RESOLUTION OF 7TH MEETING OF 12TH CENTRAL EXECUTIVE COMMITTEE

ON REFORM OF PAY POLICY FOR PUBLIC OFFICIALS AND PUBLIC EMPLOYEES, ARMED FORCES' PERSONNEL AND EMPLOYEES IN ENTERPRISES

I- SITUATION AND REASONS

1. Pay policy plays an extremely significant part in the system of socio-economic policies, which directly relates to macro balances of the economy, labor market and lives of employees on payroll and contributes to build up a streamlined and clean political apparatus, which operates in an efficient and effective manner along with anti-corruption and anti-waste.

Vietnam has implemented 4 reforms of pay policy in 1960, 1985, 1993 and 2003. The Conclusion of 8th meeting of 9th Central Committee on proposal to reforms in pay policy, social insurance and benefits for meritorious people for the period 2003 - 2007 has been steadily amended by Directions of 10th, 11th, and 12th Congress of the Communist Party of Vietnam (CPV), Conclusion of 6th  meeting of 10th Central Committee, especially Conclusions No. 23-KL/TW dated May 29, 2012 of 5th meeting and Conclusion No. 63-KL/TW dated May 27, 2013 of 7th meeting of 11th Central Committee. Based on these reforms, salaries paid to public officials and public employees and armed force’s personnel in public sector have been steadily improved, especially those in severely disadvantaged areas or sectors, contributing to improve employees’ lives. In business sector, pay policy has been steadily improved according to market mechanism under management of the State.

2. In addition to achievements, the pay policy still has limitations and inadequacies. The pay policy in public sector remains complicated; introduces the payroll design that is inconsistent with posts and leadership positions; keeps putting the emphasis on egalitarianism, which does not guarantee employees' lives; does not utilize talents or create motivation to improve working quality and productivity of employees. The amount of statutory pay rate multiplied by (x) coefficient fails to represent the real value of the pay. A broad range of allowances and earnings other than the pay are regulated by multiple authorities in different documents gives rise to unfair matters and fails to clearly present the administrative hierarchy in public duties. The pay policy fails to promote the rights and responsibilities of the heads in assessing and paying salaries and bonuses in line with labor productivity and working performance of public officials and public employees and workers in an agency/unit.

3. When taking into account causes of aforesaid limitations and inadequacies, certain objective reasons may be listed such as poor internal resources; low quality of growth, labor productivity and competitive power; low accumulation of wealth, limited state-related resources, etc. but they are greatly outweighed by subjective reasons. CPV guidelines for pay policies have been institutionalized slowly and there is a lack of  radical and  comprehensive study on pay policies in the socialist-oriented market economy. The organizational apparatus of political system remains cumbersome; their functions and duties are overlapped, their performance stays inefficient and ineffective. The number of public service providers accelerates, the number on employees on payroll and allowances from state budget remains enormous. The job placement has been provided slowly and fails to form a ground for determining personnel on payroll, recruitment, performance assessment and pay for public officials and public employees. There are certain drawbacks with respect to the inspection and supervision of labor market and pay information system, capacity of negotiation on employees’ pay when entering into labor contracts and the role of Trade Union in collective labor agreements. Guidelines for and advocacy messages of the pay policy proves ineffective that leads to formulation and implementation of certain policies with low consensus.

II – DIRECTION VIEWPOINT, OBJECTIVES AND DETAILED REFORM

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1.1. The pay policy is a vital policy of the socio-economic policy system. The pay must be the primary earning to cover living cost of the employees and their families; satisfactory pay means a good investment in labor development, which helps to improve the labor productivity and effectiveness, make social progress and do social justice, ensure political-social stability, and improve the growth quality and sustainable development.

1.2. The pay policy requires an overall and comprehensive reform that utilizes advantages and overcomes disadvantages of current pay policy in an effective manner, adheres to principles of work-based distribution and natural law of market economy, bases the pay raise on labor productivity growth, meets the international integration requirements, and set a road map in conformity with socio-economic development conditions and the national resources.

