Decree No. 94/2006/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;

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

Based on Decree No. 203/2004/ND-CP dated December 14, 2004 of the Government stipulating the minimum wage;

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

DECREE

Article 1From October 1, 2006, the general minimum wage shall be increased from VND 350,000 per month as stipulated in Article 1 of Decree No. 118/2005/NĐ-CP dated September 15, 2005 of the Government to VND 450,000 per month.

Article 2. The general minimum wage stipulated in Article 1 of this Decree shall serve as the basis for adjusting pensions, social insurance benefits, monthly allowances for retired village cadres, and calculating termination allowances, other entitlements, and deductions based on the general minimum wage as follows:

1. Increase by 28.6% over the adjusted pension, social insurance benefit, and monthly allowance as prescribed in Decree No. 93/2006/NĐ-CP dated September 7, 2006 of the Government regarding adjustments to pensions, social insurance benefits, and monthly allowances for retired village cadres.

2. Increase by 28.6% over the September 2006 social insurance benefit monthly allowance based on the general minimum wage.

3. Calculate termination allowance for months of work starting from October 1, 2006 onwards for surplus labor as prescribed in 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 Resolution No. 06/2006/NQ-CP dated May 4, 2006 of the Government at the regular meeting of the Government in April 2006.

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

Article 3. Funding for implementing the adjustment of the general minimum wage for the specified groups shall be guaranteed by the state budget from the following sources:

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

2. For public service units with income, use at least 40% of retained revenue according to regulations. Specifically, public service units under the health sector shall use at least 35% of retained revenue (after deducting drug, blood, transfusion fluid, and chemical costs).

3. Use at least 40% of retained revenue according to regulations for administrative agencies with income.

4. Use 50% of increased local government revenue.

5. The central budget shall ensure:

a) Supplementing funding to implement the adjustment of the general minimum wage in cases where ministries, central agencies, and provinces and centrally-administered cities have complied with the provisions of Clauses 1, 2, 3, and 4 of this Article but still lack funds;

b) Supporting difficult regions that cannot balance their sources for implementing an average of one-third of the general minimum wage (replacing the current support of VND 120,000 per month) for non-professional village, town, and ward cadres and those in hamlets and neighborhood associations as stipulated in Decree No. 121/2003/NĐ-CP dated October 21, 2003 of the Government;

c) Ensuring 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 retired village, town, and ward cadres receiving monthly 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, which shall be covered by the social insurance fund).

Article 4. Funding when implementing the adjustment of the general minimum wage for workers in companies and enterprises (excluding foreign-invested enterprises in Vietnam) shall be borne by the companies and enterprises and included in production costs or business expenses.

For state-owned companies currently applying an additional adjustment coefficient not exceeding twice the general minimum wage stipulated in Article 4 of Decree No. 206/2004/NĐ-CP dated December 14, 2004 of the Government and organizations and units applying an additional adjustment coefficient compared to the general minimum wage like state-owned companies, now apply an additional adjustment coefficient not exceeding 1.34 times the general minimum wage stipulated in this Decree.

Article 5.

1. The Ministry of Labor, Invalids and Social Affairs shall guide the implementation of the general minimum wage as stipulated in this Decree for companies and enterprises operating under the Enterprise Law 2005 (excluding foreign-invested enterprises in Vietnam), cooperatives, cooperative groups, farms, households, individuals, and other organizations hiring workers; guide the adjustment of pensions and social insurance benefits for those receiving pensions and social insurance benefits as stipulated in Clause 1 (excluding retired village cadres) and Clause 2 of Article 2 of this Decree; guide the calculation of termination allowances as stipulated in Clause 3 of Article 2 of this Decree for surplus labor as prescribed in Decree No. 41/2002/NĐ-CP dated April 11, 2002, Decree No. 155/2004/NĐ-CP dated August 10, 2004 of the Government, and Resolution No. 06/2006/NQ-CP dated May 4, 2006 of the Government at the regular meeting of the Government in April 2006.

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 minimum wage as stipulated in Article 1 of this Decree for state agencies, public service units, political organizations, and political-social organizations; guide the adjustment of monthly allowances for retired village cadres as stipulated in Clause 1 of Article 2 of this Decree.

3. The Ministry of National Defense and the Ministry of Public Security, after reaching consensus with the Ministry of Home Affairs and the Ministry of Finance, shall guide the implementation of the general minimum wage for armed forces.

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

a) Directing the calculation and balancing of financial resources to implement the adjustment of the minimum wage as stipulated in Article 3 of this Decree;

b) Reviewing and supplementing financial resources when implementing the adjustment of the minimum wage for ministries, central agencies, and provinces and centrally-administered cities as provided in point a, Clause 5, Article 3 of this Decree, and ensuring the source of funds for pension payments and social insurance benefits for those receiving pensions and social insurance benefits before October 1, 1995, and supporting difficult localities as provided in point b, Clause 5, Article 3 of this Decree, and compiling and reporting to the Prime Minister the results of implementation.

Article 6.

1. This Decree shall take effect fifteen days from the date of publication in the Official Gazette. The Government Decree No. 118/2005/NĐ-CP dated September 15, 2005, adjusting the general minimum wage, is hereby repealed.

2. The provisions of this Decree shall be implemented from October 1, 2006.

Article 7. Ministers, heads of ministerial-level agencies, heads of government-affiliated agencies, Chairpersons of provincial and centrally-administered city People's Committees are responsible for enforcing this Decree. /.\