[18 August 2024] —  Economica Vietnam was commissioned by the International Labour Organization (ILO) to implement a study on informal employment in Vietnam.

According to ILO, informal employment refers to ‘all employment arrangements that do not provide individuals with legal or social protection through their work, thereby leaving them more exposed to economic risk’. Informal employment refers to jobs, whether in the formal or informal sector, that are not covered by labour regulation, taxation, social protection or other employment benefits. The term informal economy workers refers to those who hold informal employment.

According to the General Statistics Office, Vietnam has 33.6 million workers in informal employment in 2021. The rate of workers in informal employment in Vietnam is 68.5%. Informal economy workers can be found inside and outside the informal sector. 

Informal employment makes significant contribution to GDP. The Covid-19 pandemic has highlighted the importance of policies and actions to reduce the vulnerability of the labor market by reducing informal employment. Expanding formal employment is also an important area that Vietnam should improve on the its path to the upper-middle-income country status and to a people-centred economy where decent jobs are one of the prime priorities. 

In such a context, ILO has contracted Economica Vietnam to implement a study on informal employment. This study aims at discussing major policy issues related to informal employment in Vietnam and the key policy implications under the current context of Vietnam.  

In the study, informal employment refers to jobs, whether in the formal or informal sector, that are “not coveredby social insurance”. The logic is, by Vietnamese laws and regulations, if a worker is not covered by social insurance, she/he is definitely not covered by regulations on labor and other employment benefits. And if she/he is covered by regulations on taxation and social protection but not covered by social insurance, she/is anyway an informal worker. As such, the use of the only indicator as “not covered by social insurance” is sufficient.

The approach used to discuss informal employment in the paper is by types of production units and jobs by status of employment which are defined by Vietnamese regulations or which are commonly understood by Government agencies, by the General Statistics Office and Government ministries. This is also to ensure that the data can be available for the description of different subsets of informal employment in Vietnam. This can also help to describe more clearly and accurately policy or regulatory issues related to specific production unit type or to jobs by status of employment by the definitions used by the Government agencies which issue such policies and regulations. This will make it easier to pinpoint which government agencies should take actions to tackle the specific informal employment issues. Such an approach also make it easier to identify which regulations and policies should be revised to improve employment formality in Vietnam. 

The study is now completed and can be downloaded from the Resource Centre of this website.