1.3. In the public sector, the State give pay to public officials and public employees and the armed forces' personnel based on their posts and leadership positions, in conformity with the state resources and revenue from public service provision, ensure the close correspondence between that pay and earnings on the labor market; give deserving treatment and commendation policies according to labor productivity, create motivation to improve work quality and efficiency, public service ethnics, professional ethnics, and purify and improve performance efficiency and effectiveness of the political system.

1.4. In the business sector, the pay reflects the labor cost, which is formed based on agreement between the employee and employer under market mechanism and state management. The State stipulates minimum wage which is the lowest remuneration to protect vulnerable workers and forms one of bases for arrangement of the wage and regulate the labor market. The wage shall be distributed based on work performance and business income, which ensures harmonized, stable and progressed labor relation in enterprises.

1.5. The pay policy reform is an objective requirement and important duty, which requires high political-related determination in building a socialist rule-of-law state and improving the socialist-oriented market economy; boost the administrative reform; make fundamental changes in organizational apparatus of the political system in a more streamlined manner, efficient and effective operation, and cutting down of personnel on payroll; make fundamental changes in organization and management system and improve performance of public service providers.

2. Objectives

2.1. Overall objectives

Build a scientific and transparent national pay policy system  that meet the following requirements: conforming to real situation of the country, meeting socialist-oriented market economy requirements and active international integration, building harmonized, stable and progressed labor relation; creating motivation for liberating the productive forces, improving labor productivity and human resource quality; building a clean, streamlined, efficient and effective political system; contributing anti-corruption and anti-waste; ensuring the lives of employees and their families and making social progress and doing justice.

2.2. Specific objectives

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a) In public sector

- Keep increasing statutory pay rate as prescribed in Resolution of The National Assembly provided that it is not less than the customer price index (CPI) and in conformity with national economic growth rate; not provide any new category of job-based allowances.

- Complete the formulation and promulgation of new pay regime according to the pay policy reform, associated with the roadmap of administrative reform and cutting down of personnel on payroll; make fundamental changes in organizational apparatus of the political system; make fundamental changes to public service providers in accordance with Resolutions of central authorities.

b) In business sector

- Increase regional minimum wage in conformity with socio-economic development and creditworthiness of enterprises is expected, by 2020, to give an amount of minimum wage that employees and their families could make ends meet.

- Carry out experimental implementation of labor and wage management in state-owned enterprises according to the proposal to reforms in pay policy that is approved.

(2) From 2021 to 2025 and a vision to 2030

a) In public sector

- From 2021, the new pay regime is expected to apply thoroughly to public officials and public employees and armed forces' personnel in the entire political system.

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- Increase the pay rate regularly in conformity with consumer price index, economic growth rate and capacity of state budget.

- By 2025, the lowest wage paid to public officials and public employees is projected to be greater than the lowest regional wage in business sector.

- By 2030, the lowest wage paid to public officials and public employees is projected to be equal to or greater than the lowest regional wage in business sector.

b) In business sector

- From 2021, the State adjusts the regional minimum wage in consideration of recommendation from the National Wage Council. Enterprises are entitled to apply their pay policy in reliance on negotiation and arrangement between the employers, employees and representative(s) of employees; the state will not directly interfere in pay policy of enterprises.

- Manage labor and wages in state-owned enterprises according to the method that a fixed labor cost is given associated with business targets by 2025, with a orientation to assign given business targets by 2030 to enterprises.

3. Detailed reform

3.1. Regarding public officials and public employees and the armed forces’ personnel (public sector)

a) Design a new pay structure, including: Base salary (approximately 70% of total payroll) and allowances (approximately 30% of total payroll), and bonuses (the bonus fund accounts for about 10% of total annual payroll, excluding allowances).

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- Formulate a position-based payroll applicable to public officials and public employees who have hold leadership positions (elected or appointed) in the political system from central to commune level according to the following rules: (1) The position-based pay must reflect the hierarchy in the political system; holder of a position will earn a pay given to such position, holder of multiple positions will earn the pay given to the highest position; holder of equivalent positions will earn the pay given to any of those positions; holder of a superior leadership position must earn a higher pay than the holder of inferior leadership position; (2) a specific amount of pay will be given to a category of position; the position-based payroll at central level shall disregard line ministries and agencies, boards, committees, and equivalence at central level; holders of the same title will earn the same position-based pay according to classification of administrative divisions but earn different position-based allowances. The classification of equivalent leadership positions in the political system for the formulation of position-based payroll purpose shall be subject to decision of Politburo after report it to Central Executive Committee.

