Impacts of Increasing the Statutory Pay Rate to VND 1.49 Million per Month from July 01, 2019

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With the increase in the statutory pay rate, there are several notable impacts effective from July 1, 2019:

1. Maximum salary of officials and public employees is 11.92 million VND

According to Decree 38/2019/ND-CP, the statutory pay rate of 1,490,000 VND/month will be used as the basis to calculate salaries in the salary tables as regulated in Decree 204/2004/ND-CP on salary policies for officials and public employees and the armed forces.

Currently, in the salary table of Decree 204/2004/ND-CP, the highest salary coefficient belongs to officials and public employees of category A3, grade 6 with a coefficient of 8.00. The actual salary received will be 11.92 million VND/month from July 1, 2019, an increase of 800,000 VND compared to the current rate, and this is the maximum salary that officials and public employees can receive.

Meanwhile, the lowest salary for officials will also be increased to 2.01 million VND/month for officials of category C, group 3 with a salary coefficient of 1.35.

2. Change in social insurance contribution amount

According to the provisions of Clause 1, Article 85, Clause 1, Article 89 of the 2020 Social Insurance Law and Clause 1, Article 6 of Decision 595/QD-BHXH, the social insurance contribution amount for officials is defined as follows:

Social insurance contribution = Monthly salary x 8% = (Salary + allowances calculated according to the statutory pay rate) x 8%

According to Decree 38/2019/ND-CP, from July 1, 2019, the statutory pay rate will be 1,490,000 VND/month, so the social insurance contribution for officials will also increase accordingly. Additionally, the maximum salary level for social insurance contributions will change significantly.

Specifically, Article 89 of the 2020 Social Insurance Law stipulates that if the salary is more than 20 times the statutory pay rate, the monthly salary for social insurance contributions will be 20 times the statutory pay rate.

Thus, the maximum salary for social insurance contributions from July 1, 2019, will be 1,490,000 VND x 20 = 29.8 million VND (the current rate is 27.8 million VND with a statutory pay rate of 1,390,000 VND).

3. Increase in various social insurance allowances

With the increase in the statutory pay rate to 1,490,000 VND/month from July 1, 2019, various social insurance allowances calculated based on the statutory pay rate will also increase accordingly. For example:

- One-time childbirth allowance = 1,490,000 VND x 2 = 2.98 million VND (previously 2.78 million VND).

- Postpartum recovery allowance = 1,490,000 VND x 30% = 447,000 VND/day (previously 417,000 VND).

- Funeral allowance = 1,490,000 VND x 10 = 14.9 million VND (previously 13.9 million VND).

4. Increase in minimum monthly pension

According to Clause 5, Article 56 of the 2020 Social Insurance Law, the monthly minimum pension of workers participating in mandatory social insurance, eligible for pension, is equivalent to the statutory pay rate, except as stipulated in point i, clause 1, Article 2, and clause 3, Article 54 of this Law.

Thus, before July 1, 2019, the minimum monthly pension for workers was 1,390,000 VND, but from July 1, 2019, this minimum pension will be 1,490,000 VND.

5. Increase in actual salaries and allowances for officials

With the increase in the statutory pay rate to 1,490,000 VND/month from July 1, 2019, i.e., an increase of 100,000 VND/month compared to the current rate (the current rate is 1,390,000 VND/month), the salaries and allowances of officials and public employees will also be correspondingly adjusted. Specifically:

- Regarding salaries:

The salary of officials = Statutory pay rate x Current salary coefficient.

From July 1, 2019, the monthly salary of officials = 1,490,000 VND/month x Current salary coefficient.

- Regarding allowances calculated according to the statutory pay rate:

Allowance = Statutory pay rate 1,490,000 VND/month x Current allowance coefficient

- Regarding allowances calculated as a percentage of the current salary plus position allowance and seniority allowance outside grade:

Allowance = (Salary from July 1, 2019 + Position allowance and seniority allowance outside grade from July 1, 2019) x Percentage of allowance according to regulations

- The amount of the reserved differential coefficient is calculated according to the formula:

Reserved differential coefficient amount = 1,490,000 VND/month x Current differential coefficient

- Additionally, for members of the People's Council at all levels, the activity fee is calculated according to the formula:

Activity fee = Statutory pay rate 1,490,000 VND x Activity fee coefficient according to regulations

6. Increase in health insurance contributions for many subjects

According to Clause 1, Article 7, and Clauses 2, 3, 4 of Article 2 and Article 3 of Decree 146/2018/ND-CP, the health insurance contributions for various subjects such as non-specialist officials at the commune level, those receiving monthly social insurance allowances, workers on sick leave, children under 6 years old, people with meritorious services to the revolution, near-poor households, etc., are 4.5% of the statutory pay rate.

Thus, from July 1, 2019, when the statutory pay rate increases to 1,490,000 VND/month, the contributions for these subjects will be 67,050 VND/month (previously 62,550 VND/month).

7. Increase in rewards for Communist Party members

According to Guidance 56-HD/VPTW, many reward levels for Communist Party members are based on the statutory pay rate.

Therefore, when the statutory pay rate increases to 1,490,000 VND/month, these reward levels will also increase accordingly. As an example, the accompanying reward levels for Communist Party badges from July 1, 2019, are as follows:

- 30-year Communist Party badge = 1.5 times the statutory pay rate = 1,490,000 VND x 1.5 = 2,235,000 VND;

- 40-year Communist Party badge = 2.0 times the statutory pay rate = 1,490,000 VND x 2 = 2,980,000 VND;

- 50-year Communist Party badge = 3.0 times the statutory pay rate = 1,490,000 VND x 3 = 5,700,000 VND;

- 55-year Communist Party badge = 3.5 times the statutory pay rate = 1,490,000 VND x 3.5 = 5,215,000 VND;

- 60-year Communist Party badge = 5.0 times the statutory pay rate = 1,490,000 VND x 5 = 7,450,000 VND;

- 65-year Communist Party badge = 6,0 times the statutory pay rate = 1,490,000 VND x 6 = 8,940,000 VND;

- 70-year Communist Party badge = 8.0 times the statutory pay rate = 1,490,000 VND x 8 = 11,920,000 VND;

- 75-year Communist Party badge = 10.0 times the statutory pay rate = 1,490,000 VND x 10 = 14,900,000 VND;

- 80-year Communist Party badge = 15.0 times the statutory pay rate = 1,490,000 VND x 15 = 22,350,000 VND.

- Nguyen Trinh -

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