Business

Payroll reforms are in a vicious circle after two decades of implementation and need breakthroughs to radically reform the state apparatus.

>> State salaries under the microscope

The National Assembly’s Committee for Social Issues former deputy chairman Dang Nhu Loi told VIR why.

Wage reforms are hiking minimum salary levels. In fact each salary hike was seemingly just enough to cover market price appreciations. Is that the case?

Actual living conditions of most state employees have not remarkably improved. Particularly, minimum salaries in 2011 rose 295.2 per cent against those in 2003. However, if consumer price index growth factor in that period was excluded, actual pay just hiked less than 60 per cent, averaging 5.4 per cent growth per year. If food price growth was excluded, actual pay just hiked 11 per cent, averaging 1.2 per cent growth per year.

The state wants to better the lives of state employees, but budget sources are meager. What is the solution?

Parallel to annual budget allocations, ministries, departments and localities can use 50 per cent of revenue surplus and save 10 per cent of administrative costs to raise extra sources feeding pay hikes.

State bodies in education and health sectors can use 35-40 per cent of revenue sources set aside for reinvestment purposes to raise fund for pay hikes. However, this will not entail breakthroughs in pay reforms.

Does this mean pay reforms must be attached to the quality of work?

That is right. We should pare down at least 40 per cent of ineffective labour currently working in diverse state bodies. Besides, pay policies for retired people and those having contributions to national revolution causes should be split from state payroll policies. In fact, retirement allowances are paid by social securities funds but not come from the state budget.

Thus far retirement allowances closely attached to payroll policies, hence each minimum salary hike requires serious consideration of those social securities funds, state employees then could not see their wages being added with a significant amount after each pay hike.

State employees’ pay scales shall be regulated by the state, while others shall be paid based on labour contracts.

What pay reform policies should be applied to state employees working at enterprises to bolster work efficiency?

As far as I know, the average pay of employees working at state leading power authority Electricity of Vietnam (EVN) is VND13.7 million ($650) per month, at banking behemoths Vietcombank VND22.4 million ($1,050) and VietinBank VND20.7 million ($980) per month. In fact, actually incomes of officials handling specific duties at these bodies may be much higher.

It is appropriate when officials at state enterprises enjoy high pay since their wages depend on work efficiency and actual performances of their enterprises. The problem is the production and business performance of these enterprises as well as their pay fund must be put under microscope.

The labourers generally and officials particularly at enterprises can only get high pay when their businesses generate high profits and run effectively. Like in foreign-invested and private units, the state should produce incentives to encourage labourers striving for pay hikes through bettering enterprise performance.