This Circular guides the method for calculating average labor productivity and average wage in state-owned companies according to Government Decree No. 206/2004/NĐ-CP. Companies must base their calculations on revenue, costs, and products sold to determine labor productivity, from which they can establish wage increases and adjust wage rates based on increases in labor productivity.
Scope of application
State-owned companies operating under the Law on State-Owned Enterprises include State Corporations, Independent State Companies, and independent accounting subsidiaries of State Corporations established and invested in by the State.
Key points
- State-owned companies → calculate average labor productivity and average wage based on revenue, costs, and products sold.
- State-owned companies → adjust wage rates according to the increase in average labor productivity, with wage increases not exceeding 80% of the increase in labor productivity.
- Planned average annual labor productivity = (Total actual revenue or total actual products sold / Average actual number of employees used).
- Planned average annual wage = (Wage fund at wage rate / Planned number of employees).
- Maximum planned average wage for determining wage rate = Last year's actual average wage x (1 + Planned average increase in labor productivity) or = Last year's actual average wage if planned labor productivity equals actual labor productivity.
🌐 Social impact of this document
- Positive impact: Helps state-owned companies improve management efficiency and enhance competitiveness in the market.
- Negative impact: May impose a burden on enterprises' wage costs if labor productivity does not increase.
- Benefit: Companies can adjust wage rates appropriately to reflect actual conditions, ensuring competitiveness.
- Cost: Requires investment of time and resources to implement new regulations.
❓ Frequently asked questions
How is average labor productivity calculated?
Average labor productivity is calculated by dividing total actual revenue or total actual products sold by the average actual number of employees used.
How is the maximum planned average wage for determining wage rate calculated?
Maximum planned average wage = Last year's actual average wage x (1 + Planned average increase in labor productivity) or equals last year's actual average wage if planned labor productivity equals actual labor productivity.
What is the maximum average wage increase?
The maximum average wage increase does not exceed 80% of the increase in average labor productivity.
Which companies apply this Circular?
This Circular applies to state-owned companies operating under the Law on State-Owned Enterprises, including State Corporations, Independent State Companies, and independent accounting subsidiaries of State Corporations established and invested in by the State.
When does this Circular take effect?
This Circular takes effect from January 1, 2005, fifteen days after its publication in the Official Gazette.
Full text
CIRCULAR
Guidelines for calculating average labor productivity and average wage in state-owned enterprises according to Decree No. 206/2004/NĐ-CP dated December 14, 2004 of the Government
Implementing Decree No. 206/2004/NĐ-CP dated December 14, 2004 of the Government on labor management, wages, and income in state-owned enterprises, the Ministry of Labor, Invalids, and Social Affairs provides guidelines for calculating average labor productivity and average wage as follows:
Chapter I. SCOPE AND APPLICABLE ENTITIES
The scope and applicable entities of these regulations are state-owned enterprises operating under the Law on State-Owned Enterprises, including:
a) State-owned corporations:
1. State-owned enterprises:
State-owned corporations established under the Law on State-Owned Enterprises in 1995 and those established by the State's decision to invest and form under the Law on State-Owned Enterprises in 2003;
- Corporations formed by companies investing and establishing themselves (corporations under the parent company - subsidiary model);
- State capital investment and business corporations;
2. Independent member companies of state-owned corporations established by the State's decision to invest and form. These corporations and companies mentioned above are referred to as companies.
b) Independent state-owned companies;
2. The independent accounting member companies of the Corporations shall be decided upon for investment and establishment by the State. The Corporations and such companies mentioned above shall be referred to collectively as companies.
Chapter II. PRINCIPLES
1. Average labor productivity is calculated based on total value or products sold and the number of workers employed by the company;
2. Average wage is calculated based on the actual wage fund implemented or the plan according to the wage rate and the number of workers employed by the company;
3. Average wage is adjusted according to the increase or decrease in average labor productivity. If average labor productivity increases, average wage increases, but the increase in average wage must be lower than the increase in average labor productivity. If average labor productivity decreases, average wage decreases. The minimum reduction is equal to the reduction in average labor productivity.
Chapter III. CALCULATION OF AVERAGE LABOR PRODUCTIVITY
1. Basis for calculating labor productivity:
a) Total revenue or total revenue minus total costs (excluding wages) or profit or total products (including converted products) sold in the previous year or in the planned year.
The indicators of total revenue; total revenue minus total costs (excluding wages); profit are calculated according to the provisions of Decree No. 199/2004/NĐ-CP dated December 3, 2004 of the Government promulgating the Financial Management Regulations of State-Owned Enterprises and the Management of State Capital Invested in Other Enterprises and the guiding documents issued by the Ministry of Finance.
