State sector minimum wage increase

Oct 25, 2012. The Government’s tentative plan to back off from the earlier road map to increase the minimum wage for State workers, as announced this week at the ongoing National Assembly sitting, backfires when all walks of life from NA deputies to experts and commoners criticize the scheme as ‘out of touch’ of the harsh reality being faced by millions of people in the State payroll. Both sides lack the common ground when the Government says the State budget is in deficit and thus cannot afford the pay rise, while the public demands that Government expenditures in other fields be tightened but not the wage increase scheme. The easier path chosen by the Government, therefore, also looks bumpy.

As covered in local media, Minister of Finance Vuong Dinh Hue on behalf of the Government says to NA deputies that the wage increase needs to be put on hold until conditions turn more favorable. If the minimum monthly wage from VND1.05 million to VND1.35 million is to be continued next May, the Government will have to secure an additional VND60 trillion, or nearly US$ 3 billion, a sum beyond the Government’s capacity in view that the State Budget revenue this year might run short of target. Minister Hue states that the budget revenue as of end-September equaled only 67% of the target, meaning it will be difficult to fulfill the budget target for this year, according to Vneconomy.

It seems the Government has opted for the easier solution given the budget constraints for fear that a reduction in other development investment projects will be a setback for growth. However, most opinions disagree with the Government.

“If the State Budget faces a shortfall, (the Government) can reduce regular spending next year by at least 10% compared to 2012, since I can see numerous unnecessary expenditures,” NA deputy Tran Du Lich is quoted in Vneconomy.

In the long run, according to deputies, the Government should seek to streamline the State workforce so that any pay rise will not affect the State Budget. Currently, the State payroll covers as many as 22 million people, including seven million civil servants and 15 million at State-owned enterprises and other establishments.

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State sector minimum wage increase, Oct 25, 2012

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