Circular No. 88/2006/TT-BTC guides the determination of needs, sources, and methods of expenditure to implement adjustments to the minimum wage level for officials, civil servants, public employees, and armed forces personnel, as well as adjustments to allowances for retired village cadres in 2006 and 2007.

CIRCULAR

GUIDELINES FOR DETERMINING THE NEEDS, SOURCES, AND METHODS OF FUNDS ALLOCATION TO IMPLEMENT THE ADJUSTMENT OF THE MINIMUM WAGE LEVEL FOR PUBLIC OFFICIALS, CIVIL SERVANTS, CIVILIAN STAFF, MILITARY PERSONNEL, AND THE ADJUSTMENT OF ALLOWANCES FOR RETIRED COMMUNE OFFICIALS IN 2006 AND 2007

Pursuant to Decree No. 94/2006/NĐ-CP dated September 7, 2006 of the Government adjusting the minimum wage level;
Pursuant to Decree No. 93/2006/NĐ-CP dated September 7, 2006 of the Government adjusting pensions, social insurance allowances, and monthly allowances for retired commune officials;
Pursuant to Decree No. 77/2003/NĐ-CP dated July 1, 2003 of the Government stipulating the functions, tasks, powers, and organizational structure of the Ministry of Finance,
The Ministry of Finance hereby provides guidelines on determining the needs, sources, and methods of funds allocation to implement the adjustment of the minimum wage level for public officials, civil servants, civilian staff, and military personnel in 2006 and 2007 as prescribed in Decree No. 94/2006/NĐ-CP dated September 7, 2006 of the Government adjusting the minimum wage level, and the adjustment of allowances for retired commune officials as prescribed in Decree No. 93/2006/NĐ-CP dated September 7, 2006 of the Government adjusting pensions, social insurance allowances, and monthly allowances for retired commune officials (hereinafter referred to as Decree No. 93/2006/NĐ-CP, Decree No. 94/2006/NĐ-CP) as follows:

I. GENERAL PROVISIONS:

1. This Circular stipulates the procedures for determining the needs, sources, and methods of funds allocation to implement the adjustment of the minimum wage level as prescribed in Decree No. 94/2006/NĐ-CP for state agencies, state-owned public institutions; units under the armed forces; Party agencies, political and social organizations, and occupational and non-governmental organizations, projects, and international organizations located in Vietnam with public officials, civil servants, and civilian staff assigned by the State and receiving salaries from the state budget according to the salary scale prescribed by the State; allowances for commune-level non-professional cadres and village-level non-professional cadres as stipulated in Clause 3 and Clause 4, Article 2 of Decree No. 121/2003/NĐ-CP dated October 21, 2003 on the system and policies for commune-level cadres (hereinafter referred to as commune-level non-professional cadres), and the adjustment of allowances for retired commune officials as prescribed in Decision No. 130-CP dated June 20, 1975 of the Council of Ministers and Decision No. 111-HĐBT dated October 13, 1981 of the Council of Ministers (hereinafter referred to as retired commune officials) as prescribed in Decree No. 93/2006/NĐ-CP, Decree No. 94/2006/NĐ-CP.

2. Based on the provisions of Decree No. 93/2006/NĐ-CP, Decree No. 94/2006/NĐ-CP, ministries, ministerial-level agencies, government agencies, and other central-level agencies (hereinafter referred to as ministries and central-level agencies) and provincial-level municipalities directly under the central government have the responsibility to organize, guide, and compile the financial needs and sources for implementing the adjustment of the minimum wage level, the adjustment of allowances for retired commune officials, and the adjustment of allowances for commune-level non-professional cadres of their agencies, units, and subordinate levels to be submitted to the Ministry of Finance in accordance with the specific provisions of this Circular.

3. Ministries and central-level agencies, People's Committees at all levels, budgetary units at all levels, and budget users have the responsibility to determine and allocate resources to implement the adjustment of the minimum wage level and the budget support (if any) to pay new salaries to public officials, civil servants, and civilian staff of their units and provide allowances for retired commune officials in accordance with the prescribed regulations and the provisions of this Circular.

4. The implementation, accounting, and settlement of funds for the adjustment of the minimum wage level and allowances for retired commune officials shall be carried out in accordance with the prescribed regulations and the specific provisions of this Circular.