- Formulate a professional-based payroll according to grades of public officials and professional titles of public employees applied to public officials and public employees not holding leader titles; each grade and title shall have multiple pay steps according to the following principles: Jobs with the same complexity will be paid the same; jobs with harsher working conditions and incentives will apply job-based allowances; re-arrangement of categories of grades and number of steps in grades of public officials and professional titles of public employees; and public officials and public employees are encouraged to advance their professional skills. The appointment of a public official or public employee to a grade or title must associate with his/her position and structure of grade or title imposed by the employer.

- Formulate 3 payrolls for the armed forces' personnel, including: 1 payroll for military commissioned officers, police commissioned officers and non-commissioned officers (according to their positions, titles and military ranks); 1 payroll for professional soldiers, police technicians and 1 payroll for national defense workers, public security workers (maintain the current equivalence between the pay for the armed forces' personnel and public officials).

c) Determine particular factors to formulate a new payroll

- Repeal current statutory pay rate and pay coefficient and replace them with base salary with specific amounts when building the new payroll.

- Carry out the regime that entering into labor contracts under the Labor Code (or service contracts) with persons who perform the duty of serving (only require those obtaining lower than associate degrees), the new payroll will not apply to them.

- Determine the lowest pay given to public officials and public employees in the public sector which is the pay given to a person who do a job requiring an associate degree (step 1) and is not less than the lowest pay given to trained workers in the business sector.

- Expand the salary range as the basis for determining specific amount of salaries in the payroll, steadily approaching the salary range of the business sector in accordance with the state resources.

- Improve the advancement between steps regularly and advancement between steps ahead of schedule for public officials and public employees and the armed forces' personnel in accordance with the new payroll.

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- Keep applying allowance for those holding multiple positions; seniority allowance (for those reaching the highest step within a grade); allowance for those working in disadvantaged areas; responsibility allowance; allowance for jobs requiring frequent change of workplace; allowance for cipher officers and particular allowance for armed force (military, police and cipher).

- Combine job-based preferential allowance, job-based responsibility allowance and harmful and hazard allowance into job-based allowance, which applies to public officials and public employees under harsher working conditions and give state incentive policy in terms of education and training, health, court, procuracy, civil judgment enforcement, inspection, audit, customs, forest management, market management, etc..  Combine special allowance, allowance for attracting employees to work in disadvantaged areas and subsidy for those working for a long time in severely disadvantaged areas into severely disadvantaged area-related allowance.

- Repeal seniority pay (except for military, police, cipher to maintain the close correspondence between their pay and earnings on the labor market); leadership allowance (because leadership position-based pay will apply to the political system); allowance for those working in the CPV agencies, political-social associations; allowance for public duty (because it is included in the base salary); and harmful and hazard allowance (because it is included in the job-based allowance).

- Stipulate new allowance regime according to administrative divisions of commune, district and province level.

- Consistently give a fixed amount of monthly allowance fund to those working part-time public duties in a commune, village and neighbor according to the rate of recurrent expenditures of the People’s Committee of commune; and stipulate the maximum number of those working part-time public duties depending on type of commune, village or neighbor. Subsequently, the People’s Committee of commune shall request People’s Council at the same administrative level to set forth which specific position will be eligible for allowances with the principle that the holder of one position may both perform multiple tasks and maintain the work quality and effectiveness.

dd) Pay and earning management mechanism

- The head of bodies shall be entitled to use the annual wage fund and funding for recurrent expenditures to employ experts, scientists and people with special talent to perform tasks assigned by the bodies and determine amounts of pay satisfactorily compensating the assigned duties.

- The head of bodies shall formulate the regulations for regular rewards given to subordinates, associated with performance assessment of each person.

- Expand the pilot application of above-mentioned mechanism to certain provinces and central-affiliated cities that exercise autonomy in balancing the budget and ensure adequate financial resource for the pay reform, social security policies may increase the average income up to 0.8 of base salary fund for public officials and public employees.

