Circular No. 04/2002/TT-BLDTBXH guides the management of salaries and income for state-owned enterprises operating public services.

CIRCULAR

Guidelines for managing salaries and income for state-owned enterprises engaged in public services

State-owned enterprises engaged in non-profit activities with primary funding from the state budget

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Pursuant to Decree No. 28/CP dated March 28, 1997, and Article 2 of Decree No. 03/2001/NĐ-CP dated January 11, 2001 of the Government amending and supplementing certain provisions of Decree No. 28/CP dated March 28, 1997 on salary and income management in state-owned enterprises, following comments from the Ministry of Finance in Circular No. 11936/TC/CSTC dated December 12, 2001, the Ministry of Construction in Circular No. 2033/BXD-TCLĐ dated November 15, 2001, and the General Confederation of Labor Vietnam in Circular No. 1873/TLĐ dated November 16, 2001, the Ministry of Labor, Invalids, and Social Affairs hereby provides guidelines for managing salaries for state-owned enterprises engaged in public services as follows:

I. APPLICABLE OBJECTS:

The applicable entities are state-owned enterprises engaged in public services under the armed forces, state-owned enterprises not operating for profit, and those primarily funded by the state budget according to Decree No. 56/CP dated October 2, 1996 of the Government and Circular No. 01/BKH/DN dated January 29, 1997 of the Ministry of Planning and Investment.

(The above entities shall be referred to as enterprises)

Not applicable to state-owned enterprises engaged in public services that self-finance, pay taxes, generate profits, and meet the conditions for applying Circular No. 05/2001/TT-BLĐTBXH dated January 29, 2001 of the Ministry of Labor, Invalids, and Social Affairs guiding the establishment of unit price wages and wage management in state-owned enterprises.

II. PRINCIPLES

1\. Based on the volume and quality of products or the demand for public service, the competent authority at the appropriate level of management determines the projected value based on current unit price standards (including wage costs) to implement the mechanism of placing orders or tendering for public goods and services. These wage costs must be calculated according to the wage parameters specified in Section III of this Circular;

2\. To be eligible to receive the volume and quality of public goods and services through assignment or participation in tenders, enterprises base their projected value on their technical and production technology levels, management capabilities, workers' skills, actual organizational structure of production and labor, and proactively establish a projected value as the basis for negotiating orders or participating in tenders. Wage costs must be calculated according to the wage parameters specified in Section III of this Circular, independent of the unit prices set by the competent authority at the appropriate level of management.

3\. Enterprises that simultaneously perform state-assigned public service tasks and other business activities should separate each part when establishing a projected value before consolidating them.

III\. DETERMINING WAGE COSTS IN THE UNIT PRICE OF PUBLIC GOODS AND SERVICES

Based on functions, responsibilities, fields of operation, and the implementation of product and service volumes in the previous year, enterprises build specific plan indicators, submit them to the competent authority at the appropriate level of management for review and assignment of annual plans. On the basis of these planned indicators, enterprises determine wage costs in the unit price of public goods and services, ensuring compliance with the following wage parameters:

1\. Labor norms:

In accordance with Circular No. 14/LĐTBXH-TT dated April 10, 1997 of the Ministry of Labor, Invalids, and Social Affairs, based on the volume and quality of public goods and services, actual production organization, and labor organization, enterprises establish labor norms to determine wage costs in the unit price of products or public services, independent of the unit price norms set by the ordering or tendering authority.

2\. Minimum wage rate:

The minimum wage rate for determining wage costs in the unit price of public goods and services is determined using the following formula:

TLminde = TLmin x (1 + Kde)

Where:

- TLminde: Adjusted minimum wage rate for determining wage costs in the unit price of public goods and services;

- TLmin: General minimum wage rate, which is the minimum wage rate prescribed by the Government for each period. From January 1, 2001, the general minimum wage rate for state-owned enterprises is implemented according to Clause 1, Article 1, Decree No. 77/2000/NĐ-CP dated December 15, 2000 of the Government, which is 210,000 VND/month. When the Government adjusts the general minimum wage rate, the new adjusted rate will apply.

- Kde: Additional adjustment factor for the minimum wage rate.

Additional adjustment factor for the minimum wage rate (Kde):

Based on labor supply and demand, labor rental rates, and the minimum living expenses by region, the lowest additional adjustment factor for the minimum wage rate (Kde) is defined as follows:

Enterprises located in a particular area shall apply the additional adjustment factor for the minimum wage rate (Kde) corresponding to that area but must ensure economic indicators approved by the competent authority at the appropriate level of management.

