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Vietnam may delay public sector wage hike

By Anh Minh, Hoang Thuy   June 1, 2020 | 12:29 am PT
Vietnam may delay public sector wage hike
A woman performs administrative procedures at the People's Committee Office of District 12 in Ho Chi Minh City in June 2019. Photo by VnExpress/Quynh Tran.
The 7.3 percent wage hike for civil servants might be delayed as the government responds to budget pressures exerted by Covid-19.

The government is considering postponing a plan to raise the monthly base wages of civil servants and public employees by six months until January 1 next year to tighten the state budget, Finance Minister Dinh Tien Dung told the press on the sidelines of a legislators’ meeting in Hanoi Monday.

He noted that the raise would only benefit people in the public sector and those receiving retirement pensions, while other sections of the society like farmers and the self-employed face not just reduced incomes but loss of jobs and livelihood as a result of the pandemic.

"Delaying the wage increase for civil servants means sharing the burden with other parts of the society, especially those affected by the pandemic," he said.

In November last year, Vietnam’s top legislative body, the National Assembly, had approved a government proposal to raise civil servants’ wages by 7.3 percent from July this year.

Under the proposal, the monthly base wage of civil servants and public employees, including teachers and doctors, will go up from VND1.49 ($64) to VND1.6 million ($69), marking the highest wage hike in the past eight years.

Apart from postponing this increase, the Finance Ministry has proposed to higher authorities a series of policies to tighten spending, including a minimum reduction of 70 percent to the expense on organizing events, conferences, as well as business trips for state officials, except for activities related to Vietnam's 2020 ASEAN chairmanship.

This proposal has recently been approved by the government in a May 29 resolution on what needs to be done to tackle difficulties caused by Covid-19.

Vietnam’s GDP growth in the first quarter fell to a 10-year low of 3.82 percent. The nation now targets an economic growth of 5 percent this year, exceeding international forecasts, banking on a rapid recovery strategy to overcome pandemic impacts.

The wage hike was devised after public sector employees complained for years that their earnings were too low. Local economists backed the assertion, noting that low wages have and will continue to foster corruption in the public sector.

Data from the General Statistics Office shows that at the end of 2017 there were more than 5.2 million people working in the public sector. The size of Vietnam’s public sector compared to the population is among the biggest in Southeast Asia, according to the World Bank.

In 2017, Prime Minister Nguyen Xuan Phuc ordered government offices to reduce staff numbers by between 1.5-2 percent every year over the next five years. Vietnam's per capita income last year was $2,800.

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