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- Public service providers that exercise autonomy in a part of recurrent expenditures and public service providers that have all of recurrent expenditures funded by state budget shall apply pay regime in a similar way to public employees. The actual salaries paid to positions and professional titles of public employees shall be determined by the head of a public sector provider according to their sources of funds (from state budget or revenue of the body), labor productivity, and work performance according to their pay regime, provided that not less than the pay regime stated by the State.

3.2. Regarding employees in business sector

a) With regard to regional minimum wage

- Keep improving the policy on monthly regional minimum wage; provide extra regulation on hourly regional minimum wage so as to improve the coverage of minimum wage and respond to the flexibility of the labor market.

- Adjust the regional minimum wage to ensure the basic living standards for employees and their families, in relation to labor market factors and socio-economic development (labor supply and labor demand, economic growth rate, consumer price index, labor productivity, employment, unemployment, creditworthiness of enterprises, etc.)

- Strengthen functions, duties and organizational structure of National Wage Council; engage more independent experts to the Council.

b) Pay and earning management

- Enterprises (including 100%-state-owned enterprises) are given discretion over their pay policy (including pay scale, payroll, labor productivity standard) and pay employees salaries not lower than minimum wages announced by the State and on the basis of collective labor agreement in conformity with the production, work organization, capacity of enterprises and transparency at the workplace.

- The State shall announce monthly and hourly regional minimum wages, average wages on the market and provide labor market information, not directly interfere in the pay policy of enterprises. Enterprises and employees will negotiate the amount of salaries, enter into a labor contract and pay/receive salaries associated the work performance.  Enterprises and employee representatives shall negotiate matters in terms of compensation or incentive arrangements, other motivation policies in the collective labor agreement or internal regulations of enterprises. The State shall enhance the roles of Trade Union and inspection of regulatory agencies.

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- The State shall stipulate the general rules for determining salaries and bonuses for state-owned enterprises associated with labor productivity and business performance, with an orientation to come closer to amount of salaries on the market. The State shall give a fixed amount of payroll covering both salaries and bonuses associated with their business targets and conditions and their lines of business; steadily assigning enterprises to achieve given business targets associated with effective use of state capital.

- Distinguish salaries paid to state capital representatives and salaries paid to Board of Management of enterprises; apply principles that whoever hires or appoint an employee will assess and pay salary to such employee. The State shall stipulate annual base salary, increases in salary and bonuses paid to state capital representatives according to the management scope and complexity and business performance and return on state capital in the enterprises that the representatives are in charge. Their base salary shall be adjusted in accordance with the base salary of local and regional labor market. Steadily engage independent Board of Members and pay salaries to Board of Members and Controllers from earnings after taxes. General Director and members of Board of Management shall work under labor contracts and be on single payroll of the enterprise, in which their maximum salaries are controlled by the business performance and common average salary of employees. Disclose annual salaries and incomes of state capital representatives and General Director of state-owned enterprises.

- Regarding enterprises tasked to stabilize the market by the State, the State shall calculate to deduct funds for guaranteeing the market stabilization tasks and then determine compensation or incentive arrangements for their employees and enterprise managers. Regarding public service enterprises, the State shall accurately and adequately include salaries suitable to those on the labor market in unit price of public service products or services The State shall implement the policy to regulate income, ensuring balanced benefits between enterprises, managers, employees and the State.

III- KEY OBJECTIVES AND MEASURES

1. Strengthen the propagation and the awareness of public officials and public employees, the armed forces' personnel and workers in enterprises in terms of viewpoint, objectives, significance, requirements and details of the pay policy reform. Raise the awareness, make fundamental changes in mindset and methods, create high consensus of levels, sectors, bodies, enterprises, employees on payroll and the society as a whole in implementing CPV's guidelines, policies and legislation of the State on the pay policy.

2. Promptly build and improve the position system, which is deemed as a radical and prerequisite measure to implement the pay reform

- On the basis of reviewing the implementation of law on public officials and public employees and gain selective international good experience, relevant agencies shall amend and improve the legislative document system in terms of positions and criteria for assessment and classification of public officials and public employees associated with particular positions in the public sector, which supports the recruitment, utilization, assessment of and pay to public officials and public employees.