The indicator of total products (including converted products) sold in reality is calculated according to the provisions of Circular No. 06/2005/TT-BLĐTBXH dated January 5, 2005 of the Ministry of Labor, Invalids, and Social Affairs.
b) The average number of workers actually employed is calculated according to the guidance provided in Circular No. 08/TT-BLĐTBXH dated May 7, 1998 of the Ministry of Labor, Invalids, and Social Affairs.
c) The number of workers in the planned year is calculated according to the provisions of Circular No. 06/2005/TT-BLĐTBXH dated January 5, 2005 of the Ministry of Labor, Invalids, and Social Affairs.
2. Calculation of labor productivity:
a) Average labor productivity calculated by value:
- The average actual labor productivity of the previous year, calculated using the formula:
|
- Electronic Information Portalthnt |
= |
∑ Tthnt or (∑ Tthnt - ∑ Cthnt) or Pthnt ------------------------------------------------ Lttnt |
(1) |
Where:
+ Wthnt: the average actual labor productivity calculated by value of the previous year;
+ ∑ Tthnt: Actual total revenue of the previous year;
+ ∑ Cthnt: Actual total costs (excluding wages) of the previous year;
+ Pthnt: Actual profit of the previous year;
+ Lttnt: The average number of workers actually employed in the previous year;
- The average planned labor productivity of the planned year, calculated using the formula:
|
- Electronic Information Portalkh |
= |
∑ Tkh or (∑ Tkh - ∑ Ckh) or Pkh -------------------------------------------- Lkh |
(2) |
Where:
+ Wkh: the average planned labor productivity calculated by value of the planned year;
+ ∑ Tkh: Planned total revenue;
+ ∑ Ckh: Planned total costs (excluding wages);
+ Pkh: Planned profit;
+ Lkh: Planned number of workers.
- The average actual labor productivity of the planned year, calculated using the formula:
|
- Electronic Information Portalthe |
= |
∑ Tthkh or (∑ Tthkh - ∑ Cthkh) or Pthkh ------------------------------------------------ Lttkh |
(3) |
Where:
+ Wth: the average actual labor productivity calculated by value of the planned year;
+ ∑ Tthkh: Actual total revenue of the planned year;
+ ∑ Cthkt: Actual total costs (excluding wages) of the planned year;
+ Pthkt: Actual profit of the planned year;
+ Lttkt: The average number of workers actually employed in the planned year.
Example 1: In 2003, the company's actual total revenue was 24 billion VND, with an average actual number of workers employed being 1,200 people. In 2004, the planned total revenue was 26.8 billion VND, and the actual total revenue was 26 billion VND; the planned number of workers was 1,280 people, and the average actual number of workers employed was 1,190 people. Therefore, the average labor productivity calculated by value is determined as follows:
+ The average actual labor productivity in 2003 is:
Wthnt = 24 billion VND/year ÷ 1,200 people = 0.02 billion VND/year
+ The average planned labor productivity in 2004 is:
Wkh = 26.8 billion VND/year ÷ 1,280 people = 0.0209 billion VND/year
+ The average actual labor productivity in 2004 is:
Wth = 26 billion VND/year ÷ 1,190 people = 0.0218 billion VND/year
b) Average labor productivity calculated by product:
- The average actual labor productivity of the previous year, calculated using the formula:
|
- Electronic Information Portalthnt |
= |
Article 24thnt ---------------- Lttnt |
(4) |
Where:
+ Wthnt: The average actual labor productivity calculated by product of the previous year;
+ Qthnt: The total actual product (including converted products) sold in the previous year;
+ Lttnt: The average number of workers actually employed in the previous year.
- The average planned labor productivity of the planned year, calculated using the formula:
|
- Electronic Information Portalkh |
= |
Article 24kh ---------------- Lkh |
(5) |
Where:
+ Wkh: The average planned labor productivity calculated by product of the planned year;
+ Qkh: The total product (including converted products) sold in the planned year;
+ Lkh: Planned number of workers.
- The average actual labor productivity of the planned year, calculated using the formula:
|
- Electronic Information Portalthe |
= |
Article 24thkh ---------------- Lthkh |
(6) |
Where:
+ Wth: The average actual labor productivity calculated by product of the planned year;
+ Qthkh: The total actual product (including converted products) sold in the planned year;
Lttkh: The average number of workers actually employed in the planned year.
