Circular No. 16/2003/TT-BTC guides the sources for implementing salary adjustments and social allowances in 2003.

CIRCULAR

OF THE MINISTRY OF FINANCE NUMBER 16/2003/TT-BTC DATED MARCH 14, 2003 GUIDING THE SOURCES FOR IMPLEMENTING THE ADJUSTMENT OF WAGES AND SOCIAL ALLOWANCES IN 2003

Pursuant to Resolution No. 09/2002/QH11 dated November 28, 2002 of the National Assembly, Session 2, of the Eleventh Legislature on the state budget estimate for 2003;
Pursuant to Decree No. 03/2003/NĐ-CP dated January 15, 2003 of the Government on the adjustment of wages and social allowances and the initial reform of the wage management mechanism,
The Ministry of Finance guides the sources for implementing the adjustment of wages and social allowances in 2003 as follows:

I - GENERAL PROVISIONS:

1. Ministries, central agencies, and localities must calculate and allocate tasks to ensure savings of 10% of regular expenditures (excluding wages, items with the nature of wages, contributions to international organizations, costs of national target programs, subsidies, and transportation subsidies) for each administrative agency and public institution to implement the wage adjustment.

2. Public institutions with income (including those that have implemented financial mechanisms according to Decree No. 10/2002/NĐ-CP dated January 16, 2002 of the Government) shall use a minimum of 40% of the retained income (after deducting collection expenses) to implement the wage adjustment. For the health sector, this figure is a minimum of 35% (including income from health insurance).

In cases where regulations stipulate that public institutions with income must remit a portion of their income (from tuition fees, hospital fees, etc.) to the supervising authority for general adjustment, these institutions shall use a minimum of 40% (for the health sector, a minimum of 35%) of the retained income (after remittance) and any income from the general adjustment fund (if applicable) to implement the wage adjustment.

3. Administrative agencies with income shall use a minimum of 40% of the retained income (after deducting collection expenses) to implement the wage adjustment.

Local budgets shall allocate 50% of the increase in revenue in 2002 (the difference between actual revenue submitted to the State Treasury by December 31, 2002, and the revenue estimate approved by the People's Council at the beginning of the year) and 50% of the increase in the revenue estimate for 2003 set by the Prime Minister compared to the revenue estimate for 2002 set by the Prime Minister to implement the wage adjustment; reserve 50% of the increase in revenue in 2003 compared to the revenue estimate for 2003 set by the Prime Minister to implement the wage adjustment for 2003 and carry over to 2004.

The central budget shall supplement the ministries, central agencies, and localities after they have implemented the above measures and still lack sufficient sources to ensure the implementation of the wage adjustment.

The central budget shall ensure payment of increased pensions and social insurance allowances (for those who receive social insurance benefits guaranteed by the state budget) and increased preferential allowances for persons with meritorious service according to the Law on Persons with Meritorious Service. For those who receive social insurance benefits (belonging to the category guaranteed by the Social Insurance Fund), the Social Insurance Fund shall make the payments.

For laborers under contracts as prescribed in Decree No. 68/2000/NĐ-CP dated November 17, 2000 of the Government, the funds for paying wages and allowances shall be self-funded by the agencies and units from their regular operating expenses and retained income (if any), and shall not be included in the wage fund of the agency or unit.

II - SPECIFIC PROVISIONS:

1. For Ministries and Central Agencies:

Ministries and central agencies shall base their 2003 state budget estimates already allocated in Decision No. 157/2002/QĐ-BTC or Decision No. 229/2002/QĐ-BTC dated December 24, 2002 of the Minister of Finance, and the announced savings targets of 10% of regular expenditures by sector, to allocate the budget to subordinate agencies and units, including calculating and allocating immediately the savings target of 10% of regular expenditures to each unit to enable them to proactively pay the increased wages in 2003; do not retain the 10% savings of units (concentrated at the first-level budget unit) to implement new increased wages.

When allocating the budget estimate and assigning savings targets to subordinate agencies and units, ministries and central agencies should note the following issues:

- For units that have piloted the allocation of personnel quotas and administrative management costs according to Decision No. 192/2001/QĐ-TTg dated December 17, 2001 of the Prime Minister, they must also implement savings of 10% of regular expenditures to implement the new increased wages.

- For public institutions that are not assigned personnel quotas by the state; operational funding (including wages) is included in the product price set by the state (such as public works, land administration, geology, etc.): In Decision No. 157/2002/QĐ-BTC dated December 24, 2002, the Ministry of Finance did not assign a savings target of 10% of regular expenditures; these units must base their implementation of increased wages according to regulations on the 2003 state budget estimate already allocated.

