Circular No. 19/2000/TT-BLDTBXH guides the salary classification for workers transferring from other sectors to state-owned enterprises.

CIRCULAR

GUIDELINES ON SALARY GRADING FOR WORKERS TRANSFERRING TO STATE ENTERPRISES FROM OTHER SECTORS

area where workers transfer to work at state-owned enterprises

In recent times, the Ministry of Labour - Invalids and Social Affairs has received numerous letters, petitions, and documents from various ministries, localities, enterprises, and individual workers requesting guidance on salary grading for workers transferring to state enterprises from other sectors and moving from one state enterprise to another. To unify the handling of this issue, after consulting with relevant ministries, the Ministry of Labour - Invalids and Social Affairs hereby provides guidelines on salary grading for the aforementioned subjects as follows:

I. APPLICABLE OBJECTS.

Workers who are transferring to work at state enterprises from other sectors include:

a- Those currently graded according to the salary scales issued together with Decision No. 69/QD-TW dated May 17, 1993 of the Central Party Committee;

b- Those currently graded according to the salary scales issued together with Resolution No. 35 NQ/UBTVQHK9 dated May 17, 1993 of the Standing Committee of the National Assembly;

c- Those currently graded according to the salary scales issued together with Decree No. 25/CP dated May 23, 1993 of the Government regarding the temporary regulations on new salary systems for civil servants, administrative officials, public service staff, and armed forces personnel;

d- Those currently graded according to the wage scales of state enterprises as prescribed, transferring from one enterprise to another;

e- Those currently receiving wages according to the wage scales of foreign-invested enterprises, foreign organizations, or international organizations in Vietnam, or enterprises operating under the Law on Enterprises.

The term "transferring" here refers to those transferred according to the regulations of the State; those changing workplaces and implementing labor contracts.

II. SALARY GRADING:

1. Principles:

The objects specified in Section I above, when transferring to work at state enterprises, shall be graded according to the principle: performing what job, receiving the corresponding salary for that job; holding what position, receiving the corresponding salary for that position, without retaining the current salary level as the basis for grading at the new workplace. The basis for grading shall be based on the assigned job; technical grade standards for skilled workers; professional and vocational grade standards; enterprise classification level, and the wage scales applied by the enterprise according to State regulations.

2. Method of Salary Grading:

a) For those appointed to work at state enterprises.

Those appointed to hold the positions of Chairman of the Board of Directors, Specialized Member of the Board of Directors, Member of the Supervisory Board (except for General Managers or Directors of large independent enterprises with established Boards of Directors) shall have their salary grading implemented according to Circular No. 06/TTLT-TCCB-BLDTBXH-BTC dated October 20, 1998 of the Joint Ministries of Personnel - Civil Service, Ministry of Labour - Invalids and Social Affairs, and Ministry of Finance, guiding the implementation of Decision No. 83/1998/QD-TTg dated April 15, 1998 of the Prime Minister on salary and leadership allowances for members of the Board of Directors and Supervisory Board of State-owned Corporations and large independent state enterprises.

Those appointed to hold the positions of General Manager, Deputy General Manager, Director, Deputy Director, Chief Accountant of enterprises shall have their salary grading implemented according to Circular No. 15/LT-TT dated May 26, 1996 of the Joint Ministries of Labour - Invalids and Social Affairs and Ministry of Finance guiding Decision No. 185/TTg dated March 28, 1996 of the Prime Minister on state enterprises of special category; Circular No. 23/1997/TTLT-BLDTBXH-BTC guiding the implementation of Decree No. 110/NĐ-CP dated November 18, 1997 of the Government on supplementing the coefficient of management position salaries and leadership allowances attached to Decree No. 26/CP dated May 23, 1993 of the Government and Circular No. 17/1998/TTLT-BLDTBXH-BTC dated December 31, 1998 of the Joint Ministries of Labour - Invalids and Social Affairs and Ministry of Finance guiding the classification of state enterprises.

b) For those transferring to work at state enterprises under labour contracts.