Based on actual circumstances and financial resources, the competent authority at the appropriate level of management and enterprises may choose a higher additional adjustment factor than the prescribed level.

Example: Company A Urban Environmental Services located in an area with an additional adjustment factor for the minimum wage rate of 0.3, the lowest minimum wage rate for determining wage costs in the unit price of payment for public goods and services applied is:

TLminde = 210,000 VND/month x (1 + 0.3) = 273,000 VND/month or more.

3\. Job grade wage coefficient:

The job grade wage coefficient is determined based on the complexity of the work suitable for the public service tasks assigned or contracted by the competent authority at the appropriate level of management and the wage scale coefficients prescribed by the state.

4. Overtime allowances:

BASED ON THE GUIDELINES FOR IMPLEMENTING ALLOWANCE REGIMES ISSUED BY THE MINISTRY OF LABOR, INVALIDS AND SOCIAL AFFAIRS, ENTERPRISES SHALL DETERMINE THE ELIGIBILITY AND AMOUNT OF ALLOWANCES IN ACCORDANCE WITH THE PROVISIONS TO BE INCLUDED IN THE UNIT COST OF PRODUCTS AND PUBLIC SERVICES.

THE ALLOWANCES TO BE CONSIDERED IN DETERMINING WAGE EXPENSES INCLUDE: AREA ALLOWANCE; HAZARDOUS AND DANGEROUS WORK ALLOWANCE; RESPONSIBILITY ALLOWANCE; NIGHT SHIFT ALLOWANCE; ATTRITION ALLOWANCE; MOBILITY ALLOWANCE; LEADERSHIP POSITION ALLOWANCE.

IV. ENTERPRISE WAGE PAYMENT MECHANISM

1. ESTABLISHING A PLAN FOR WAGE EXPENSES AND FUNDS FOR ADDITIONAL WAGE FUNDS:

BASED ON THE VOLUME OF TASKS AND THE UNIT PRICE OF PRODUCTS AND PUBLIC SERVICES ACCORDING TO THE PLAN SET BY THE AUTHORIZED STATE AUTHORITIES THROUGH ASSIGNMENTS OR BIDS, ENTERPRISES SHALL DEVELOP PLANS TO IMPLEMENT THE ASSIGNED PUBLIC SERVICE VOLUMES, ENSURING THE QUANTITY, QUALITY, AND TIMEFRAME AS REQUIRED. BASED ON SAVING OTHER EXPENSES IN THE TOTAL EXPENSES, ENTERPRISES SHALL DEVELOP A WAGE EXPENSE PLAN WITH AN ADJUSTMENT FACTOR FOR THE MINIMUM WAGE INCREASE AS PROVIDED FOR IN DECREE NO. 28/CP OF MARCH 28, 1997 OF THE GOVERNMENT ON REFORMING WAGE MANAGEMENT AND INCOME IN STATE ENTERPRISES, DECREE NO. 03/2001/NĐ-CP OF JANUARY 11, 2001 OF THE GOVERNMENT SUPPLEMENTING AND REVISING DECREE NO. 28/CP, AND GUIDELINES ISSUED BY THE MINISTRY OF LABOR, INVALIDS AND SOCIAL AFFAIRS.

THE ENTERPRISE'S WAGE EXPENSE PLAN MUST SATISFY THE FOLLOWING CONDITIONS:

- COMPLETING THE VOLUME OF PRODUCTS AND PUBLIC SERVICES ACCORDING TO THE PLAN SET BY THE AUTHORIZED STATE AUTHORITIES;

- FULLY PERFORMING THE OBLIGATION TO PAY STATE TAXES (IF ANY), SOCIAL INSURANCE, AND HEALTH INSURANCE FOR EMPLOYEES;

- ENSURING LABOR PRODUCTIVITY INCREASES;

- NOT INCREASING THE CONTRACTED OR BIDDED FUNDS.

2. REVIEWING THE WAGE EXPENSE PLAN:

PRIOR TO IMPLEMENTATION, THE ENTERPRISE'S WAGE EXPENSE PLAN MUST BE REVIEWED BY THE AUTHORIZED STATE AUTHORITIES AT THE APPROPRIATE LEVEL OF MANAGEMENT, SPECIFICALLY:

- THE SECTORAL MINISTRIES SHALL REVIEW THE PLANS OF CENTRALLY MANAGED ENTERPRISES;

- THE DEPARTMENT OF LABOR, INVALIDS AND SOCIAL AFFAIRS SHALL REVIEW THE PLANS OF LOCALLY MANAGED ENTERPRISES;

- THE BOARD OF DIRECTORS OF THE GENERAL CORPORATION SHALL REVIEW THE PLANS OF ENTERPRISES UNDER THE MANAGEMENT OF THE GENERAL CORPORATION 90/TTg OR 91/TTg.

