After years of high inflation, salaries which lagged behind now have become more and more out of touch. Salary reforms and how to make salary the working motive is one more time a hot topic of the Assembly forum, the Government and the story of the year 2012.
The Assembly decided to increase minimum salary of officials to VND 1.05 million from VND 830,000 since May 1st 2012. The total budget funded by Assembly to salary reform was about VND 59,300 billion this year.
Salary not keeping pace with price
According to Ministry of Home Affairs, for 8 years from 2003, monthly minimum salary of officials in administrative and non-profit sector has been adjusted 7 times, from VND 210,000 to VND 830,000, increasing by 4 folds. On May 1, 2011 the minimum salary was raised for the 8th time to VND 1.05 million. However, the Ministry of Home Affairs notes that the adjustment hasn’t met minimum needs and does not allow officials to rely totally on their salary.
A calculation conducted by an agency about salary showed that despite 7 adjustments, compared with inflation rate and price, minimum salary has actually increased only 0.05 fold. It means that in reality, minimum salary only increased by 0.64 percent per year. In comparison with economic-social growth in the past time and the idea of regarding salary as an investment in human resource development, the salary growth rate is too low.
Meanwhile, after a long time of one-digit inflation rate, 2004 saw a high increase in inflation, and the rate was double digit in late 2007. For the past 5 years, only in 2009 was the inflation rate lower than 10 percent. In 2007, CPI leaped by 12.6 percent, in 2008 by 19.9 percent, in 2010 by 11.8 percent and in 2011 by 18.25 percent.
Low salary increase and high inflation, especially high price increase of food, consuming goods have caused obvious impacts on people’s life, made them become poorer and suffer a harder life. Calculation of Ministry of Labour-Invalids and Social Affairs showed that minimum salary introduced by Government for administrative and non-profit sector at VND 830,000 per month only met primary need of food, but not other costs.
Mr Doan Cuong, Director of Department of Salary, Ministry of Home Affairs admitted that the minimum salary hasn’t met primary needs of officials. According to the evaluation in Draft of salary reforms, insufficient salary made some people leave the government sector.
Actually, salary has always lagged behind in race with price. Once there was rumour of salary increase, no matter whether the salary rose or not, price was pushed up. So far, there hasn’t been an effective reform for salary so that salary could be working motivation.
Transparency and Equality
Despite low salary, why are people racing to work in governmental sector? The answer is, apart from limited qualification, personal benefit desire of promotion, corruption and illegal wealth. Ministry of Home Affairs also pointed out that low salary made labourers find other ways to have income and only want to work in sectors related to human resources, financial issues, or land, which directly interacted with individuals and enterprises so that they can benefit from their positions. As a result, corruption is increasing. Officials are also divided into two groups of wealth level, one of which cannot live on their salary, while the other gets rich.
Lack of transparency and equality of salary is due to official and unofficial income not clearly identified. Basically, salary is not only….salary. Net salary is only a small part included in a large sum of difficulty allowance, management allowance at unclear levels, which cause opacity.
A conference about salary to assess results of salary policy reform from 2003 until now and orient for period 2012-2020 was held by Ministry of Home Affairs and funded by UNDP. The common estimation among participants was salary was not easy to reform.
Mr Jairo Acuna-Alfaro, Consultant for UNDP policy in Vietnam once recommended annually reviewing salary to decide increase or decrease in the following year. It is important to review salary in both public and private sector to compare. The adjustment should be based on GDP growth. Accordingly, salary and GDP will be up or down together and the adjustment will depend on national development.
He thought that salary levels should be gathered and oriented for each position. If the reform in the direction of separating salary, allowance, incentive, in which salary is lower than the others, the issue will not be handled.
However, officials should be able to live on salary. Only when salaries can keep pace with prices will they be a true motivation for the people.
Bao Chau
Vietnamese
