers are willing to take a cut in the amount they get from the buyer, who has to pay it upfront.

Since Covid-19 nearly bankrupted the company he worked for, Cao Truong Hien, a 25-year-old living in Ho Chi Minh City’s Go Vap District, decided to quit his job in July last year. He borrowed VND30 million ($1,300) to try to make a living as a motorbike taxi rider. But the income from his new job has proven insufficient to guarantee him a stable life.

After eight months of quitting his job, Hien decided to sell his social insurance book early since he could not wait one full year to receive his one-time unemployment benefit while being pushed by a creditor. He made the offer in a closed group online, with more than a dozen people contacting him to buy the book.

A woman fills out paperwork to draw her one-time social insurance benefits. Photo by VnExpress/Le Tuyet.

After nearly three and a half years of paying insurance with an average salary of VND4.5 million per month, he closed the deal with the highest bidder at VND20 million while the actual insurance amount was about VND30 million. The two sides met at a bank where Hien opened an account and handed over the ATM card and password to the buyer.

"They took over the account to receive money from the insurer later," Hien said, adding the one-time authorization contract to receive social insurance was made at the notary office. As per protocol, Hien had to sign a prepared commitment, stating he would not return or work anywhere until August 21, which would prompt him to pay social insurance. In addition, he could not change his mind and withdraw the book. In case he breached the contract, he would have to pay back twice the amount received.

Also in a difficult situation, Vu Thi Huong, 33, working at a garment company in HCMC’s District 7 accepted to sell her three-year social insurance book for VND18 million (over $781) while the book's actual value was more than VND30 million.

After losing her job in August last year, the single mother tried different ways but struggled to support her two young children.

"I need money to bring my children back to Central Highlands’ Dak Lak Province and open a stall selling refreshments to make a living," she explained.

Like Hien, before receiving the money, Huong must commit to not going back to work for a year from the time she quit her job, not to withdraw her book or else pay back VND36 million.

"Looking at the commitment, I was a bit worried. But then I had no other choice," she lamented.

Phan Van Men, director of Ho Chi Minh City Social Insurance, said in 2020, there were nearly 350 professionals authorized to receive social insurance benefits once. Of these, some individuals were authorized to benefit 300 to 400 times. The agency suspected these individuals were buying and selling, and so profiting from workers' social insurance books, but could not launch an investigation due to a lack of evidence.

"All cases are authorized through a notary office according to strict procedures. Meanwhile, there were no complaints or lawsuits reported," Men said.

He shared that to avoid buying and selling social insurance books, the city’s social insurance agency has requested more statistics on the matter, and that suspect transactions be reported to the police.

The sale of social insurance books used to be common in HCMC. Cu Chi District Police in mid-2020 administratively sanctioned a number of pawn shop owners for pawning and "buying prematurely" the insurance books of nearly 240 workers. Since these workers failed to pay their debts, the pawn shop owners were authorized by the employees to obtain the benefits and pay the workers the difference.

The Department of Cybersecurity and Hi-tech Crime Prevention investigates a married couple in April 2020 for creating posts online seeking to buy social insurance books from workers in HCMC and Binh Duong Province. Photo by VnExpress/Quoc Thang.

Also in 2020, the same department coordinated with police in HCMC and Binh Duong Province to investigate and sanction a number of people profiteering from social insurance book sales.

Accordingly, taking advantage of the epidemic, many unemployed workers set up Facebook pages like "Purchasing social insurance book with high price", "Liquidating insurance books ahead of time" and others. Via the authorization process, these buyers then directly accessed the benefits.

Do Ngoc Tho, head of the Insurance Policy Implementation Department under Viet Nam Social Security, said in order to limit the buying and selling of insurance books in provinces like Binh Duong, Dong Nai and HCMC, a list of individuals who had received multiple authorizations would be sent to police. This somewhat limits the collection of benefits, but not completely, since the law does not prohibit it.

"In future, when amending the Law on Social Insurance, it is necessary to specify which cases are allowed to enjoy the benefits, so the selling and buying of social insurance book situation would not be as widespread as it is now," Tho commented.

Nguyen Quang Dong, director of the Institute for Policy Studies and Media Development (IPS), said current regulations do not recognize the social insurance book as an asset, though in fact the purchase and sale of the book still takes place. Therefore, the law should consider the insurance book as an asset like a house ownership certificate so workers could mortgage it when in need.

According to Dong, the State Bank can assume prime responsibility to pilot a few loan programs to address financial difficulties and create self-employment for people by mortgaging their insurance books. This would help them have money but still reserve the time to pay insurance, to prevent people from selling insurance books prematurely or receive one-time social insurance benefits.