II. SPECIFIC PROVISIONS:

1. Regarding the determination of financial needs to implement the adjustment of the minimum wage level as prescribed in Decree No. 94/2006/NĐ-CP and the adjustment of allowances for retired commune officials as prescribed in Decree No. 93/2006/NĐ-CP (hereinafter referred to as the financial needs to implement Decree No. 93/2006/NĐ-CP, Decree No. 94/2006/NĐ-CP):

a) The total number of public officials, civil servants, civilian staff, and the number of retired commune officials to determine the financial needs to implement Decree No. 93/2006/NĐ-CP, Decree No. 94/2006/NĐ-CP is the actual number present at the reporting time (the number present at October 1, 2006 for the 2006 report; the number present at January 1, 2007 for the 2007 report) and not exceeding the total number of positions allocated by the competent authority (or approved). For the number of commune-level non-professional cadres to determine the level of support from the central budget, it is based on the position stipulated in Clause 3 and Clause 4, Article 2 of Decree No. 121/2003/NĐ-CP, each position is supported from the central budget not more than one cadre.

For the additional positions in 2006, 2007 compared to the number of positions at the reporting time, if within the total number of positions allocated by the competent authority (or approved), the financial needs to implement Decree No. 93/2006/NĐ-CP, Decree No. 94/2006/NĐ-CP of these positions will be included in the financial needs to implement Decree No. 93/2006/NĐ-CP, Decree No. 94/2006/NĐ-CP in 2007; in case of inability to include, report to the Ministry of Finance for consideration and resolution.

For the positions exceeding the total number of positions allocated by the competent authority (or approved), the financial needs to implement Decree No. 93/2006/NĐ-CP, Decree No. 94/2006/NĐ-CP of these positions will be self-funded by the agency or unit from the available financial sources in accordance with the law; not included in the financial needs to implement Decree No. 93/2006/NĐ-CP, Decree No. 94/2006/NĐ-CP of ministries and central-level agencies and provincial-level municipalities directly under the central government.

The total number of authorized positions assigned (or approved) specifically for Ministries, central agencies, and provinces and centrally-administered cities shall be determined similarly to that prescribed in Section 1.1.1, 1.1.2 Point 1.1 Clause 1 Section II Circular No. 02/2005/TT-BTC dated January 6, 2005 of the Ministry of Finance on guiding the determination of demand, sources, and methods of expenditure implementation for salary reform for cadres, civil servants, public officials, and armed forces (hereinafter referred to as Circular No. 02/2005/TT-BTC).

b) The financial requirement for implementing Decrees 93/2006/NĐ-CP, 94/2006/NĐ-CP mentioned in this Circular is determined based on the basic salary according to rank, grade, and position; allowance according to the prescribed system (excluding night shift wages, overtime pay, and allowances in absolute amounts), and contributions according to the system (social insurance, health insurance, trade union fees) and the additional minimum wage increase stipulated in Decree 94/2006/NĐ-CP compared to Decree 118/2005/NĐ-CP as specified in point a above.

For the financial requirements for implementing Decrees 93/2006/NĐ-CP, 94/2006/NĐ-CP of provinces and centrally-administered cities, it includes additional funding for subsidies for retired village cadres, part-time village cadres; increased activity fees for People's Council representatives at all levels; additional funding for the salaries of kindergarten teachers outside the authorized staffing level due to the adjustment of the general minimum wage; and additional funding for the salaries of village health workers within the authorized staffing level due to the adjustment of the general minimum wage.

The financial requirement for implementing Decree 94/2006/NĐ-CP for part-time village cadres is determined based on the allowance stipulated in Decree 94/2006/NĐ-CP (150,000 VND/month) increased from the amount stipulated in Decision No. 1561/TTg-KTTH dated October 12, 2005 of the Prime Minister (120,000 VND/month) based on the number of cadres specified in point a Clause 1 Section II of this Circular.