- For units that have implemented cost allocation (such as Tax Departments, State Treasury, Vietnam Television...), within the cost allocation decision of the competent authority which has stipulated that during the allocation period, the unit must arrange within the allocated amount to ensure newly issued policies, these units must ensure the increased wages within the total allocated funding.

- For administrative agencies and public institutions with retained income according to regulations, the source for implementing increased wages shall be arranged as follows: use part of the retained income according to regulations (as specified in Points 2 and 3 of Section I above), use 10% of regular expenditure savings to adjust wages. Ministries and central agencies need to direct subordinate agencies and units to calculate and report the following indicators:

+ Increased wages as prescribed.

+ Retained income according to regulations if any (after deducting collection expenses), of which the income used for paying increased wages; the income remitted to the supervising authority for general adjustment according to regulations (if any).

When allocating the budget and assigning targets for regular expenditure savings to subordinate agencies and units, central ministries and agencies must calculate each unit's revenue and the amount of regular expenditure savings used to implement additional salary increases, ensuring that after deducting the savings for implementing new salaries, there remains a reasonable increase level among units and sufficient funds to fulfill important assigned tasks.

- The use of revenue and 10% regular expenditure savings to implement additional salary increases shall be based on the following principles:

+ Units may not use revenue (including revenue adjusted between units) and regular expenditure savings from this field to implement additional salary increases for other fields.

+ For units without their own staffing system to perform tasks, they may use regular expenditure savings and retained revenue according to regulations (if applicable) to fund ongoing tasks.

+ In cases where the source for implementing salary increases (as stipulated in Section I above) exceeds the actual need for new salary payments according to regulations, the unit may use the surplus to fund other operational expenses.

+ Public service units that self-fund their operations, if after using the retained revenue according to regulations they still cannot cover the required salary payments, shall report to the supervising agency to compile and submit to the financial authority at the same level for consideration and submission to the competent authority to supplement funding for implementation.

2. Regarding provinces and centrally-administered cities:

2.1. Determine the total additional funding needs when implementing the new salary system for local management objects and salary payments, including kindergarten teachers managed by communes who have been recruited into the staffing system according to regulations, and commune health workers receiving salaries based on rank.

Kindergarten teachers managed by communes who are not part of the state staff, after rearranging expenditures and applying measures to generate sources according to the above principles and still failing to ensure salary payments, social insurance, and health insurance at the minimum wage level, shall be supported by the local budget from education and training expenses to ensure kindergarten teachers earn no less than the minimum wage and pay social insurance and health insurance as stipulated in Decision 161/2002/QĐ-TTg dated November 15, 2002, issued by the Prime Minister on certain policies for early childhood education development.

2.2. Provincial People's Committees and centrally-administered city People's Committees shall direct the calculation and determination of funding sources from the local budget and a portion of the revenue of public service units and administrative units to implement additional salaries in 2003, specifically as follows:

- Specifically determine the results of the budget revenue collection task on the territory in 2002 (actual amounts deposited into the State Treasury by December 31, 2002), and on this basis, calculate the 50% increase in local budget revenue in 2002 compared to the approved 2002 budget by the People's Council at the beginning of the year (excluding the increase in revenue from reinvestments in the locality from land use rights transfer fees, land lease fees, proceeds from the sale of state-owned housing, agricultural land use tax, forest resource tax, a portion of lottery revenue, etc.).

- The 50% increase in local budget revenue in the 2003 budget compared to the 2002 budget assigned by the Prime Minister (excluding reinvestment revenues in the locality according to the aforementioned regulations), with a minimum level announced and assigned by the Ministry of Finance in Decision No. 158/2002/QĐ-BTC dated December 24, 2002.

If the People's Council decides to allocate additional revenue compared to the Prime Minister's budget, then 50% of the additional revenue should be reserved to prepare for the implementation of additional salaries in 2003 and carried over to 2004, while the locality only allocates expenditure tasks corresponding to 50% of the revenue increase; in management, it also follows this principle.

- Determine and assign targets for saving 10% of the regular expenditure budget for departments, bureaus, and levels of the budget under their jurisdiction to calculate and ensure that the total savings of 10% regular expenditure of the province or city does not fall below the savings of 10% regular expenditure assigned in Decision No. 158/2002/QĐ-BTC dated December 24, 2002, by the Minister of Finance.

Local budgets at all levels shall not retain 10% of regular expenditure at the budget level.

- Determine and aggregate a portion of the retained revenue according to regulations to adjust salaries for departments, bureaus, and levels of the budget under their jurisdiction according to the principles stated in Points 2 and 3 of Section I of this Circular.

2.3. Guidance for lower-level budgets (districts, communes) to organize the calculation and determination of the portion of additional salary implementation from the 50% revenue increase in 2002; 50% revenue increase in the 2003 budget compared to the 2002 budget; 10% regular expenditure savings; and a portion of the revenue retained to implement new salaries in public service and administrative units as stipulated in Points 2 and 3 of Section I above.

