May 21, 2020 / 17:26

Vietnam gov't proposes holding up salary increase this year

The Hanoitimes - If the basis salary increases in accordance with the roadmap, the Vietnamese government is expected to spend an additional VND60 trillion (US$2.58 billion) to pay wages.

Prime Minister Nguyen Xuan Phuc on Wednesday put forth the postponement of a regular basis salary increase for wage earners in the public sector this year in order to allot more resources to support people affected by Covid-19 pandemic and economic recovery, local media reported.

The National Assembly last year approved a 7.38% raise in the monthly basis wage in the public sector to VND1.6 million (US$69) starting July 1 this year.

  Prime Minister Nguyen Xuan Phuc speaks the National Assembly session on May 20. Photo: Kinhtedothi.vn

The basis salary is the reference for calculating salaries of employees in the state-run sector by multiplying it with their corresponding coefficient.

A civil servant’s salary is calculated by multiplying a basis salary which now stands at VND1.49 million (US$64) after a 7.2% hike from July 1 last year, with a coefficient determined by their qualification and experience.

Public sector employees have complained for years that their earnings are too low. The starting coefficient for a university graduate in the public sector is 2.34.

The Ministry of Home Affairs said that the current basis salary is only 42.39% compared to the average regional minimum salary in 2019 and 40.16% compared to the average regional minimum salary in 2020. With this salary, public employees and those working in the armed forces can hardly make ends meet.

The Vietnamese National Assembly in November 2019 approved a government proposal to raise salaries for civil servants by 7.38% from July 1, 2020. This will be the boldest salary hike in the past eight years. The previous salary raise was a 7.2% hike, effective from July 1, 2019.

If the basis salary increases in accordance with the roadmap, the Vietnamese government is expected to spend an additional VND60 trillion (US$2.58 billion) to pay wages.

According to a survey released by employment website Jobstreet.com late last year, salaries in Vietnam are rising faster than in any other Southeast Asian country. The average annual growth rate of Vietnam's payroll stands at 20-24%, compared to 14-20% in Thailand, the Philippines, Indonesia, Myanmar and Singapore.

Vietnam raises minimum wage every year. However, despite the rapid growth, wages in Vietnam are still low as it only meets 95% of laborers’ living costs.

Vietnam's per capita income in 2018 was US$2,587.