Committee chairman explains state wage stasis

With inflation at 7 per cent, if the wages of state administrators are not raised by the proposed 9.5 per cent this year they will in fact lose money. What are your thoughts on this?

Our committee and other relevant agencies understand this problem. We have seen numerous obstacles to budget collections this year and as such we will likely keep the current wage level of VND1.15 million ($55) per month for now. Just maintaining the current level is requiring considerable effort by the Ministry of Finance. 

If budget collections improve over the next two years, would the wage hike proposal be reconsidered?

We want to increase the wages but accomplishing this is fraught with hardships as charges and fees have dropped constantly year-on-year. In past years we would see 23-24 per cent of GDP and in some cases even up to 26-27 per cent, but it has slid sharply in recent years as the government has applied wide ranging measures to improve the competitiveness of the economy to attract foreign investment and as per the country’s international commitments.

In 2011 collections made up 22 per cent of GDP which fell to 20 per cent in 2012 and 18.4 per cent in 2013. 2014 is expected to see another drop to 17.4 per cent.

While collections have fallen, GDP has consistently gone up. In 2013 it rose by 5.4 per cent and forecasts say 5.8 per cent next year. Doesn’t this mean the budget would also increase?

There are numerous expenditures that we are stuck with and some items such as poverty reduction programmes and national health insurance for young children and impoverished people that are demanding more and more of the budget.

Based on estimated tax and GDP growth rates, we are having to be very thrifty with the budget. Spending on investment development will fall from $9.6 billion in 2013 to $7.4 billion in 2014, the lowest in many years. Moreover, the budget deficit will revised to 5.3 per cent of GDP in 2014.

Increasing wages goes along with improving human resources to enhance state management efficiency and reduce corruption. Will not increasing wages suspend progress in these areas?

That’s true, but it isn’t financially possible for us to increase wages in the current situation. We can only ask that state administrators understand and share in the difficulty.

Are there any proposed alternative solutions to scale up state employees’ incomes?

The government is going to take stronger measures to downsize the overly complicated administrative apparatus. In doing so people working in administrative and non-production areas will be given wages based on merit.