The financial requirement for implementing Decrees 93/2006/NĐ-CP, 94/2006/NĐ-CP for retired village cadres is determined based on the adjustment of the additional subsidy between Decree 93/2006/NĐ-CP compared to the amount stipulated in Decree 119/2005/NĐ-CP dated September 27, 2005 and the adjustment of the additional subsidy between Decree 94/2006/NĐ-CP compared to the amount stipulated in Decree 93/2006/NĐ-CP.

c) For Ministries, central agencies, and provinces and centrally-administered cities with an increase in the number of authorized positions as of October 1, 2006 compared to the number of authorized positions present at the time of reporting the financial requirements for adjusting the minimum wage in 2006 as stipulated in Decree 118/2005/NĐ-CP dated September 15, 2005 (within the total number of authorized positions assigned or approved) and not yet processed, the additional financial requirement for implementing the adjustment of the general minimum wage as stipulated in Decree 118/2005/NĐ-CP (hereinafter referred to as the financial requirement for implementing Decree 118/2005/NĐ-CP) for these authorized positions in 2006 (the actual payment up to December 31, 2006) will be combined together with the financial requirement for implementing Decrees 93/2006/NĐ-CP, 94/2006/NĐ-CP in the fourth quarter of 2006.

d) For Ministries, central agencies, and provinces and centrally-administered cities with an increase in the number of authorized positions as of December 31, 2006 compared to the number of authorized positions present as of October 1, 2006 (within the total number of authorized positions assigned or approved) and not yet processed, the financial requirement for implementing Decree 118/2005/NĐ-CP for these authorized positions from recruitment to December 31, 2006 will be combined together with the financial requirement for implementing Decrees 93/2006/NĐ-CP, 94/2006/NĐ-CP in 2007.

Additional wages due to the adjustment of the general minimum wage for employees who do not fall under the category of state-assigned authorized positions and whose wages are included in the product cost according to the regulations of public institutions operating in fields such as transportation, land administration, geology, etc.; additional wages for employees in agencies and units that have implemented cost allocation (such as Tax Authority, Customs, State Treasury, Vietnam Television, State Bank of Vietnam...); and additional wages for authorized positions and employees in the trade union system at all levels: Implemented similarly to the provisions in Point 1.2 Clause 1 Section II Circular No. 02/2005/TT-BTC (not included in the financial requirement for implementing the adjustment of the general minimum wage for Ministries, central agencies, and provinces and centrally-administered cities).

2. Regarding the determination of sources to ensure the financial requirements for implementing Decrees 93/2006/NĐ-CP, 94/2006/NĐ-CP (hereinafter referred to as the financial source for implementing Decrees 93/2006/NĐ-CP, 94/2006/NĐ-CP):

a) Principles for using financial resources in 2006, 2007 to implement Decrees 93/2006/NĐ-CP, 94/2006/NĐ-CP: Implemented similarly to the provisions in Point 2.1 Clause 2 Section II Circular No. 02/2005/TT-BTC.

b) Financial resources for implementing Decrees 93/2006/NĐ-CP, 94/2006/NĐ-CP in 2006:

- In cases where the source for implementing the adjustment of the general minimum wage in 2006 as stipulated in Point c Clause 2 Section II Circular No. 89/2005/TT-BTC dated October 13, 2005, after deducting the financial requirement for implementing Decree 118/2005/NĐ-CP, if there is a surplus:

+ If the surplus mentioned above is less than the financial requirement for implementing Decrees 93/2006/NĐ-CP, 94/2006/NĐ-CP in 2006 as stipulated in Clause 1 Section II of this Circular, the central budget will supplement the shortfall for Ministries, central agencies, and provinces and centrally-administered cities to ensure sufficient resources for implementation.

If the remaining balance mentioned above exceeds the funding requirement for implementing Decrees 93/2006/NĐ-CP and 94/2006/NĐ-CP in 2006 as stipulated in Clause 1, Section II of this Circular, then the ministries, central agencies, and provinces/cities directly under the Central Government shall use that remaining balance to ensure funding for implementing Decrees 93/2006/NĐ-CP and 94/2006/NĐ-CP in 2006, with any excess transferred to 2007 to continue adjusting the general minimum wage as prescribed in Decrees 93/2006/NĐ-CP and 94/2006/NĐ-CP in 2007; this excess shall not be used for other purposes.

