Early base salary hike to hamper inflation control: finance ministry

The increase of base salary for civil servants and public employees from January 1, 2023 instead of July 1, 2023 as proposed by legislators will hamper the government’s inflation control efforts, says the Ministry of Finance.

Under Vietnam’s current regulations, the base wage is the reference for calculating the total salary for civil servants, public employees and armed forces by multiplying it with corresponding coefficient.

The latest hike in base monthly salary was conducted on July 1, 2019, with an increase from VND1.39 million ($56) to VND1.49 million ($60). As a result, new graduates entering the state sector enjoy salary level 1 with a coefficient of 2.34, equivalent to a monthly salary of VND3.48 million ($140).

Earlier, on October 20, the first day of the ongoing National Assembly (NA) session, Finance Minister Ho Duc Phoc presented the government's proposal on a 20.8% increase in the base wage from VND1.49 million to VND1.8 million ($73) from July 1, 2023.

At later group discussions, NA delegates called for the base salary hike from January 1, six months ahead of the proposed schedule.

In response, the finance ministry said the early base salary increase will make the government’s inflation control difficult as purchasing demand among people and businesses often soar before and during the Calendar and Lunar New Year holidays.

The base salary hike in the outset of the year will put more pressure on official price control efforts, it added.

According to the ministry, amid a risk of rising inflation, salary policy reforms must be conducted in harmony with the realization of socio-economic management goals.

Therefore, the government continued to propose postponing the implementation of salary reforms under Resolution No. 27-NQ/TW issued by the Party Central Committee in 2018, it stated.

The resolution targeted the adoption of a new salary regime for cadres, civil servants, public employees and armed forces as of 2021. Under which, the regional minimum wage will be adjusted regularly based on recommendations of the National Salary Council. Enterprises will be allowed to decide salary policies based on negotiation and agreement between employers and employees and representatives of labor collectives. The state will not directly intervene in enterprise salary policies.

At a group discussion on October 22, Minister of Home Affairs Pham Thi Thanh Tra said that it was reasonable to increase the monthly base wage from VND1.49 million to VND1.8 million as it would help create new work motivation for civil servants and public employees.

She said that during the Covid-19 pandemic, public employees, particularly health care workers, faced high work pressures and rising living costs while their salaries remained the same.

It was reported that during last year and the first half of this year, about 39,552 public employees in the education and health care sectors left their jobs, mostly in big cities like Ho Chi Minh City, Hanoi and Can Tho as well as the industrial hubs of Dong Nai, Binh Duong and Ba Ria-Vung Tau.