Decree No. 118/2005/ND-CP Adjusts the General Minimum Wage

DECREE

Adjusting the general minimum wage level

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THE GOVERNMENT

Pursuant to the Law on Organization of the Government dated December 25, 2001;

Pursuant to the Labor Code dated June 23, 1994; the Law Amending and Supplementing Certain Provisions of the Labor Code dated April 2, 2002;

BASED ON THE GOVERNMENT DECREE NO. 203/2004/ND-CP OF DECEMBER 14, 2004 ON THE MINIMUM WAGE LEVEL;

At the proposal of the Minister of Labor, Invalids and Social Affairs, the Minister of Home Affairs, and the Minister of Finance, 

DECREE:

Article 1. As of October 1, 2005, the general minimum wage shall be increased from VND 290,000 per month as stipulated in Clause 2, Article 1 of Decree No. 203/2004/NĐ-CP dated December 14, 2004 of the Government on the minimum wage to VND 350,000 per month.

Article 2. The general minimum wage prescribed in Article 1 of this Decree shall serve as the basis for adjusting pensions, social insurance benefits, and calculating severance pay, deductions, and other entitlements based on the general minimum wage as follows:

1. Increase by 20.7% over the monthly pension or social insurance benefit already adjusted according to Decree No. 117/2005/NĐ-CP dated September 15, 2005 of the Government for those receiving pensions or social insurance benefits before October 1, 2005.

2. Increase by 20.7% over the social insurance benefit amount for September 2005 for those receiving monthly social insurance benefits based on the general minimum wage.

3. Calculate severance pay for months of work starting from October 1, 2005 onwards for surplus laborers under Decree No. 41/2002/NĐ-CP dated April 11, 2002 of the Government on policies for surplus labor due to restructuring state-owned enterprises, Decree No. 155/2004/NĐ-CP dated August 10, 2004 of the Government amending and supplementing Decree No. 41/2002/NĐ-CP, and for those who cease employment due to streamlining staff under Resolution No. 16/2000/NQ-CP dated October 18, 2000 of the Government on streamlining staff in administrative agencies and public institutions, Resolution No. 09/2003/NQ-CP dated July 28, 2003 of the Government amending and supplementing Resolution No. 16/2000/NQ-CP (the number of years worked up to September 30, 2005 is calculated according to guidance prior to October 1, 2005).

4. Deductions and entitlements based on the general minimum wage shall be recalculated accordingly.

Article 3. The funding for implementing the adjustment of the general minimum wage for certain groups shall be guaranteed by the State budget from the following sources:

1. Saving 10% of regular expenses (excluding salaries and salary-like allowances) for each administrative agency and each public institution under ministries, central agencies, and provinces and centrally-administered cities.

2. For public institutions with income, at least 40% of retained earnings shall be used. Specifically, public health institutions shall use at least 35% of retained earnings (after deducting drug, blood, transfusion fluid, and chemical costs).

3. Using at least 40% of retained earnings of administrative agencies with income.

4. Utilizing 50% of increased local government revenue.

5. The central budget shall supplement funds to ensure the implementation of the adjustment of the general minimum wage when ministries, central agencies, and provinces and centrally-administered cities have implemented the provisions of Clauses 1, 2, 3, and 4 of this Article but still fall short.

6. The central budget shall guarantee funding for adjusting pensions and social insurance benefits for those receiving pensions and social insurance benefits before October 1, 1995 (funding for adjusting pensions and social insurance benefits for those receiving pensions and social insurance benefits from October 1, 1995 onwards, including village, town, and township cadres currently receiving monthly pensions and social insurance benefits according to Decree No. 09/1998/NĐ-CP dated January 23, 1998 and Decree No. 121/2003/NĐ-CP dated October 21, 2003 of the Government, shall be guaranteed by the social insurance fund).

Article 4. Funding for implementing the adjustment of the general minimum wage for workers in enterprises shall be guaranteed by the enterprises and included in production costs or business expenses.

Article 5

1. The Ministry of Labor, Invalids and Social Affairs shall guide the implementation of the general minimum wage level as prescribed in Article 1 of this Decree for state-owned enterprise companies, companies, and enterprises operating under the Enterprise Law, cooperatives, cooperative groups, farms, households, individuals, and other organizations that hire workers; guide the adjustment of pensions and social insurance benefits for those receiving pensions and social insurance benefits as stipulated in Clause 1 and Clause 2 of Article 2 of this Decree; guide the calculation of severance pay for surplus laborers as stipulated in Clause 3 of Article 2 of this Decree under Decree No. 41/2002/NĐ-CP dated April 11, 2002 and Decree No. 155/2004/NĐ-CP dated August 10, 2004 of the Government.

2. The Ministry of Home Affairs shall take the lead, coordinate with the Ministry of Finance and relevant ministries and sectors to guide the implementation of the general minimum wage level as prescribed in Article 1 of this Decree for state agencies, public institutions, armed forces, political organizations, and political-social organizations; guide the calculation of severance pay for those ceasing employment due to streamlining staff as stipulated in Clause 3 of Article 2 of this Decree under Resolution No. 16/2000/NQ-CP dated October 18, 2000 and Resolution No. 09/2003/NQ-CP dated July 28, 2003 of the Government.

3. The Ministry of Finance shall take the lead, coordinate with relevant ministries and sectors to be responsible for:

a) Guiding the calculation and balancing of funding sources to implement the adjustment of the general minimum wage as stipulated in Article 3 of this Decree.

b) Reviewing and submitting to the Prime Minister for supplementation of funding to implement the adjustment of the general minimum wage for ministries, central agencies, and provinces and centrally-administered cities as stipulated in Clause 5 of Article 3 of this Decree, and ensuring payment for pensions and social insurance benefits for those receiving pensions and social insurance benefits before October 1, 1995.

Article 6

1. This Decree shall take effect fifteen days after its publication in the Official Gazette.

2. These provisions of this Decree shall be implemented from October 1, 2005.

Article 7. The Ministers, Heads of ministerial-level agencies, Heads of government agencies, Chairpersons of People's Committees of provinces and centrally governed cities are responsible for implementing this Decree./.