Vietnam's commitment to reducing inequality second in Southeast Asia

By Minh Nga   October 9, 2020 | 05:00 pm PT
Vietnam's commitment to reducing inequality second in Southeast Asia
People having financial difficulties due to Covid-19 impacts receive gifts from benefactors at a government office in Phu Nhuan District, HCMC, April 11. Photo by VnExpress/Nguyet Nhi.
Vietnam ranks second in Southeast Asia on its commitment to reducing inequality, according to an index based on policies and other actions.

The 2020 Commitment to Reducing Inequality (CRI) index measures government policies and actions in three areas proven to be directly related to the problem: public services (health, education and social protection), taxation, and workers’ rights.

Vietnam was ranked 77th among 158 governments included in the ranking and second among the Association of Southeast Asian Nations.

This is the third edition of the CRI Index compiled by Oxfam, a confederation of 20 independent charitable organizations focusing on the alleviation of global poverty, and the Development Finance International, an international business development advisory firm providing a strategy-through-execution approach.

In the 2020 CRI Index report released Thursday, Vietnam is acknowledged to have had one of the world’s most successful responses to Covid-19 as it has moved rapidly with containment, targeted testing, tracking and quarantine, and public communication.

The nation also included measures to limit increases in poverty and inequality, a plan to provide financial relief of $2.7 billion for 20 million vulnerable people, and pay workers with suspended contracts a monthly allowance of VND1.8 million ($77.6).

Within the nine ASEAN nations that are ranked, Thailand was first.

Compared to its ASEAN peers, Vietnam’s performance was judged better in terms of health and social protection spending, collecting high levels of tax, and promoting women’s labor rights.

On the three areas used in the ranking, Vietnam was third in ASEAN and 89th in the world for public services, first in ASEAN and 12th worldwide for progressive taxation, and 8th regionally and 119th globally on labor rights.

The report said Vietnam’s scores for public services have been dragged down by poor education spending and coverage as well as low social protection coverage.

In taxation Vietnam performs well in general mainly because of increasingly low commitments in the tax pillar all over the world and a methodology in which developed countries would score much lower than developing countries if they performed the same harmful tax practices, the report said.

There is much more that Vietnam can do to make its corporate income tax and value added tax more progressive, and to increase tax collection so as to be able to spend more on public services, it added.

With its labor policy, Vietnam does not fare well mainly because of the high proportion of its population in vulnerable employment. On the other hand, it does relatively well on minimum wages and women’s rights.

The report suggested that Vietnam reinforce its policies to fight inequality by increasing the corporate income tax rate and reducing corporate tax incentives; increasing spending for public services including education, health, and social protection; increasing its minimum wage, which currently stays at VND3-4.42 million ($130-190) depending on different regions; and taking progressive steps towards universal social protection coverage and access, especially for workers in informal and vulnerable employment.

Other suggestions include moving ahead with adoption of laws allowing independent workers’ representative organizations in accordance with International Labor Organization’s conventions and creating an enabling institutional environment for fairer public policy, with citizens and civil society empowered to participate and provide their feedback; and monitor and reduce inequality as part of poverty reduction efforts.

In the 2020 worldwide CRI index, Norway stands first, followed by Denmark and Germany.

Chema Vera, Oxfam International’s interim executive director, said: "Governments’ catastrophic failure to tackle inequality meant the majority of the world’s countries were critically ill-equipped to weather the pandemic. No country on earth was trying hard enough to reduce inequality and ordinary people are bearing the brunt of this crisis as a result. Millions of people have been pushed into poverty and hunger and there have been countless unnecessary deaths."

Matthew Martin, Development Finance International’s director, said: "Extreme inequality is not inevitable, and you don’t have to be a wealthy country to do something about it. We know that policies such as free public healthcare, safety nets for people who can’t work, decent wages and a fair tax system, have been proven to fight inequality. Failure to implement them is a political choice, one that Covid-19 has exposed with catastrophic economic and human costs.

"Governments must learn the lessons of this pandemic and seize this opportunity to build fairer, more resilient societies and a better tomorrow for us all," he added.

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