In cases where the source for implementing the general minimum wage adjustment in 2006 as stipulated in Point c, Clause 2, Section II of Circular No. 89/2005/TT-BTC has been fully utilized for the general minimum wage adjustment according to Decree 118/2005/NĐ-CP: The central budget will supplement the amount required for implementing Decrees 93/2006/NĐ-CP and 94/2006/NĐ-CP in 2006 as stipulated in Clause 1, Section II of this Circular for the ministries, central agencies, and provinces/cities directly under the Central Government.

c) Funding sources for implementing Decrees 93/2006/NĐ-CP and 94/2006/NĐ-CP for the year 2007:

c1) Funding sources for implementing Decrees 93/2006/NĐ-CP and 94/2006/NĐ-CP in 2007 for the ministries and central agencies:

- For state administrative agencies, the Party, and mass organizations:

+ Utilize at least 40% of the retained revenue according to the regime in 2007.

+ Utilize the savings from reducing 10% of regular expenses in 2007 (excluding salaries, which have the nature of wages as stipulated in Decree 118/2005/NĐ-CP and salary regulations set forth in Decree 204/2004/NĐ-CP dated December 14, 2004, Resolution No. 730/2004/NQ-UBTVQH11 dated September 30, 2004, and Resolution No. 1003/2006/NQ-UBTVQH11 dated March 3, 2006 of the Standing Committee of the National Assembly, Decision No. 128/QĐ-TW dated December 14, 2004 of the Central Committee's Secretariat of the Communist Party of Vietnam) for each agency.

+ Any remaining funds from the salary reform in 2006 that were not used will be carried over to 2007.

- For state-owned public institutions and those of the Party and mass organizations:

+ Utilize at least 40% of the retained revenue according to the regime in 2007 (except for the health sector, which is 35%, after deducting drug, blood, transfusion fluid, and chemical costs) of the units after subtracting the amount already used to implement additional salary increases as stipulated in Decree 03/2003/NĐ-CP dated January 14, 2003, Decree 204/2004/NĐ-CP, and Decree 118/2005/NĐ-CP based on the staffing level in 2007.

+ Utilize the savings from reducing 10% of regular expenses in the 2007 budget (excluding salaries, which have the nature of additional salary increases compared to 2006 as stipulated in Decree 118/2005/NĐ-CP and salary regulations set forth in Decree 204/2004/NĐ-CP) increased compared to the 2006 budget (the 2006 budget includes the budget allocated by the competent authority and any supplementary amounts for implementing additional salary increases according to Decree 118/2005/NĐ-CP, if applicable) for each public institution.

+ Any remaining funds from the salary reform in 2006 that were not used will be carried over to 2007.

In cases where the sources specified in Subparagraph c1, Point c, Clause 2, Section II above are less than the funding requirement for implementing Decrees 93/2006/NĐ-CP and 94/2006/NĐ-CP in 2007 as stipulated in Clause 1, Section II of this Circular, the central budget will supplement the shortfall for the ministries and central agencies to ensure sufficient funding.

In cases where the sources specified in Subparagraph c1, Point c, Clause 2, Section II above exceed the funding requirement for implementing Decrees 93/2006/NĐ-CP and 94/2006/NĐ-CP in 2007 as stipulated in Clause 1, Section II of this Circular, the ministries and central agencies shall self-fund the implementation of Decrees 93/2006/NĐ-CP and 94/2006/NĐ-CP in 2007 as stipulated in Clause 1, Section II of this Circular; the remaining portion shall be used to implement new salary increases when the State continues to issue them; this remaining funding shall not be used for other purposes.

c2) Funding sources for implementing Decrees 93/2006/NĐ-CP and 94/2006/NĐ-CP in 2007 for the provinces/cities directly under the Central Government:

- Utilize the savings from reducing 10% of regular expenses in 2007 (excluding salaries, which have the nature of wages as stipulated in Decree 118/2005/NĐ-CP and salary regulations set forth in Decree 204/2004/NĐ-CP dated December 14, 2004, Resolution No. 730/2004/NQ-UBTVQH11 dated September 30, 2004, and Resolution No. 1003/2006/NQ-UBTVQH11 dated March 3, 2006 of the Standing Committee of the National Assembly, Decision No. 128/QĐ-TW dated December 14, 2004 of the Central Committee's Secretariat of the Communist Party of Vietnam).

