Statutory Pay Rate Increase 2023 for Officials and Public Employees: How Much? Will the Increase in Statutory Pay Rate Raise Allowances and Subsidies?
How much will the statutory pay rate for 2023 for state officials and public employees increase?
Recently, the Central Committee of the Communist Party directed the Politburo to instruct the Government Party Committee to finalize the Report on the pay adjustment plan to present to the XV National Assembly for consideration and decision to implement wage reform according to Resolution 27-NQ/TW of 2018. Previously, the wage reform for officials and public employees was scheduled to be implemented from 2021, but due to the serious impact of the COVID-19 pandemic, the wage increase was postponed to wait for an appropriate time.
At the press conference for the anticipated program of the 4th session of the XV National Assembly, the Secretary-General of the National Assembly stated that the country's economy has now recovered, grown, and shown positive signs, so the National Assembly is considering increasing the statutory pay rate first, followed by a roadmap for wage reform.
The Central Committee of the Communist Party has given opinions on adjusting the statutory pay rate.
The Government of Vietnam is presenting to the National Assembly to adjust the statutory pay rate to 1.8 million VND/month, an increase of about 20.8% (currently 1.49 million) to raise the salaries of officials and public employees.
Thus, if the wage adjustment proposal is approved, it is expected that from July 1, 2023, state officials and public employees will apply the salary level of 1.8 million VND/month.
How much will the statutory pay rate for 2023 for state officials and public employees increase? Will the increase in the statutory pay rate increase allowances and subsidies? (Image from the Internet)
Will the increase in the statutory pay rate increase allowances and subsidies?
Based on Decree 204/2004/ND-CP, toxic allowances, leadership allowances, regional allowances, and other allowances are calculated based on the statutory pay rate.
As per the provisions of the 2014 Law on Social Insurance, subsidies include convalescence and health recovery after sickness; lump-sum allowance upon childbirth or adoption of a child under 6 months; convalescence and health recovery after maternity leave; funeral allowance; monthly survivor’s allowance; etc.
Additionally, at the press conference for the anticipated program of the 4th session of the XV National Assembly, the Government of Vietnam is presenting to the National Assembly a proposal to increase pension and social insurance subsidies for those funded by the state budget by about 12.5%; additional support for those who retired before 1995; increased preferential subsidies for those who contributed to the nation and social security policies linked to the statutory pay rate by about 20.8%.
Thus, if the proposal is approved, from July 1, 2023, when the statutory pay rate for officials and public employees is adjusted, the allowance and subsidy levels will also increase accordingly.
How will the pension level change if the statutory pay rate for officials and public employees is increased?
According to Clause 1, Article 63 of the 2014 Law on Social Insurance, the pension level will change depending on the statutory pay rate.
Adjustment of salaries used for calculating social insurance contributions
1. The salaries used for calculating social insurance contributions to determine the average monthly salary on which social insurance premiums are based for employees specified in Clause 1, Article 89 of this Law are adjusted according to the statutory pay rate at the time of enjoying the pension for employees who participated in social insurance before January 1, 2016.
For employees who start participating in social insurance from January 1, 2016, onwards, the salaries used for calculating social insurance contributions are adjusted as specified in Clause 2 of this Article.
2. The salaries used for calculating social insurance contributions to determine the average monthly salary on which social insurance premiums are based for employees specified in Clause 2, Article 89 of this Law are adjusted based on the consumer price index in each period as prescribed by the Government.
Based on Clause 1, Article 7 of Decree 115/2015/ND-CP, the monthly pension level is based on the percentage of the pension multiplied by the average monthly salary on which social insurance premiums have been paid.
Thus, when the statutory pay rate increases, it will increase the average salary for social insurance contributions and therefore increase the monthly pension for state officials and public employees.
Moreover, according to Clause 3, Article 89 of the 2014 Law on Social Insurance, the monthly salary used for social insurance contributions is 20 times the statutory pay rate.
Monthly salary used for mandatory social insurance contribution
1. Employees eligible for policies on state-mandated salaries will have monthly social insurance contributions based on rank, grade, military rank, and position allowances, with seniority allowances beyond the scale, and seniority allowances in their profession (if any).
For employees specified in Point i, Clause 1, Article 2 of this Law, the monthly salary used for social insurance contributions is the statutory pay rate.
2. For employees who contribute to social insurance under policies where salaries are determined by employers, monthly social insurance contributions will be based on the salary and allowances regulated by labor laws.
From January 1, 2018, onwards, monthly social insurance contributions comprise the salary, salary allowances, and other additional amounts as regulated by labor laws.
3. If the monthly salary specified in Clauses 1 and 2 of this Article exceeds 20 times the statutory pay rate, the monthly salary used for social insurance contributions is capped at 20 times the statutory pay rate.
Therefore, when the statutory pay rate applied to officials and public employees is approved at 1.8 million VND/month, the maximum pension that retired officials can receive will not exceed 36 million VND/month. As a result, an increase in the statutory pay rate will also increase the maximum pension.
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