Salary and Motivation

Comedian Chi Trung said: “Just leave everyone where they are. Who would die, if those who cannot die naturally would find a way to commit suicide? It is less terrible than having salary increased and then consumer prices increased 3 times higher” – funny enough but worth thinking about. Everybody goes to work and gets a salary. Everybody has salary but it is not high enough to live on. However, everybody still survives, some even live in luxury!

 

Now, when salaries are increased, not only must the Government consider over budget, owners worry about paying salaries, but also employees are anxious that life will get harder. Salary increases, life gets harder instead of being improved. The increase of prices along with salary makes salary increase meaningless.

 

After 2 years of inflation in 2010 and 2011, salary has been considerably adjusted. Required salary increased, so did salary for people from the state budget, however salary for people in the private sector was not much improved because in fact it was higher than the minimum one. Therefore, when just a part of state employees has salary increased, prices directly influence the lives of tens of millions of people. This is the sadness of employees in the manufacturing sector.

 

In fact, it is unfair to put the blame of inflation on price increase, because inflation is in a higher level than salary or meals of employees. It is a problem of the whole economy, when investment is too widespread and inefficient, goods of enterprises are uncompetitive, economic growth depends too much on hot investment, and money was issued too much, not from foreign investment. However, those issues are out of the control of most working people, they are the responsibility of the Government, ministries and monetary policy. On the surface, when salary increases, prices change simultaneously and cause more difficulties for the majority of working people who have tough lives with limited money.

 

As a result, although nominal salary increases, even strongly increases, real salary which reflects the real purchasing power capacity of consumers, tends to decrease sharply when prices of goods continuously escalate. While salary is about to rise, prices surge in advance, and people are not happy when having salary increased.

However, people still live with low salary, a faint balance. And each impact like salary increase breaks the balance and cause more troubles. Therefore, like the comedian Chi Trung said: “Just leave everything where they are …”

 

Last year, the enterprise community faced many difficulties, from sharply increased inventories, decreased demand, to lack of capital and loan pressure. Salary increase means labour costs grow (including salary, bonuses, health insurance, social insurance, unemployment insurance, and salary deducted funds). In many enterprises, workers in fact do not feel the salary increase because their salary is higher than minimum one, and productivity salary, soft salary can be reduced when hard salary rises. Only the contribution of enterprises is increasing, including insurance types, salary deducted funds. In good times, increased contribution does not affect operations, but in the context of enterprises having many difficulties, labour cost increase is a huge difficulty for enterprises. Besides, labour cost increase also causes enterprises to consider more carefully hiring plans, to end new recruitment, or even implement layoffs to cut costs.

 

Prof. Dr Tran Dinh Thien, Director of Vietnam’s Institute of Economics, said about the race between salary and prices: Salary and prices always accompany each other because both are essential for life. Compared to the GDP growth rate, actually salary increase rate in Vietnam rises far more than normal theory limit of economics. Practically, this is a credible effort of the Government. It proves a deep concern of the Government to life of workers. On the other hand, with all experiences, it is easy for people to be aware that despite continuous and considerable salary increase, medium salary of the majority of workers in the state sector still does not reach the level of “minimum salary”.

 

Nowadays, the society is aware of the importance of price stabilisation instead of salary increase. Price stabilisation is a macro-economic issue and responsibility of the Government, how to make price increase more practical and meaningful and gladly received by workers.

 

An appropriate salary policy has to encourage creative ability and capacity, the effectiveness of employees, especially high quality ones; improve staff management quality, enhance agreement of the society and public services, labour discipline; and reduce corruption in performance of official duties. The target is still ahead!