- Utilize at least 40% of the retained revenue of state administrative agencies and public institutions according to the regime in 2007 (except for the health sector, which is 35%, after deducting drug, blood, transfusion fluid, and chemical costs).

- 50% of the increase in local government revenue (excluding the increase from land use fees) realized in 2006 compared to the 2006 budget approved by the Prime Minister.

- Any remaining funds from the salary reform up to the end of the 2006 fiscal year at the local level that were not used will be carried over to 2007.

In cases where the sources specified in Subparagraph c2, Point c, Clause 2, Section II above are less than the funding requirement for implementing Decrees 93/2006/NĐ-CP and 94/2006/NĐ-CP in 2007 as stipulated in Clause 1, Section II of this Circular, the central budget will supplement the shortfall for the provinces/cities directly under the Central Government to ensure sufficient funding.

In cases where the sources specified in Subparagraph c2, Point c, Clause 2, Section II above exceed the funding requirement for implementing Decrees 93/2006/NĐ-CP and 94/2006/NĐ-CP in 2007 as stipulated in Clause 1, Section II of this Circular, the provinces/cities directly under the Central Government shall self-fund the implementation of Decrees 93/2006/NĐ-CP and 94/2006/NĐ-CP as stipulated in Clause 1, Section II of this Circular; the remaining portion shall be used to implement new salary increases when the State continues to issue them; this remaining funding shall not be used for other purposes.

3. Regarding the reporting system on the funding requirements and sources for implementing Decrees 93/2006/NĐ-CP and 94/2006/NĐ-CP:

The ministries, central agencies, and provinces/cities directly under the Central Government are responsible for organizing, guiding, reviewing, and compiling reports on the funding requirements and sources for implementing Decrees 93/2006/NĐ-CP and 94/2006/NĐ-CP in 2006 and 2007 to send to the Ministry of Finance.

- As for the requirements and funding sources to implement Decree 93/2006/NĐ-CP, 94/2006/NĐ-CP in 2006: The latest submission date is November 15, 2006.

- As for the requirements and funding sources to implement Decree 93/2006/NĐ-CP, 94/2006/NĐ-CP in 2007: The latest submission date is January 31, 2007.

(Report on the requirements and funding sources to implement Decree 93/2006/NĐ-CP, 94/2006/NĐ-CP in 2006: Ministries and central agencies shall submit requirement reports according to form number 1, funding source reports according to form number 3 attached; provinces and centrally governed cities shall submit requirement reports according to forms number 2a, 2b, 2c, 2d, funding source reports according to form number 4 attached).

Report on the requirements and funding sources to implement Decree 93/2006/NĐ-CP, 94/2006/NĐ-CP in 2007: Ministries and central agencies shall submit requirement reports according to form number 5, funding source reports according to forms number 7a, 7b, 7c attached; provinces and centrally governed cities shall submit requirement reports according to forms number 6a, 6b, 6c, 6d, funding source reports according to forms number 8a, 8b, 8c attached).

4. Regarding the method of expenditure to implement Decree 93/2006/NĐ-CP, 94/2006/NĐ-CP:

a) For budgetary units with funding sources to implement Decree 93/2006/NĐ-CP, 94/2006/NĐ-CP (10% savings from regular expenditures; 35-40% of retained revenue according to regulations) exceeding the funding requirements to implement Decree 93/2006/NĐ-CP, 94/2006/NĐ-CP, such units may proactively use these sources to pay additional salaries to cadres, civil servants, and public officials of their own units according to prescribed regulations.

b) For ministries, central agencies, provinces, centrally governed cities, and budgetary units with funding requirements to implement Decree 93/2006/NĐ-CP, 94/2006/NĐ-CP exceeding the funding sources to implement Decree 93/2006/NĐ-CP, 94/2006/NĐ-CP as stipulated in this Circular:

- Based on the reports submitted by ministries, central agencies, and provinces, centrally governed cities, the Ministry of Finance will review and supplement to ensure that ministries, central agencies, and provinces, centrally governed cities have sufficient funding sources to implement Decree 93/2006/NĐ-CP, 94/2006/NĐ-CP.

