Social Cohesion Policy Review of Viet Nam
This report examines the effects of recent economic growth in Viet Nam on social cohesion.
It finds that recent rapid economic growth in Viet Nam has not resulted in an increase
in overall inequality, but the level of inequality was already high. Growth was not
particularly inclusive, benefiting most the middle class and the richest households,
and favouring less households in the bottom 20th percentile. Income mobility was also
high, and while a majority of households experienced upward income mobility, downward
absolute income mobility affected one in five households. Economic growth was not
particularly job rich with employment growth lagging behind economic expansion.
In particular, important challenges were identified in the area of education and skills
policies relating to fast-changing labour market needs. Minimum wage policies had
a small but positive effect on employment, but concerns were highlighted over partial
coverage and weak compliance. Tax policy and specifically personal income tax had
only a small impact on reducing inequality, but transfers from central to local governments
produced an equalising effect, albeit with mixed results in terms of satisfaction
with public services. Finally, social protection systems have been extended, but important
coverage gaps remain among the poor and ethnic minority groups, and informality remains
a key challenge for universal extension.
Published on October 28, 2014
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