Salary Reform: 03 Types of Salaries To Be Simultaneously Increased from July 1, 2024 in Vietnam

Salary Reform: 03 Types of Salaries To Be Simultaneously Increased from July 1, 2024 in Vietnam​ (Image from the internet)

Salary Reform: 03 Types of Salaries To Be Simultaneously Increased from July 1, 2024 in Vietnam

On November 10, 2023, the National Assembly passed Resolution 104/2023/QH15 on the state budget estimate for 2024, which stipulates that from July 1, 2024, the entire country will officially implement a comprehensive salary policy reform according to Resolution 27-NQ/TW of 2018.

The funding for the salary reform will be ensured from the accumulated salary reform funds of the central budget, local budget, and a portion allocated in the budget expenditure estimates.

There will be changes in salary policies for officials and public employees and workers. Specifically, 3 important types of salaries will increase from July 1, 2024, including:

(1) Implementing salary reform for officials and public employees

According to Minister of Home Affairs, Pham Thi Thanh Tra, as prescribed in the salary reform plan, from July 1, the average salary of officials and public employees is expected to increase by about 30% (including basic salary and allowances).

From 2025, this salary level will continue to be adjusted annually by about 7% per year on average.

Previously, the basic salary of an official was calculated based on the statutory pay rate and salary coefficient. According to Clause 2, Article 3 of Decree 24/2023/ND-CP, the statutory pay rate applied is 1.8 million VND per month, while the salary coefficient is specified in the appendix issued with Decree 204/2004/ND-CP.

However, from July 1, 2024, with the salary reform, according to the latest information from the Government of Vietnam's portal, the salary structure of officials and public employees will expand from 1 - 2.34 - 10 to 1 - 2.68 - 12.

The lowest salary of officials and public employees will significantly increase compared to the current starting salary of 3.5 million VND for intermediate-level officials and public employees with a salary coefficient of 1.86.

The average salary of officials and public employees will also increase from a starting coefficient of 2.34 to 2.68. Currently, officials and public employees with a university degree have a starting salary of over 4.2 million VND per month.

The highest salary of officials and public employees, corresponding to level 3 of senior specialists (equivalent to a minister's salary), will also be expanded from a coefficient of 10 to 12. Therefore, the new highest salary of officials and public employees is expected to far exceed the current figure of 18 million VND.

In addition to this basic salary, the new salary policies will also rearrange types of allowances accounting for a maximum of 30% of the total salary fund (in some cases, it could be higher or lower than 30%) and 10% as bonuses.

Thus, if including basic salary, allowances, and bonuses, the average salary of officials and public employees after implementing the salary reform will increase by more than 32% compared to the average income of salaried workers (7.5 million VND per month).

(2) Pensions and social insurance benefits

According to Resolution 104/2023/QH15 of the National Assembly, from July 1, 2024, comprehensive salary policy reform will be implemented according to Resolution 27-NQ/TW of 2018. The funding for this salary reform is ensured from the accumulated salary reform funds of the central budget, local budgets, and a portion allocated in the state budget expenditure estimates. This will adjust pensions, social insurance benefits, monthly allowances, preferential allowances for meritorious persons, and some social security policies currently linked with the statutory pay rate.

In addition, on April 22, 2024, the Prime Minister of the Government of Vietnam issued Directive 17/CT-TTg of 2024 on building the economic-social development plan and state budget estimates for 2025. It clearly states that pensions, social insurance benefits, preferential allowances for meritorious persons, and social allowances will be adjusted from July 1, 2024.

Thus, from July 1, 2024, pensions will increase for workers simultaneously with the salary reform date.

The specific increase in pensions from July 1, 2024, will be announced by the Government of Vietnam. It is expected that a draft decree on continuing to adjust pensions will be submitted to the Government of Vietnam by May 2024 (Resolution 01/NQ-CP of 2024).

(3) Regional minimum wage increase by 6% from July 1, 2024

Recently, the Ministry of Labor - War Invalids and Social Affairs announced a draft Decree stipulating the minimum wage for workers under labor contracts. According to the draft, the minimum monthly wage of regions will increase compared to the current minimum wage. This increase is expected to be applied from July 1, 2024.

The Ministry of Labor - War Invalids and Social Affairs, in the draft, proposes adjusting the minimum wage, increasing the minimum wage by 6% compared to the current rate to be applied from July 1, 2024, as follows:

Thus, it is expected that 3 types of salaries will simultaneously increase from July 1, 2024, including the salary increase for officials and public employees through salary reform, adjustments to pensions and social insurance benefits, and increasing the regional minimum wage for workers.

Nguyen Ngoc Que Anh

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