- On this basis, ministries, central agencies will notify supplementary funding to subordinate budgetary units; financial authorities at all levels in localities will report to the People's Committees at the same level to notify supplementary funding to budgetary units under their own planning and lower-level budgets to implement additional salary payments for cadres, civil servants, and public officials according to prescribed regulations (after using the funds to implement additional salary payments as prescribed but still lacking funding).

- Based on the aforementioned notification, financial authorities at all levels will allocate to lower-level budgets to implement.

- Level I budgetary units are responsible for allocating the aforementioned supplementary notifications to subordinate budgetary units (after using revenue and saving 10% but still lacking funding). Budgetary units will withdraw money from the State Treasury within the supplemented amount together with proactively using retained revenue according to regulations and saving 10% of regular expenditures to pay additional salaries to cadres, civil servants, and public officials of their own units according to prescribed regulations.

c) For ministries, central agencies, provinces, centrally governed cities with funding sources to implement Decree 93/2006/NĐ-CP, 94/2006/NĐ-CP exceeding the funding requirements to implement Decree 93/2006/NĐ-CP, 94/2006/NĐ-CP:

- Ministries, central agencies, provinces, centrally governed cities will direct and guide units and subordinate budgets with funding sources exceeding the funding requirements to implement Decree 93/2006/NĐ-CP, 94/2006/NĐ-CP to proactively use these sources to pay additional salaries to cadres, civil servants, and public officials of their own units according to prescribed regulations.

- Provinces, centrally governed cities will proactively use the sources for salary implementation according to regulations: increased local government revenue, saving 10% of regular expenditures (the portion retained centrally) to supplement funding sources to implement Decree 93/2006/NĐ-CP, 94/2006/NĐ-CP for budgetary units at the same level and subordinate budgets still lacking funding to implement Decree 93/2006/NĐ-CP, 94/2006/NĐ-CP following the similar process as mentioned above in point b.

d) Unused funding for adjusting the minimum wage in the year will be transferred to the next year for continued implementation of salary reform, not to be used for other purposes; specifically:

- For budgetary units: Units shall send a letter to the State Treasury where transactions are conducted requesting to transfer the funding to the next year for continued use. The State Treasury shall record the transfer to the next year based on the unit's request and report to the financial authority according to Circular 101/2005/TT-BTC dated November 17, 2005 guiding the closing of accounting books at the end of the year and the preparation and reporting of annual state budget settlement.

- For budgets at all levels: Financial authorities shall issue payment orders to transfer funding from the previous year to the next year. The State Treasury shall record according to the financial authority's payment order.

đ) Accounting and settlement: The accounting and settlement of funding for implementing additional salaries and allowances for retired village cadres shall be carried out in accordance with the provisions of the State Budget Law and current legal documents.

Funding for implementing additional salaries due to adjustment of the general minimum wage and allowance for retired village cadres in the fourth quarter of 2006: If the disbursement procedures are completed according to regulations during the adjustment period of the 2006 settlement, it will be settled in the 2006 state budget; if the disbursement procedures are not completed according to regulations during the adjustment period of the 2006 settlement, it will be settled in the 2007 state budget. Funding for implementing additional salaries due to adjustment of the general minimum wage in 2007 will be settled in the 2007 state budget.

III. IMPLEMENTATION:

1. Based on the provisions of this Circular, ministries, central agencies, and People's Committees of provinces, centrally governed cities are responsible for organizing and guiding agencies, units, and subordinate levels to determine the requirements and funding sources to implement Decree 93/2006/NĐ-CP, 94/2006/NĐ-CP in 2006 and 2007.

On the basis of their specific circumstances and the provisions of this Circular, the Heads of Ministries, central agencies, People's Committees of provinces and centrally governed cities shall stipulate the reporting timeframes and formats for units and subordinate budget levels in accordance with the regulations on consolidation and reporting to the Ministry of Finance as set out in this Circular.

2. The determination, submission of reports, assessment of funding requirements, and implementation of additional pension and social insurance benefit payments under Decrees 93/2006/NĐ-CP and 94/2006/NĐ-CP for individuals receiving social insurance benefits guaranteed by the state budget shall be guided by separate circulars.

This Circular shall take effect fifteen days from the date of publication in the Official Gazette. Any difficulties encountered during its implementation should be reported promptly to the Ministry of Finance for timely resolution./.