Example 2: In 2003, the company's total actual product sold was 36,000 tons/year, with an average actual number of workers employed being 1,200 people. In 2004, the planned total product sold was 40,000 tons, and the actual total product sold was 41,000 tons; the planned number of workers was 1,280 people, and the average actual number of workers employed was 1,250 people. Therefore, the average labor productivity calculated by product is determined as follows:
+ The average actual labor productivity in 2003 is:
Wth = 36,000 tons ÷ 1,200 people = 30 tons/year.
+ The average planned labor productivity in 2004 is:
Wkh = 40,000 tonnes : 1,280 people = 31.25 tonnes/person-year.
+ The average actual labor productivity in 2004 is:
Wth = 41,000 tonnes : 1,250 people = 32.8 tonnes/person-year
3. Calculate the average planned labor productivity increase for the planning year compared to the actual performance of the immediately preceding year using the formula:
|
Iw |
= |
- Electronic Information Portalkh (-------------------------- - Electronic Information Portal thnt |
x |
100%) |
- |
100% |
(7) |
Where:
+ Iw: Average labor productivity increase (%)
+ Wkh: Average planned labor productivity for the planning year.
+ Wthnt: Average actual labor productivity of the immediately preceding year.
Example 3: Combining the above examples 1 and 2, the average labor productivity increase in 2004 compared to the actual performance in 2003 is:
+ The average labor productivity increase calculated based on value is:
|
Iw |
= |
0.0209 billion VND/year (-------------------------- 0.02 billion VND/year |
x |
100%) |
- |
100% |
= |
4,5% |
+ The average labor productivity increase calculated based on product is:
|
Iw |
= |
31.25 tonnes/year (-------------------------- 30 tonnes/year |
x |
100%) |
- |
100% |
= |
4,17% |
Chapter IV. CALCULATING AVERAGE WAGE
1. Basis for calculating average wage:
a) Wage fund according to the unit wage rate of the immediately preceding year or the planning year determined in accordance with Circular No. 07/2005/TT-BLDTBXH dated January 5, 2005 of the Ministry of Labor, Invalids and Social Affairs;
b) Actual number of workers used on average calculated in accordance with Circular No. 08/TT-BLDTBXH dated May 7, 1998 of the Ministry of Labor, Invalids and Social Affairs;
c) Planned number of workers calculated in accordance with Circular No. 06/2005/TT-BLDTBXH dated January 5, 2005 of the Ministry of Labor, Invalids and Social Affairs;
2. Calculating average wage:
a) Average actual wage of the immediately preceding year, calculated using the formula:
|
TLthnt |
= |
Vđgthnt ---------------- Lttnt |
(8) |
Where:
- TLthnt: Average actual wage of the immediately preceding year (VND/person-year).
- Vđgthnt: Actual wage fund according to the unit wage rate of the immediately preceding year;
- Lttnt: Average actual number of workers used in the immediately preceding year.
b) Average planned wage of the planning year, determined using the formula:
|
TLkh |
= |
Vđgkh ---------------- Lkh |
(9) |
Where:
- TLkh: Average planned wage of the planning year (VND/person-year).
- Vđgkh: Wage fund according to the unit wage rate of the planning year;
- Lkh: Planned number of workers.
3. Calculating the average planned wage increase for the planning year compared to the actual performance of the immediately preceding year using the formula:
|
Itl |
= |
TLkh (-------------------------- TLthnt |
x |
100%) |
- |
100% |
(10) |
Where:
- Itl: Average wage increase (%);
- TLkh: Average planned wage of the planning year;
- TLthnt: Average actual wage of the immediately preceding year.
Example 4: In 2003, the actual wage fund according to the unit wage rate of the company was 18,000 million VND; the average actual number of workers used was 1,000 people. In 2004, the planned wage fund according to the unit wage rate was 20,500 million VND; the planned number of workers was 1,120 people. Therefore, the average wage and the average wage increase were determined as follows:
- The average actual wage in 2003 is:
TLthnt = 18,000 million VND : 1,000 people = 18 million VND/person-year.
- The average planned wage in 2004 is: TLkh = 20,500 million VND : 1,120 people month = 18.304 million VND/person-year
- The average planned wage increase in 2004 compared to the actual performance in 2003 is:
|
Itl |
= |
18,034 million VND (-------------------------- 18 million VND |
x |
100%) |
- |
100% |
= |
1,69% |
Chapter V. ADJUSTING THE AVERAGE WAGE BASED ON THE LEVEL OF INCREASE OR DECREASE IN THE AVERAGE LABOR PRODUCTIVITY TO DETERMINE THE UNIT WAGE RATE
To ensure that the average wage increase is lower than the average labor productivity increase, the average wage for the planning year to determine the unit wage rate is adjusted according to the level of increase or decrease in the average labor productivity as follows:
1. For companies with planned average labor productivity lower than the actual average labor productivity of the immediately preceding year, the maximum average planned wage to determine the unit wage rate is adjusted according to the formula:
|
TLkh |
= TLthnt x |
Iw + 100% (---------------) 100% |
(11) |
Where:
- TLkh: Maximum average planned wage to determine the unit wage rate;
- TLthnt: Average actual wage of the immediately preceding year determined in accordance with paragraph a, point 2, section IV of this circular;
- Iw: Average planned labor productivity increase of the planning year compared to the actual performance of the immediately preceding year, determined in accordance with point 3, section III of this circular.
