Premium
Social security and firm performance: The case of Vietnamese SMEs
Author(s) -
LEE Sangheon,
TORM Nina
Publication year - 2017
Publication title -
international labour review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.433
H-Index - 46
eISSN - 1564-913X
pISSN - 0020-7780
DOI - 10.1111/j.1564-913x.2015.00054.x
Subject(s) - formality , vietnamese , business , social security , subsidy , profit (economics) , net profit , revenue , labour economics , finance , public economics , industrial organization , economics , microeconomics , market economy , philosophy , linguistics
This article investigates how social security provision – a key determinant of formality – impacts on small and medium‐sized firm performance in Viet Nam. Based on enterprise census data covering all registered firms from 2006 to 2011, the authors find that firms which increase their social security coverage by 10 per cent experience a revenue gain of 1.4–2.0 per cent per worker and a profit gain of up to 1.8 per cent, depending on the survival time of the firm. However, given the time lag between “investment” (in social security contributions) and returns (enhanced firm performance), specific policy measures such as initial social insurance subsidies for small firms could increase participation in mandatory schemes.