THE APPLICATION FOR REVIEW SHALL INCLUDE:

+ REQUEST LETTER;

+ THE ENTERPRISE'S WAGE EXPENSE PLAN.

3. DETERMINING THE ACTUAL WAGE FUND:

BASED ON THE DEGREE OF COMPLETION OF THE PUBLIC SERVICE TASK VOLUME AND THE CONDITIONS STATED IN POINT 1, SECTION IV ABOVE, ENTERPRISES SHALL SETTLE THE ACTUAL WAGE FUND ACCORDING TO THE ENTERPRISE'S WAGE EXPENSE PLAN APPROVED BY THE AUTHORIZED STATE AUTHORITIES AT THE APPROPRIATE LEVEL OF MANAGEMENT.

IF ENTERPRISES FAIL TO MEET THE CONDITIONS STATED IN POINT 1, SECTION IV ABOVE, THEY SHALL HAVE THEIR WAGE FUND REDUCED. THE AVERAGE LOWEST AMOUNT AFTER REDUCTION MUST BE EQUAL TO THE AVERAGE WAGE CALCULATED IN SECTION III ABOVE WHEN ESTABLISHING THE WAGE EXPENSE PLAN IN THE BUDGETED FUNDS FOR THE UNIT PRICE OF PRODUCTS AND PUBLIC SERVICES.

V. IMPLEMENTATION

1. BASED ON THE CONTENTS AND GUIDELINES SET OUT IN THIS CIRCULAR, THE SECTORAL MINISTRIES, THE PEOPLE'S COMMITTEES OF PROVINCES AND CITIES DIRECTLY UNDER THE CENTRAL GOVERNMENT, THE DEPARTMENT OF LABOR, INVALIDS AND SOCIAL AFFAIRS, THE CHAIRS OF THE BOARDS OF DIRECTORS OF THE GENERAL CORPORATION 91/TTg AND 90/TTg, AND ENTERPRISES ARE RESPONSIBLE FOR IMPLEMENTING THE PROVISIONS OF THIS CIRCULAR.

2. THE RESPONSIBILITIES OF THE STATE ADMINISTRATIVE AUTHORITIES AND ENTERPRISES REGARDING WAGE AND INCOME MANAGEMENT SHALL BE IMPLEMENTED IN ACCORDANCE WITH THE PROVISIONS IN SECTION IV OF CIRCULAR NO. 05/2001/TT-BLĐTBXH OF JANUARY 29, 2001 OF THE MINISTRY OF LABOR, INVALIDS AND SOCIAL AFFAIRS.

THE REPORTING OF LABOR, WAGES, AND INCOME SITUATIONS IN ENTERPRISES IS AS FOLLOWS:

- ENTERPRISES MUST REPORT TO THE AUTHORIZED AUTHORITIES AT THE APPROPRIATE LEVEL OF MANAGEMENT BY THE END OF APRIL EACH YEAR ON THE SITUATION OF LABOR, WAGES, AND INCOME OF THE PREVIOUS YEAR ACCORDING TO FORM NUMBER 1 ATTACHED TO THIS CIRCULAR.

- THE SECTORAL MINISTRIES AND THE PEOPLE'S COMMITTEES OF PROVINCES AND CITIES AT THE APPROPRIATE LEVEL OF MANAGEMENT MUST REPORT TO THE MINISTRY OF LABOR, INVALIDS AND SOCIAL AFFAIRS BY THE END OF MAY EACH YEAR ON THE SITUATION OF LABOR, WAGES, AND INCOME OF THE PREVIOUS YEAR IN ENTERPRISES ACCORDING TO FORM NUMBER 2 ATTACHED TO THIS CIRCULAR.

3. THIS CIRCULAR TAKES EFFECT FROM JANUARY 1, 2002.

ANY ISSUES ENCOUNTERED DURING IMPLEMENTATION SHOULD BE REPORTED BY THE MINISTRIES, THE PEOPLE'S COMMITTEES OF PROVINCES AND CITIES DIRECTLY UNDER THE CENTRAL GOVERNMENT, AND STATE ENTERPRISES TO THE MINISTRY OF LABOR, INVALIDS AND SOCIAL AFFAIRS FOR REVIEW AND RESOLUTION.