After region-based minimum wage, base salary will officially increase by 90.000 VNĐ starting from July 2018

Previously, Decree no 141/2017/NĐ-CP substituting Decree no 153/2016/NĐ-CP stipulated the region-based minimum-wage applied to employee working under labor contract. Recently, on 15^th May, 2018, Government issued the Decree no 72/2018/NĐ-CP on the base salary applied to cadres, civil servants, officials and armed forces superseding Decree no 47/2017/NĐ-CP. Accordingly, the base salary will rise from 1.300.000 VNĐ to 1.390.000 VNĐ starting on 1^st July, 2018.

Base salary is used as the basis for salary levels calculation in the pay-sheet, allowance levels calculation and the implementation of other benefits in accordance with the law. Base salary is also used to calculate the operating cost level, living expenses, deductions and another benefits based on the base salary.

The employees applied the new base salary from 1^st July, 2018 includes:

-Cadres, civil servants from central to district level; Cadres, civil servants of commune level in accordance with Law on cadres and civil servants 2008;

-Public employees working in the public non-business units in accordance with Law on public employees 2010;

-Employees working under wage-rate labor contract according to Decree no 204/2004/NĐ-CP on salary regimes for cadres, civil servants, officials, and armed forces, including:

1. Employees working under labor contract in the agencies, units of Party, Government, social and political organization stipulated in Decree no 68/2000/NĐ-CP on the application of contractual regime to a number of jobs in the state administrative agencies and public service units;
2. Employees working under labor contract approved by the competent authority in the public non-business units in accordance with the regulation of the Government and The Prime Minister;

-Employees working as regular staff in the association funded by state budget regulated in the Decree no 45/2010/NĐ-CP on the organization, operation and management of associations;

-Officer, professional military personnel, non-commissioned officers, soldiers and workers, defense officials and contract laborers of the Vietnam People's Army;

-Officer, non-commissioned officers who earn wage, non-commissioned officers, duty combatants, police workers, contract employees of Public Security Force;

-Employees working in the cipher organization;

-Employees working as non-specialized workers in commune level, in hamlet, civil group.

Congress approved the adjustment of base salary at the Resolution of the draft state budget 2018 at meeting at the end of year 2017. According to the Statistic report about the non-official employments, Viet Nam now has over 18 billion employees working in the non-official sector – accounting for 57% of total nonagricultural employment across the country. These are the employees which are not included in the compulsory social insurance and it’s necessary to exploit and encourage them to participate in the voluntary social insurance. Participating in the social insurance system not only help employees have a better life when old, decreasing ability to work but also expand and enhance the work effectiveness of social insurance system. The monthly premium that the employees have to pay for retirement funds and death grant of voluntary social insurance is 22% of employee’s monthly chosen income. The minimum premium is equal to the level of poverty standard in rural area and the maximum is 20 times the base salary.

The adjustment of base salary is going to be affect not only the employees working in government sector, in the Party organizations,... but also affect the employees working in nonofficial sector and participating in voluntary social insurance. With the rise off base salary to 1.390.000 VND, the highest voluntary social insurance premium will rise accordingly. The higher premium that employees can pay, the higher pension they gain when retired.

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