Oct 24, 2012

Vietnam - Cutting spending, weeding out the inefficiencies to increase salary

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VietNamNet Bridge – On the sidelines of the National Assembly session, deputies shared their opinions about salary increase with VietNamNet on October 22.

Earlier, the government stated that it wanted to delay wage hike. The resources are not enough to raise the minimum wage to VND1.3 million on May 1, 2013 as scheduled, said a report of the Government put forward at the National Assembly (NA) meeting on Monday, October 22.

Authorized by the Prime Minister, Minister of Finance Vuong Dinh Hue delivered the report on the State budget in 2012 and budget estimate and allocation plan for next year.

Hue said that if the minimum wage was raised from VND1.05 million to VND1.3 million per month and allowance for civil servants was increased from 25% to 30% of their wages on May 1, 2013 as scheduled, the State budget would have to allocate some VND60 trillion.

It will be difficult to balance the State budget in 2013, stressed the minister. Under the allocation plan for next year, only an additional VND28.9 trillion can be allocated for the wage hike purpose, but it is just enough to maintain the minimum wage of VND1.05 million effective from this May.

Based on the budget revenue this year and in the early months of 2013, the Government will report to NA about the possibility of wage reform at the fifth NA sitting in May next year.

Hue remarked it would be very difficult to accomplish the State budget revenue target for this year. Around VND740.5 trillion was collected in the first nine months of the year, equivalent to 67.3% of the estimate for the whole year.

Meanwhile, the central budget spent VND20 trillion in the first nine months on tax exemption, reduction and payment extension for enterprises.

Deputy Prime Minister Vu Van Ninh

The Government has not yet had the capital sources for raising salaries. If salaries are raised under the roadmap, the government will have to cut spending for other items.

However, the Government will raise salaries when the economy recovers. When the government has sufficient conditions for raising salaries, the government will report to the National Assembly to immediately implement it.

In previous years, the state budget had excessive revenues that could be spent on salary increases, but this year we may fail to achieve budget revenue targets.

Deputy Nguyen Thi Kha (Tra Vinh province)

If the government can make a balance of the budget, it is necessary to raise salaries because increasing salaries will not only benefit civil servants, but also retired people and those who are subjected to social policies.

If the source of the budget is not enough to increase salaries under the roadmap, it must raise at least by a half of the schedule.

The government can raise salaries in two phases, the first from May 1 and the second at the end of the year. We should not be afraid that salary increase will push the prices up.

The budget for some items may not increase but salaries must be ensured to increase on track.

Deputy Tran Hoang Ngan (HCM City)

We must have budget revenues to ensure the implementation for the wage reform roadmap. To have resources for salary increases, the government has to increase domestic revenue; to reduce unreasonable expenses--particularly expenses related to festivals and celebration activities that the Government had to admit as waste.

Some people are afraid that salary increase will make the prices up but in my opinion, in recent years, the rise in wages was no longer a shock to the economy. We also do not increase salaries in the early part of the year, so salaries are no longer the element that makes the prices go up.

Raising salaries in May 2013 under the roadmap is only applied to those who are paid by the state budget so it should be implemented under the plan.

Deputy Head of HCM City’s National Assembly delegation, Dr. Tran Du Lich

Increasing salaries must be attached to improving the efficiency of the government apparatus.

Measures must be implemented together to ensure the efficient operation of the apparatus. It is unfair to increase wage to maintain personnel who work inefficiently.

We have discussed streamlining the government apparatus for many times but the apparatus is bigger and bigger. In such circumstance, raising wage only brings about negative effects.

I think salaries should be increased in 2013 as schedule but it is necessary to cut permanent expenditures.

Chair of NA Committee for Social Issues Truong Thi Mai

The Ministry of Labor, War Invalids and Social Affairs has said to raise the salaries of the business sector as planned. As for the public sector, the Government will have to reconsider before reporting to the National Assembly. I recommend raising salary at the appropriate time, not to state of not increasing salary. To increase salary under the approved roadmap, we will need up to VND60 trillion ($3 billion). This is a difficult problem.

Ngoc Le

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