- Bodies in political system shall directly formulate and improve the list of positions, job description, determine structure of public officials and public employees, ranks of commissioned officers; determine framework of reference by every position and cutting down of personnel on payroll in accordance with resolutions of CPV and applicable laws. And then, they shall reshuffle the organizational apparatus, reorganize the staff of public officials and public employees and the armed forces' personnel to pay salaries according to positions, titles and leadership positions.

3. Formulate and promulgate new pay regime

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- After reporting to Central Executive Committee, Politburo decides the classification of equivalent leadership positions in the political system for the formulation of new payroll.

- Involved agencies of CPV and the State shall draft a document on new pay policy and send it to Politburo for consideration before promulgation, effect pay adjustment according to new payroll since 2021 provided that the new payroll is not lower than the current payroll.

4. Take drastic financial and budgetary measures, which is deemed as groundbreaking objectives to create resources for the pay policy reform

- Implement, in a drastic and effective manner, central resolutions on economy restructuring associated with growth model reform; perfecting the socialist-oriented market economy; private economic development; reform and improvement of performance of state-owned enterprises; resolutions of Politburo on restructuring of government budget, public debt management to increase revenue sustainably, and strengthen the decisive role of the central budget.

- Initiate tasks to restructure State budget revenues with an orientation to ensure the total revenue and sustainable revenue structure. Amend and improve revenue policies with an orientation to expand tax base and cover new revenues. Reinforce revenue management, make fundamental changes in preventing loss of revenue, taking actions against and preventing smuggling, trade fraud, trade in counterfeit goods, transfer pricing, tax evasion. Conduct practice of thrift, anti-corruption, anti-waste in using state budget and capital projects. Take drastic measures to repossess property from corruption- or economic-related lawsuits.

- Annually, set aside about 50% of estimated revenue increase and 70% of realized revenue increase of local budget, set aside about 40% of revenue increase in central budget for the pay policy reform.

- Enhance management and improve effectiveness in spending of state budget; keep saving 10% of estimated recurrent expenditure increase annually until application of the fixed payroll according to the payroll designated by the competent authority.

- After setting aside an amount for annual adjustment of statutory pay rate, an amount for social security policies promulgated by central government (regarding local budget) and an amount for investment projects as prescribed (regarding provinces subject to given rate of revenue withholding) according to resolutions of the National Assembly, the remaining amount shall be reserved for the pay policy reform after 2020, not for any other purposes that are not permitted by competent authorities.

- Repeal non-pay expenditures for public officials and public employees derived from state budget, such as: Extra money for meeting attendance; extra money for drafting legislative documents, schemes; seminars, etc. Apply fixed payroll associated with objectives of cutting down of personnel on payroll for relevant bodies. Expand the mechanism that gives a fixed funding associated with required achievements. The amounts of salaries/wages paid to public officials and public employees are not regulated in amendments to documents on non-salary policies. Study to govern non-salary benefits with fixed amounts (cars, phones, etc.). Any new policies is promulgated only when sources of funds are available and balanced.

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Financially-autonomous public service providers shall ensure their source of funds for pay policy reform. Public service providers that exercise autonomy in a part of recurrent expenditures are entitled to withhold at least 40% of revenue (the health branch only is entitled to withhold at least 35% of revenue after deducting related costs from the user charges) and reserve 10% of recurrent expenditures of annual budgetary increase and other sources of state budget estimates to ensure sources of funds for the pay policy reform.

Public service providers without revenue sources that have total recurrent expenditures covered by state budget shall reserve 10% of recurrent expenditures of annual budgetary increase and other sources of state budget estimates to ensure sources of funds for the pay policy reform.

5. Implementing resolutions of 6th meeting of 12th central committee and reform and innovation projects schemes in relevant branches and sectors is a significant task to reform the pay salary comprehensively

Enhance the administrative reform, streamline and improve effective and efficient performance of the organizational apparatus of political system and public service providers. Associate responsibilities of heads of bodies in political system and heads of public service providers with institutionalization and implementation of resolutions of 6th meeting of 12th central committee, especially streamlining organizational apparatus, cutting down of personnel on payroll from government budget, restructuring public official and public employee staff to build a sustainable sources for the pay policy reform.

