The minimum wage is the lowest wage, differentiated by region, applicable to employees in Vietnam. However, in Vietnam and most countries around the world, ordinary employees have 2 popular working options: working in the public sector for the state and working in the private sector for Business. The minimum wage as understood by the majority of employees today is the level applied to employees in the private sector. So, for employees working for the state, i.e. cadres, civil servants, and public employees, would they get and apply the minimum wage?
Article 3 of Decree 38/2019/ND-CP stipulates that the base salary is used as a basis for:
- Calculating salary levels in the payroll, allowance levels and implementing other regimes as prescribed by law;
- Calculating the operating and living expenses according to the provisions of law;
- Calculate deductions and benefits according to the base salary.
Thereby, the current base salary of 1.49 million VND/month will be used as a basis for calculating the salary in the salary table as well as allowances for cadres, civil servants, and public employees working in the public sector.
Payroll applies a salary coefficient, which is based on the base salary.
For example, an officer has a salary coefficient for his position of 5.0, their monthly salary will be: 1.49 x 5 = 7.45 million VND.
This salary is higher than the minimum wage of all regions in Vietnam (the highest is region 1 with 4.68 million VND). However, that does not mean that every position in the state will receive a salary higher than the minimum wage for private employees.
Currently, according to the salary coefficient table of current cadres and civil servants, the highest salary coefficient in Vietnam is 8.0 for grade 6 salary group 1 (A3.1), grade A3 civil servant, equivalent to 11 ,92 million VND/month.
In contrast, the lowest salary coefficient in Vietnam is currently 1.65 for salary grade 1 group 1 (C1), grade C civil servant is equivalent to 2.45 million VND/month.
Thereby, the cadres and civil servants holding this position all receive a salary lower than the regional minimum wage. Even after the upcoming base salary increase in 2023, the salary for salary grade 1 group 1 (C1), grade C civil servant is only up to 2.97 million VND/month, still lower than the current regional minimum wage in Region IV which is 3.25 million VND/month (the lowest in Vietnam among the 4 regions)
Not only that, even though they work in the state, employees who are cadres, civil servants, and public employees will still have to pay social insurance equivalent to that of employees working in the private sector, a 10.5% proportion of the employee's monthly salary. Of that amount, 8% will be contributed to the survivorship and retirement fund, 1% to the unemployment insurance fund, and 1.5% to the health insurance fund.
Thereby, civil servants in Vietnam do not apply the minimum wage mechanism. The salary received by cadres and civil servants is based on the base salary system, which is expected to have a significant increase in 2023, and within the next 10 years, there will be a big change, a complete restructuring of the base salary regime with great support for the group of employees working in the public sector.
In addition, for the group of civil servants, the base salary is not the full amount they usually receive as employees in the private sector. Cadres, civil servants and public employees, in addition to a fixed salary according to salary levels, often receive other allowances and supports in addition to salary levels to ensure their minimum standard of living.
The base salary plus the usual allowances will ensure that cadres, civil servants and public employees receive a monthly salary equivalent to the minimum wage in the region where the employee works.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.