Those transferring to work as workers or employees in direct production or service jobs shall be assessed based on the assigned job, occupational title, technical grade standards for skilled workers, and the enterprise shall organize examinations of professional knowledge, technical skills, and proficiency levels. Workers reaching a certain grade in a specific trade shall be placed in the corresponding wage grade for that trade according to the wage scales applied by the enterprise according to State regulations;

Those transferring to work in professional, technical, administrative, or service jobs at enterprises shall be placed in the corresponding grade according to the professional, technical, administrative, or service wage scale applied by the enterprise according to State regulations; the wage level shall be determined based on the job undertaken and specific circumstances, subject to agreement. The time for the next wage grade increase will be calculated from the date of the agreed wage grade placement.

When transferring to work at an enterprise, if workers are appointed to hold the positions of Department Head, Deputy Department Head, or equivalent positions within the enterprise, in addition to the salary grading as prescribed above, they shall also receive leadership position allowances according to the enterprise's classification level as stipulated generally.

IV. IMPLEMENTATION.

This circular takes effect from the date of issuance.

State enterprises shall implement salary grading for the applicable subjects in accordance with the guidelines set out in this circular.

Any difficulties encountered during implementation should be reported in writing to the Ministry of Labour - Invalids and Social Affairs for resolution./.

RAISING THE AVERAGE WAGE RATE FOR 2000
TOWARDS A REASONABLE SALARY POLICY

(VNNLB, May 29, 2000) - Based on the implementation of salaries in enterprises, the Ministry of Labour - Invalids and Social Affairs annually announces the average salary level for enterprises. According to the calculation of the Ministry of Labour - Invalids and Social Affairs, the average wage rate is expected to be higher in 2000 compared to 1999.

At this point, there are approximately 5,000 state-owned enterprises in operation, attracting nearly 2 million workers with an average monthly income of around 1,000,000 VND. The salary scale system issued by the Government serves as the basis for calculating the basic wage rate for enterprises, which is used to calculate corporate tax and implement social insurance benefits for employees. To make the basic wage rate more aligned with reality, the Ministry of Labor, Invalids, and Social Affairs is proposing that the Government increase the average wage level of enterprises to twice the current average basic wage rate (the current average basic wage rate is 900,000 VND/month). However, according to Mr. Pham Minh Huan, Deputy Director of the Wages Department at the Ministry of Labor, Invalids, and Social Affairs, this wage increase will only apply to enterprises that are profitable and have a labor force where more than 50% are skilled workers. As a result, the average wage for effective enterprises would be 1,800,000 VND/month. The State does not control the wage disparity within each enterprise but encourages payment based on labor productivity, allowing a ratio of up to 14:1 between the highest and lowest wages within the same enterprise. In most enterprises, this ratio is around 6-7:1. The criteria for evaluating the effectiveness of an enterprise include completing production and business plans, exceeding budget contributions by 5% or more, and having a high proportion of workers engaged in heavy and hazardous work. If an enterprise's profit exceeds 5%, it may allocate 30% of its profits towards the company's wage fund. Additionally, to align wage policies more closely with reality, the Ministry of Labor, Invalids, and Social Affairs is developing wage reform measures aimed at improving wage policies in line with market conditions. Gradually, a unified wage policy will be applied across all enterprises, initially focusing on standardizing the minimum wage, which will serve as a lower limit to protect workers' rights. Other indicators will be guided by the Government, while leaving the decision-making authority to the enterprises. For state-owned enterprises, the Government will not issue salary scales as currently practiced but will guide enterprises to develop their own salary systems and pay workers accordingly. The Government will only set an average wage linked to labor productivity as the basis for calculating wage costs and will regulate through reasonable tax policies without assessing the basic wage rate or controlling the average wage as is currently done.

UNREASONABLE WAGES IN FOREIGN-INVESTED ENTERPRISES NEED TO BE ADJUSTED

(TBKTVN, ISSUE 34/2000) By December 31, 1999, there were 2,800 foreign-invested projects granted licenses nationwide, with about 1,900 foreign-invested enterprises established, of which nearly 1,500 were operational, employing over 300,000 workers. Additionally, there were approximately 3,200 representative offices, agencies, organizations, and diplomatic missions from foreign countries or international bodies operating, employing around 16,000 workers.

"In recent times, many aspects of wage policies in this sector have been inconsistent with reality," noted Mr. Nguyen Minh Huan, Deputy Director of the Wage Policy Department at the Ministry of Labor, Invalids, and Social Affairs.