6. Improve the efficiency and effectiveness in state management

- Amend and make better regulations of law on public officials and public employees, labor, enterprises, social insurance and relevant law provisions on pay policy in the public sector and business sector; accelerate the decentralization and autonomy give to bodies in recruitment, utilization, assessment, appointment, discipline, payment and management of public officials and public employees and workers in enterprises to improve productivity, quality and effectiveness in the bodies and enterprises.  Build a national database of entities and salaries/wages of public officials and public employees, ensuring  its connection and integration with other relevant national database.

- Improve the mechanism to negotiate salaries/wages in enterprises through establishing a mechanism to settle dialogues, negotiate, and reach arrangements between entities in labor relation with an orientation to ensure transparency, democracy and balance of interests between employees and employers and create high consensus. Develop apparatus and improve performance of grassroots-level Trade Union and manage the incorporation and operation of employee representatives in an effective way. State statistics agencies shall announce annual basic living standards as the basis for determining minimum wages and pay policy orientation; strengthen the investigation and disclosure of information and data about salaries/wages and income in both public sector and on the market. Improve capacity and work performance in basic research and design of labor- and pay-based policies.

- Facilitate the good coordination between specialized State management agencies and regulatory agencies in investment, finance and improving effectiveness in using state budget, anti-overlapping and anti-waste. Provide specific regulations on power and responsibilities of heads of Ministries, regulatory bodies, and local governments and relevant bodies. Strengthen transparency and accountability of bodies of CPV, the State and socio-political organizations.

- Accelerate the inspection and supervision of implementation of the pay policy in accordance with laws and regulations in enterprises, agencies, CPV units, the State and socio-political organizations. Take drastic measures against entities that knowingly avoid, not strictly perform or fail to perform duties in implement pay policy reform associated with administrative reform, reshuffling of organizational apparatus, cutting down of personnel on payroll for public service providers and violations against regulations and law on salaries or wages. Formulate a set of indicators and mechanism to report regularly, disclose information and data of state organizational apparatus, public service providers, and pay-related expenditures in the public sector.

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- According to the viewpoint and policies of CPV, CPV agencies, the State, Fatherland Front, and socio-political organizations from central to local level shall comprehensively initiate measures within their functions and tasks to achieve the pay policy reform objectives, bringing about positive effect to the economy.

- Promote roles of people from all social strata, Fatherland Front and socio-political organizations in supervising and criticizing the implementation of pay policy reform comprehensively with reshuffling of organizational apparatus, cutting down of personnel on payroll, making fundamental changes to the organization and management system of public service providers.

- Improve roles and capacity of Trade Union which is a representative of employees in labor relation in accordance with socialist-oriented market economy and international integration.

IV- IMPLEMENTATION

1. Provincial committees of CPV, city committees of CPV, CPV departments, CPV Personnel Committees, CPV organizations, CPV committees affiliated to central level shall formulate action plan/program to implement the resolution with the appropriate roadmap and give specific assignments to relevant bodies within their competence in each sector, branch, local government, and bodies.

2. CPV organization of the National Assembly shall direct the formulation of making laws and ordinances, especially bills intended for implementation of this resolution; strengthen the oversight of the National Assembly, Standing Committee of the National Assembly, the Nationality Council, committees of the National Assembly as to the pay policy reform.

3. CPV Personnel Committees of the Government shall take charge and cooperate with CPV organization of the National Assembly, Central Organizing Committee in drafting documents on new pay policy, roadmap to implement in conformity with the economy, capacity of state budget, and then submit them to Politburo, and forward them to competent authorities to promulgate or promulgate within competence in line with viewpoint, objectives and tasks and measures for pay policy reform.

4. Central Propaganda Department shall take charge and cooperate with relevant agencies in heightening awareness and propagating the resolution and implementation results.

5. Vietnamese Fatherland Front and socio-political organizations shall formulate supervision programs and plans for this resolution.

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ON BEHALF OF CENTRAL EXECUTIVE COMMITTEE
GENERAL SECRETARY




Nguyen Phu Trong