The Party’s point of view on salary policies

The 6^th session of the 10^th Central Committee laid stress on some points in the salary policies. They are:

- To be fully aware of and implement the Party’s point of view: “Adequate salary payment to laborers is investment in development, creation of driving force for economic growth and public service improvement, contribution to improve the State apparatus’s transparency, effectiveness and efficiency.” It is necessary to study and take measures to generate resources for salary reform.

- Salary reform should ensure that public employees, servants and cadres can live with their salaries. On that basis, salary mechanisms for different sectors namely administration, public services and business will be built to better conform to the socialist-oriented market economy and  create motivation to improve the quality of public employees, servants and cadres.

- Reform of salary, social insurance and preferential assistance to people with great merit must bridge the gap in salary in each sector and among sectors of administration, public services, business and armed forces.

- Salary reform, social insurance and preferential assistance to people with great merit must ensure better life for poor people, ethnic minority groups and people to who are entitled for preferential social policies to realize the goals of the 11^th National Party Congress: “Effectively realizing social progresses, and security in each development step and stage of development.”

Salary policy reform in the coming stage:

With given goals and principles mapped out by the Central Committee of the 10^th Party Congress and the status quo of current salary mechanisms, in the coming years, the following contents should be taken into consideration:

First, there are numerous difficulties in the economy. There is a big gap between the living standards of Viet Nam and other countries. Though renovation of concerned policies like employment, administrative reform, public finance, housing, social insurance, study and healthcare has brought about positive changes, it has not yet met people’s needs and expectation.

Second, the number of people in the State budget payroll is two large and increasing. The Ordinance on revision of the Ordinance on preferential assistance to people who render great merit expanded the scope of beneficiaries. While salary for each individual is low, the proportion of salary and allowance in the State budget is too high. By now, income outside salary of laborers has not been controlled.

Third, regional and international integration and commitments of Viet Nam have resulted in challenges for labor and salary reform. Particularly in recent year, world economic recession has caused impacts to each branch and each sector and brought about quite a few difficulties to the country’s salary reform.

In the current context, policies on salary should focus on completing salary mechanisms of sectors of production and business and public services (including science, education and healthcare) and separate them from salary policies for cadres, public employees and armed forces.

- For production and business sectors

At present, outstanding efforts have been made to expand scope of production, business, technology, capital and particularly management. It is necessary to honor our international commitments on subsistence salary we made when we entered the World Trade Organization (WTO) and to abide by the Law on Enterprise which stipulates that subsistence salary among businesses in the same sector should be unified.

In each type of business, each enterprise depending on its conditions is allowed to pay minimum salary equal to or higher than the common minimum salary regulated by the Government.

As far as salary scale and payroll are concerned, competent authorities should build salary scale and payroll of businesses where the State is the major stakeholder. This salary scale and payroll are used to calculate social insurance and health insurance for cadres who are rotated to different sectors at the requests of the Party and State.

- For the public service sector:

First, to renovate both operation and financial mechanisms (including salary) to enable public service providers to collect fees to pay staff’s salary and gradually other expenditure; to operate on the basis of self-accounting (non-profit) to improve service quality and better meet social needs while generate sufficient revenue to pay staff salary.

Second, the Government should issue the scale of basic service fees. The financial management mechanisms should be similar to that of businesses. The head of the service unit can recruit staff for his/her unit.

Third, State management offices should develop scale of salary and payroll to be used as a basis for public service units to recruit staff, pay salary, social insurance and health insurance.

These are the most potential sectors in recruiting talents, and creating conditions for the staff to bring into play their labor strength and creativeness.

- The sector of cadres, public employees and armed forces

It is possible to notice that this is the most important and difficult problem in salary reform.

First, most of cadres, public employees in Party, State, Front and mass organizations live on salary only which is lowest in the labor market. In reality, public employees are those who directly involve in creating and operating the administrative institutions. However, low salary causes difficulties to administrative reform, prevention of corruption and economic growth. Loss caused by slow economic growth is high because each percentage of GDP means thousands of billion dong(1).

Second, as there is not clear-cut difference between management mechanisms of the public service sector with public employee sector, the number of people who are entitled to salary and allowance from the State budget is large(2).

Third, the use of a minimum salary as a common basis for calculation of salary, allowance, social insurance and health insurance results in restriction of real income of cadres and state employees and recruitment of competent and highly qualified people to state sectors.

Some solutions:

Some basic solutions of the renovation process         

First, to adjust common minimum salary to a reasonable level every year based on the country’s economic growth and labor market as a basis for each sector to decide its own minimum wages.

Second, to continue expand the salary scale from minimum, average and maximum salaries to completely do away with egalitarianism in salary payment(3) at present and to encourage and motivate talents and competent employees in the public service sector in general so as to harness their capacity and wisdom in production.

Third, salary reform should be closely linked with administration reform (streamlining of organization and apparatus), capacity building of paid cadres, public employees and laborers in all sectors to meet the country’s demands.

Forth, resource generation. This is a difficult issue that needs the determination of the National Assembly, Government, ministries, Central level and resolute leadership and guidance of the Party. Besides saving 10% of expenditure, using 50% of local budget revenue for salary payment and separating the public service sector from the cadres and public employee sector, it is necessary to restructure current expenditure and investment in development according to the Law on Budget.

Fifth, the Government assigns the Ministry of Finance to earmark financial resource for salary policy reform to submit to the National Assembly for approval.

Solutions to each sector:

- For the production and business sectors

It is necessary to honor our international commitments made when we joined WTO and to be in line with the Law on Enterprise and to build a unified level of minimum salary among businesses in the same sector. Each enterprise is allowed to use regional minimum salary which is equal to or higher that the minimum salary stipulated by the Government if applicable and in line with Viet Nam’s legislation.

- For the public service sector:

To scale up self-reliance and responsible mechanisms, pilot and expand the model of equitization to mobilize social resources and reduce pressure on the State budget.

- For the public administrative sector including the Party, State, mass organizations and armed forces

To gradually implement the resolutions of the 3^rd Plenum of the 10^th Party Central Committee on “building a separate salary mechanisms for the public administration sector”. On the basis of the common minimum salary, and depending on the State budget and economic growth, apply higher salary scale.

1. To provide work allowance to cadres, state employees and armed forces or based on the State budget capacity to increase salary co-efficient for cadres, state employees in this sector.

2. To continue applying professional seniority allowance which are suitable to each job and profession (especially for Party’s committees of the remaining levels)(4)

3. To continue delegate more responsibility to local administrations. Where there is revenue from economic growth they can increase allowance from 30% to 50% beside salary. Heads of organizations are delegated with more authority in recruitment, arrangement and organization to gradually sign labor contracts in important positions and jobs and use of human resources in different forms. The State will only manage payroll in important positions.

- On preferential allowance to people who render great merit:

To continue adjust preferential allowance to people who render great merit on the basis of average consumption and state budget capacity.

Effective implementation of salary policies will greatly influence socio-economic development, system of macro socio-economic policies and improve the life of paid laborers. /.

------------------------------------------

(1) From Sum-up Report on new salary policies, October 2004

(2) According to MOLISA, approximately six million people are paid by the State budget

(3) The space between salary scales is too narrow. It is only (0,33) for specialists

(4) According to Decision No 275-QĐ/TW, on December 06, 2009 of the 10^th party Secretariat, cadres and public employees who are working in control committees of the Party at all level (from the Central to district and equal levels) are entitled to seniority allowance.