Increase of 7% in annual salary when implementing the 2024 salary reform for which subjects?
7% Annual Salary Increase During 2024 Wage Reform: Who Will Benefit?
On the morning of October 23, 2023, at the National Assembly House in Hanoi, under the chairmanship of Politburo member and National Assembly Chairman Vuong Dinh Hue, the 6th session of the 15th National Assembly officially commenced.
The report by the Government of Vietnam on the results of the economic and social development plan for 2023 and the projected plan for 2024, presented by Prime Minister Pham Minh Chinh at the 6th session of the 15th National Assembly, indicated: In recent years, despite challenges from the COVID-19 pandemic, the Government of Vietnam has endeavored to increase revenue, save expenses, and allocate a salary fund of approximately 560 trillion VND, ensuring sufficient resources for implementing wage reforms according to Resolution 27-NQ/TW 2018, starting from July 1, 2024, over the period 2024 - 2026.
Simultaneously, the Government of Vietnam continues to adjust the regional minimum wage and salary policies for businesses as stipulated.
From 2025 onward, there will be an annual average salary increase of 7% for officials and public employees, and the armed forces until the lowest salary equals or exceeds the lowest salary in Region I of the enterprise sector.
Thus, starting from 2025, the following groups will have their salaries increased by an average of 7% per year:
- Officials and public employees;- Armed forces.
*7% Annual Salary Increase During 2024 Wage Reform: Who Will Benefit?*
What is the Roadmap for Wage Reform According to Resolution 27?
Based on Resolution 27-NQ/TW 2018, the wage reform roadmap is outlined as follows:
From 2021 to 2025 and towards 2030
For the Public Sector
- From 2021, a new unified salary policy will be applied to officials, public employees, and the armed forces throughout the political system.- In 2021, the lowest salary of officials and public employees will be equal to the average lowest salary across regions in the enterprise sector.- Periodically adjust salary levels in line with consumer price indexes, economic growth, and state budget capacity.- By 2025, the lowest salary of officials and public employees will be higher than the average lowest salary across regions in the enterprise sector.- By 2030, the lowest salary of officials and public employees will be equal to or higher than the lowest salary of the highest region in the enterprise sector.
For the Enterprise Sector
- From 2021, the State will periodically adjust the regional minimum wage based on the recommendations of the National Wage Council. Enterprises will implement salary policies based on negotiations and agreements between employers and employees and their representative organizations; the State will not directly intervene in enterprise salary policies.- Manage labor and salary in state-owned enterprises by means of salary cost allocation tied to business performance tasks up to 2025, and transitioning to task-based business performance allocation by 2030.
What Are the Guiding Principles for Wage Reform?
Resolution 27-NQ/TW 2018 outlines the guiding principles for wage reform as follows:
- Wage policy is a particularly important policy within the economic and social policy framework. Wages must truly be the main source of income that ensures the livelihood of workers and their families; correct remuneration is an investment in human resource development, creating motivation to enhance labor productivity and work efficiency, significantly contributing to social progress and equity, maintaining socio-political stability; promoting and enhancing growth quality and sustainable development.- Wage policy reform must ensure overall, systematic, and synchronized characteristics, inherit and effectively address the limitations of the current wage policy; adhere to the principle of distribution according to labor and the objective laws of the market economy, using labor productivity increase as the basis for wage increases; meet international integration requirements; have a roadmap suitable to the economic and social development conditions and resources of the country.- In the public sector, the State compensates officials, public employees, and the armed forces based on job position, title, and leadership position, appropriate to state resources and public service revenue, ensuring a reasonable correlation with labor market wages; implement appropriate reward and incentivization policies based on labor productivity, creating motivation to improve work quality and efficiency, professional ethics, and contribute to purifying and enhancing the efficiency and effectiveness of the political system.- In the enterprise sector, wages are the price of labor formed based on agreements between employees and employers under market mechanisms managed by the State. The State sets minimum wages as the minimum floor to protect vulnerable workers, and as a basis for wage agreements and labor market regulation. Wage distribution is based on labor outcomes and business performance, ensuring harmonious, stable, and progressive labor relations within enterprises.- Wage policy reform is an objective requirement and an important mission, necessitating high political determination in building a socialist rule-of-law state and perfecting the socialist-oriented market economy institution; promoting administrative reform; reorganizing the political system to be streamlined, effective, and efficient; slimming down staff; reorganizing and improving the quality and efficiency of public service providers.
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