Based on this, clearly announce the level of support from the provincial or city budget for lower-level budgets in cases where the sources of lower-level budgets are insufficient to implement additional salaries.

2.4. For budgetary units at all levels (departments, bureaus, etc., under the province; offices, bureaus, etc., under the district), they shall organize implementation similar to central ministries and agencies as stated in Point 1 above.

III - PROCEDURE FOR PREPARING REPORTS, REVIEWING FUNDS, ISSUING AND PAYING OUT, AND SETTLING THE SALARY, ALLOWANCE, SUBSIDY, AND INCREASED LIVING EXPENSES FUND FOR 2003:

1. Preparing reports:

1.1. Heads of central ministries and agencies are responsible for compiling and reporting on the salary fund, additional allowances, and implementation sources (including 10% regular expenditure savings and a portion of retained revenue) and the amount requested for additional salary implementation (if insufficient) according to Form No. 1 and 2 (attached) to the Ministry of Finance before March 31, 2003, for verification, consolidation, and submission to the Prime Minister for decision on additional salary implementation funding.

- The People's Committees of provinces and centrally governed cities shall be responsible for compiling reports on the local salary fund, additional allowances, and sources of implementation (as stipulated in Section I of this Circular) and the amount requested to be supplemented by the State Treasury (if insufficient) according to Form Nos. 3, 4, 5, and 6 (attached) and submit them to the Ministry of Finance before March 31, 2003, for verification, consolidation, and submission to the Prime Minister for a decision to supplement the sources of implementation for increased salaries.

1.2. Based on the supplementary amount decided by the Prime Minister, the heads of ministries, central agencies, and the People's Committees of provinces and centrally governed cities shall be responsible for organizing the examination and approval of increased salaries and the sources to ensure the implementation of new increased salaries for units and subordinate budget levels; based on that, they shall allocate the supplementary amount for the implementation of new increased salaries to units and subordinate budget levels. They shall prepare reports on the implementation of the salary fund, additional allowances, and sources of implementation and submit them to the Ministry of Finance and the Ministry of Home Affairs according to the forms and regulations stipulated in Joint Circular No. 03/2003/TTLT-BNV-BTC dated February 17, 2003, issued by the Ministry of Finance and the Ministry of Home Affairs guiding the implementation of Decree No. 03/2003/NĐ-CP dated January 15, 2003, of the Government.

Depending on the specific circumstances of their own agencies and localities, the heads of ministries, central agencies, and the People's Committees of provinces and centrally governed cities shall specify the reporting deadlines for units and subordinate budget levels.

2. Regarding the distribution and payment of increased salaries:

2.1. Budgetary units when allocating detailed budgets according to the budget classification sent to the financial authorities at the same level as the basis for distribution must pay attention to allocating the 10% savings from regular expenditures to corresponding items to implement salary adjustments as prescribed.

2.2. The Ministry of Finance shall temporarily provide support funds from the central budget to provinces, centrally governed cities, and central ministries and agencies (after using the sources of funds specified in Section I and still being short of sources) according to the progress of implementation until the Decision of the Prime Minister regarding the supplementary amount for provinces, centrally governed cities, and central ministries and agencies (the remaining part) to implement the salary system and social allowances for 2003 is issued.

2.3. Until the competent authority's supplementary decision is made, financial authorities at all levels shall temporarily provide support funds from the budget to agencies and units to implement increased salaries for 2003 for units (after using revenue and the remaining 10% savings) according to the progress of implementation until the competent authority's decision on supplementary funds from the budget (the remaining part) for agencies and units to implement the salary system and social allowances for 2003 is issued.

2.4. Agencies and units using the budget shall be responsible for paying increased salaries for 2003 to employees in accordance with the provisions of Joint Circular No. 03/2003/TTLT-BNV-BTC dated February 17, 2003, issued by the Ministry of Home Affairs and the Ministry of Finance guiding Decree No. 03/2003/NĐ-CP dated January 15, 2003, of the Government on adjusting salaries, social allowances, and reforming the salary management mechanism in one step; the provisions of this Circular and current regulations.

2.5. Specifically, the implementation of the distribution and payment of increased salaries for January and February 2003 shall be carried out according to Circulars No. 483 TC/NSNN, 485 TC/NSNN, and 486 TC/NSNN dated January 14, 2003, of the Ministry of Finance.

3. Settlement: The settlement of funds for implementing increased salaries and social allowances shall be conducted in accordance with the Law on State Budget and current legal documents.

IV- This Circular shall take effect concurrently with the effectiveness of Decree No. 03/2003/NĐ-CP dated January 15, 2003, of the Government. During the implementation process, if there are any difficulties, units are advised to report promptly to the Ministry of Finance for study and resolution.