Vietnam Paves the Way for Significant Wage Increases

Vietnam's Prime Minister Pham Minh Chinh has just directed the government get ready for a sweeping wage reform aimed at significantly increasing salaries for officials, civil servants, public employees, and members of the armed forces.

The new policy, a direct result of Resolution 27-NQ/TW of the Central Committee, will take effect on July 1, 2024, bringing substantial improvements to the compensation structure within the public sector.

The Need for Reform

This reform underscores Vietnam's commitment to fair compensation and seeks to address a growing concern: the disparity between public and private sector wages.

The government recognizes the dedication of its workforce and the need to provide competitive salaries to attract and retain talent. By aligning public sector wages with market rates, the reform aims to boost morale, increase productivity, and enhance the overall quality of public services.

A Comprehensive Approach

At the heart of the new policy lies the creation of five meticulously designed salary scales. These comprehensive scales aim to provide fair compensation across the diverse range of positions within Vietnam's public sector.

They encompass leadership positions at all governmental levels, professional roles held by officials, civil servants, and employees who don't hold managerial responsibilities, and the various positions within the armed forces.

These positions include those specializing in cipher work, military professionals, technical staff, and defense workers.

To ensure a smooth and equitable transition, the policy firmly mandates that no worker will experience a reduction in salary under the new system.

Notably, the lowest public sector salary will be directly aligned with the lowest regional average salary in the corporate sector. While this figure currently stands at over VND 3.9 million (approximately USD 154), it's anticipated to increase as the ongoing revision of regional minimum wages progresses.

Spotlight on Education and Healthcare

Demonstrating the government's dedication to critical sectors, the reform places a strong emphasis on increasing salaries for education and healthcare workers.

This decision is deeply influenced by the challenges these sectors faced during the COVID-19 pandemic, highlighting the vital role these professionals play in society.

The goal is to ensure that teachers and doctors receive compensation commensurate with their skills, responsibilities, and the value they provide.

Substantial and Sustained Increases

The average salary of civil servants and public employees is projected to increase by a noteworthy 30% under the new reform. However, the government's commitment doesn't stop there.

Starting in 2025, salaries will be further adjusted annually by an average of 7%. These planned increases reflect a two-fold objective: to compensate for price fluctuations and to align salary growth with Vietnam's expanding economy.

Financial Prudence and Long-Term Stability

Prime Minister Pham Minh Chinh, a key architect of the wage reform, understands the importance of meticulous planning and reporting for the new policy's success and long-term sustainability.

To secure the necessary funding, the government is pursuing several strategies. It aims to streamline administrative operations across various agencies, seeking greater efficiency to reduce costs.

Additionally, it is carefully reducing staffing levels to optimize resource allocation. At the same time, revenue collection efforts are being enhanced to further bolster the financial foundation necessary for the reform.

These steps, coupled with Vietnam's projected economic growth, are designed to establish a robust financial framework to support the wage reform.

Protecting Existing Benefits

The Ministry of Home Affairs, under the leadership of Minister Pham Thi Thanh Tra, has implemented a salary reservation system to protect the interests of certain public sector workers. 

This system is specifically designed for those who currently earn higher salaries under specific income regulations that will be abolished.

By reserving a portion of their current salaries, this measure guarantees that no worker will experience a financial setback upon the implementation of the new policy.

A Momentous Change

Experts agree that this is the most progressive and comprehensive wage reform undertaken by the Vietnamese government to date. It not only addresses immediate needs but also lays the groundwork for sustainable salary adjustments in the years to come.

The reform stands as a testament to Vietnam's commitment to building a strong, well-compensated, and motivated public sector workforce, capable of driving progress and serving the nation effectively.