The monthly basis salary of civil servants and public employees will be raised from VND1.49 million (US$64) per month to VND1.6 million (US$69) per month, local media reported.
The basis salary is the reference for calculating salaries of employees in the state-run sector by multiplying it with their corresponding coefficient.
The Ministry of Home Affairs said that the current basis salary, VND1.49 million (US$64) per month, is only 42.39% compared to the average regional minimum salary in 2019 and 40.16% compared to the average regional minimum salary in 2020. With this salary, public employees and those working in the armed forces can hardly make ends meet.
The Vietnamese National Assembly (NA) on November 2019 approved a government proposal to raise salary for civil servants by 7.3% from July 1, 2020. This will be the boldest salary hike in the past eight years. The previous salary raise was a 7.2% hike, effective from July 1, 2019.
Besides, the Vietnamese government will adjust pensions, social insurance allowances, prescribed monthly allowances and preferential allowances for people with meritorious services in accordance with the basis wage increase.
Public sector employees have complained for years that their earnings are too low. The starting coefficient for a university graduate in the public sector is 2.34.
The size of Vietnam’s public sector compared to the population is among the biggest in Southeast Asia, according to the World Bank.
Currently, Vietnam’s minimum monthly salary is divided into four different levels, depending on location - VND4.18 million (US$179) for region 1, VND3.71 million (US$159) for region 2, VND3.25 million (US$139) for region 3, and VND2.92 million (US$125) for region 4.
The four different minimum wage regions reflect the cost of living in each area. Region 1, including largest cities like Hanoi and Ho Chi Minh City, has the highest minimum wage, while region 4 (rural areas) has the lowest.
Businesses will calculate their workers' salaries by multiplying the minimum wage rates with a coefficient determined by qualification and experiences.
According to a survey released by employment website Jobstreet.com late last year, salaries in Vietnam are rising faster than in any other Southeast Asian country. The average annual growth rate of Vietnam's payroll stands at 20-24%, compared to 14-20% in Thailand, the Philippines, Indonesia, Myanmar and Singapore.
However, despite the rapid growth, wages in Vietnam are still low. Vietnam raises minimum wage every year. The increase in 2019 was 5.3%, but only meets 95% of laborers’ living costs. Vietnam's per capita income in 2018 was US$2,587.