Example 6: In 2003, the actual average labor productivity of the company was 18.5 million VND/year, the actual average wage according to the unit rate was 6 million VND/year. In 2004, the planned average labor productivity was 17.5 million VND/year.
- The average planned labor productivity increase in 2004 compared to the actual performance in 2003 is:
Iw = (17.5 million VND : 18.5 million VND) x 100% - 100% = -5.4054%
- The maximum average planned wage to determine the unit wage rate in 2004 is:
TLkh = 6 million VND/year x [(-5.4054% + 100%) : 100%] = 5.676 million VND/year (or 472,973 VND/month if calculated monthly).
2. For companies with planned average labor productivity equal to the actual average labor productivity of the immediately preceding year, the maximum average planned wage to determine the unit wage rate equals the actual average wage of the immediately preceding year.
3. For companies with planned average labor productivity higher than the actual average labor productivity of the immediately preceding year, the maximum average planned wage to determine the unit wage rate is adjusted according to the formula:
|
TLkh |
= TLthnt + TLthnt x |
Iw ---------- 100% |
x 0.8 |
(12) |
Where:
- TLkh: Maximum average planned wage to determine the unit wage rate;
- TLthnt: Average actual wage of the immediately preceding year determined in accordance with paragraph a, point 2, section IV of this circular;
- Iw: Average planned labor productivity increase of the planning year compared to the actual performance of the immediately preceding year, determined in accordance with point 3, section III of this circular.
Example 7: In 2003, the actual average labor productivity of the company was 24.6 million VND/year, the actual average wage according to the unit rate was 6.6 million VND/year. In 2004, the planned average labor productivity was 26.8 million VND/year.
- The average planned labor productivity increase in 2004 compared to the actual performance in 2003 is:
Iw = (26.8 million VND : 24.6 million VND) x 100% - 100% = 8.94%
- The maximum average planned wage to determine the unit wage rate in 2004 is:
TLkh = 6.6 million VND + [(6.6 million VND x 8.94% x 0.8) : 100%] = 7.072 million VND/year (or 589,336 VND/month if calculated monthly)
Chapter VI. IMPLEMENTATION ORGANIZATION
1. Ministries managing sectors, People's Committees of provinces and centrally governed cities shall direct companies to calculate average labor productivity as the basis for determining the planned average wage rate according to the provisions of this Circular;
2. For the Development Support Fund and the Vietnam Deposit Insurance Corporation, which are currently applying the wage system as prescribed for state-owned enterprises under Decision No. 17/2000/QĐ-TTg dated February 3, 2000, and Decision No. 88/2001/QĐ-TTg dated June 5, 2001 of the Government, they shall apply the provisions of this Circular to calculate average labor productivity, average wages as the basis for determining the wage rate unit price and the wage fund; 3. State-owned enterprises operating under the Enterprise Law, and other economic sector enterprises may apply the provisions of this Circular;
4. This Circular shall take effect fifteen days from the date of publication in the Official Gazette. The Circular No. 06/2001/TT-BLĐTBXH dated January 29, 2001 of the Ministry of Labor, War Invalids and Social Affairs guiding the calculation of the average labor productivity growth rate and the average wage growth rate in state-owned enterprises is hereby abolished;
5. The provisions of this Circular shall be implemented as of January 1, 2005. During implementation, any difficulties encountered shall be reported by ministries managing sectors, provincial and centrally governed city people's committees, and state-owned enterprises to the Ministry of Labor, War Invalids and Social Affairs for study and resolution.
5. These provisions of this Circular shall take effect from January 1, 2005. During implementation, any difficulties encountered by the Ministries managing the sectors, People's Committees of provinces and centrally governed cities, and state-owned enterprises shall be reported to the Ministry of Labor, Invalids and Social Affairs for study and resolution.
Download
The original file of this document is being updated. Please read the full text and check back later.
Relations map
Click a document to open. A red border = a relation that changes validity.
Translations
This document is available in the following languages: