Vietnam to give public sector 7.4 percent wage raise next year

By Hoai Thu   November 12, 2016 | 11:52 am GMT+7
Vietnam to give public sector 7.4 percent wage raise next year
The basic wage for the public sector will be raised to VND1.3 million ($58) a month from July 2017. Photo by VnExpress

This is the second annual increase in a row for the sector, which has around 2.8 million payroll jobs.

Vietnam’s top legislative body, the National Assembly, on Friday approved a government’s proposal to raise wages for Vietnamese civil servants and public employees, including teachers and doctors, by 7.4 percent from July next year.

The government made the proposal last month, seeking to raise the wage level from the current VND1.21 million ($54) a month to VND1.3 million ($58).

In Vietnam, the minimum monthly pay for civil servants and public employees is calculated by multiplying that basic level with a coefficient determined by qualifications and experience. The coefficient for a new subdistrict-level civil servant with a bachelor’s degree, for example, is 2.34.

Many in the public sector have for years complained that their earnings are too low. In May this year, the public sector's minimum wage was increased by 5 percent, the first time in three years.

At a conference in October, economists have blamed low wages in the sector for increasing the level of corruption.

They said the current wages for many officials only cover 60 percent of basic living costs at best, but most have stopped depending on the official salaries and still manage to afford nice houses and cars.

Vietnam ranked 112th out of 168 countries in the Corruption Perceptions Index in 2015.

Nguyen Duc Hai, chairman of the National Assembly's Finance and Budget Committee, has said the new pay raise is reasonable considering higher costs of living.

But the government also needs to scale down the workforce to reduce the pressure on the state budget, he said.

The government is having 2.8 million people on its payroll, according to local media.

Vietnam's state budget revenue is expected to reach more than VND1,200 trillion ($54.3 billion) in 2017, compared to a spending projection of more than VND1,390 trillion ($62.3 billion). That will leave a budget deficit of 3.5 percent of the country's gross domestic product.

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