Minimum wage不合理之处已被修正，请确认是否需要进一步调整。

According to the Ministry of Labor, Invalids, and Social Affairs, setting the minimum wage based on four regions and applying it uniformly to Vietnamese workers in foreign-invested enterprises is appropriate, and most enterprises comply with or exceed the prescribed levels. However, about 20% of companies, due to production difficulties or low processing fees, pay wages equal to or below the government-prescribed minimum wage to reduce costs and avoid significant losses. Enterprises propose to the Government to allow them to pay lower than the prescribed minimum wage for six months or one year. Reconsidering the minimum wage between regions with similar living costs; between urban and suburban areas in major cities; between enterprises inside and outside industrial zones; and between different industries...

On the other hand, to facilitate contract signing and accounting, some enterprises request the Government to permit the continued practice of defining wages in USD and paying in Vietnamese dong based on the inter-bank foreign exchange market rate announced at the time of payment.

No Allowances

Currently, most enterprises establish salary scales based on job titles, occupational standards, or specific tasks for actual labor usage. The average monthly wage for a worker in this area is approximately 74.02 USD (equivalent to 1,029,000 VND), with the highest being over 1,000 USD (14,000,000 VND) and the lowest around 37 USD (450,000 VND).

According to economic experts, establishing salary scales for foreign-invested enterprises based on ensuring distance between grades and wage multiples as stipulated for domestic enterprises is inappropriate for such entities, especially those fully funded by foreign capital. The minimum wage in foreign-invested enterprises is already quite high, and applying a grade difference of 30% above the minimum wage as required for domestic enterprises is too large.

Therefore, most enterprises only set the first grade wage 3-10% higher than the minimum wage, with a gap of 3-5% between consecutive grades. Since enterprises have established wages suitable for specific working conditions and locations, most do not apply the allowances stipulated by the State.

On the other hand, the wages of foreigners compared to Vietnamese performing the same roles or jobs in enterprises show a significant disparity (3-7 times higher), not counting additional benefits like housing, transportation, electricity, water, air tickets, etc. In many enterprises, the wage fund for a foreigner is higher than the total wage fund for all Vietnamese workers. Moreover, the annual requirement to increase wages for workers has not been implemented by foreign-invested enterprises.

NEW WAGES IN ENTERPRISES WITH FOREIGN INVESTED CAPITAL

(TBKTVN, No. 46/2000) - To reform the wage system for workers employed in enterprises with foreign invested capital and foreign or international organizations in Vietnam, the Ministry of Labor, War Invalids and Social Affairs has submitted to the Government a Decree on a new wage system in this sector. According to this, when the consumer price index published by the General Statistics Office increases by 10% or more compared to the time of the most recent adjustment of the minimum wage, the minimum wage and other wage levels must also be adjusted upward by the enterprise to maintain real wages. Enterprises with foreign invested capital shall base their wage scales, salary tables, and allowances on the minimum wage set by the State, taking into account their production and business organization, labor positions, and industries or trades they employ, according to the principles established for domestic enterprises and public institutions. Enterprises may also independently establish appropriate wage scales and salary tables based on their production and business conditions.

For simple technical jobs requiring training, the first-level wage must be at least 10% higher than the State-set minimum wage. The wage for hazardous or dangerous jobs must be higher than that for ordinary jobs. Enterprises must publicly disclose their wage scales, allowances, and register them with local labor authorities. These wage scales and allowances serve as the basis for negotiating wage levels in employment contracts, overtime pay, severance pay, and other benefits stipulated in the Labor Law, the basis for social insurance and health contributions, implementing wage increases according to contractual agreements or collective labor agreements, resolving other rights and interests through mutual agreement. The maximum period for advancing one wage grade does not exceed three years. In cases where annual wage increases are implemented, the increase must not be less than 3% of the wage stated in the employment contract. For places implementing piece-rate or lump-sum wage systems, labor norms must be established and publicly announced as the basis for appropriate wage payments based on quantity and quality of work. These labor norms must be openly disclosed and tested for a trial period of 1 to 3 months before formal implementation. If 80% of workers assigned these norms complete their tasks within the standard time, it will be considered a reasonable norm.