Circular 38: Assessment of the Financial Situation for Wage Adjustment

To be specific, ministries, central agencies, provinces, and centrally governed cities must be responsible for reporting on the evaluation of the funds ensuring the implementation of salary adjustments. The report content is regulated in Article 7 of Circular 38/2019/TT-BTC as follows:

Illustrative image (source: internet)

Firstly, ministries and central agencies shall report on:

- Staffing, basic salary funds, allowances according to salaries, and contributions according to regulated policies. In particular, please note:

- The portion of the basic salary fund, allowances, and salary contributions of agencies and units as regulated to ensure from the management administrative expenditure or contracted expenditure source.

- The portion of the basic salary fund, allowances, and salary contributions of individuals with a salary coefficient, basic salary from 1.86 or less.

- Funding needs for implementing salary adjustments according to Decree 38/2019/ND-CP on May 9, 2019, of the Government of Vietnam regulating the statutory pay rate for officials and public employees and the armed forces.

- Funding sources ensuring the implementation of salary adjustments in 2019, specifying:

  - Funding sources for implementing salary adjustments not fully used in 2018 carried over to 2019 (if any);    - Using at least 40% of the retained revenue according to policies, in line with the roadmap to structure costs into prices, fees for public service activities. The scope of deducting retained revenue shall be implemented in accordance with the Ministry of Finance’s guidance on the needs and sources for salary reform in 2019;    - Sources from 10% cost-saving in the regular expenditure estimates for 2019 compared to the estimates in 2018 (excluding salary, allowances, salary-related items, and personal-related expenses according to policies);    - Sources not fully used in 2019 carried over to 2020 to implement statutory pay rate adjustments (if any).

Secondly, provinces and centrally governed cities shall report on:

- Basic salary funds, allowances, benefits according to salaries, and contributions according to regulated policies; noting the above-stated contents.- Funding needs for implementing salary reform in 2019.- Funding sources ensuring the implementation of salary reform in 2019, specifying:

- Funding sources for implementing salary reform not fully used in 2018 carried over to 2019 (if any);

- Using at least 40% of the retained revenue according to policies; specifically, for revenue from providing medical examination and treatment services, preventive health, and other health services of public health institutions, using at least 35%. The scope of deducting retained revenue shall be implemented in accordance with the Ministry of Finance’s guidance on the needs and sources for salary reform in 2019;

- Sources from 10% cost-saving in regular expenditures (excluding salary, allowances, salary-related items, and personal-related expenses according to policies);

- Sources from 50% of increased local government revenue according to regulations (excluding land levy and revenue from lottery operations);

- Sources allocated for implementing salary reform according to regulations from reducing expenditure for regular administrative activities and supporting public service providers.

- The residual funds for salary reform in 2019 (if any) after implementing social security policies issued by the Central Government according to Decision 579/QD-TTg on April 28, 2017, of the Prime Minister of the Government of Vietnam on the principles of targeted support from the Central Government budget to local governments for implementing social security policies during the period 2017-2020 (including detailed residual salary reform funds, the amount used for social security policies).

More details can be found in Circular 38/2019/TT-BTC effective from August 12, 2019.

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