Building a roadmap for salary and social insurance reforms

Thursday, 2018-05-17 17:56:07
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The project on salary and social insurance reform is expected to begin in 2021 (illustrative image)
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NDO - The seventh plenary session of the 12th Party Central Committee (PCC) has approved the project on salary and social insurance reforms, which raised expectations from experts and people about a breakthrough in the implementation of the salary and social insurance policies in order to promote economic growth. Now, it is necessary to map out solutions and a roadmap to bring these policies into play.

General expectations

Economic expert Luu Bich Ho, former Director of the Vietnam Institute for Development Strategies under the Ministry of Planning and Investment, said that salary reform was discussed a long time ago but has not been approved for a variety of reasons. This issue has created an enormous impact on labour, jobs, social welfare, and economic development. Thus, the approval of the project on salary reform is a noteworthy stride, demonstrating Vietnam's efforts in improving its salary system, Ho noted.

"Once the project is carried out, it will create a driving force for labourers, and ensure social welfare and salaries for the armed forces. In particular, the project will have a closer approach to the targets that Vietnam is pursuing, including wages based on labour efficiency, wages conformable with the market mechanism and wages guaranteeing the life of labourers”, Ho added.

Meanwhile, Pham Minh Huan, deputy minister of Labour, Invalids and Social Affairs, spoke highly of the PCC's discussions and approval of 'hot issues' within the project on salary and social insurance reforms. Accordingly, it is advisable to complete the salary policy for the non-State sector towards market mechanisms under the management of the State.

Meanwhile, greater autonomy in the areas of recruitment and salary policies should be given to non-productive public units, particularly hospitals and schools.

"The public sector shows lots of inadequacies with wage mechanisms having yet to be reformed. Thus, the PCC emphasised the necessity of rearranging the apparatus, streamlining the payroll, reappraising civil servants and increasing the budget to serve wage reform for civil servants. The problem is how to carry out the reforms?” Huan said.

Sharing the same view as Huan, Nguyen Thi Lan Huong, a salary expert from the Ministry of Labour, Invalids and Social Affairs, agreed that the salary reform project is the project attracting the highest expectations of the people. "Despite new provisions, some contents of the project still need to be concretised, including the calculation of the wage scale, the payment in accordance with work efficiency, and the grant of financial autonomy to heads of public units," Huong noted.

Specific solutions, roadmap needed

Experts suggested that the PCC should create an action programme to assign to the Government so that the Government will be able to entrust specific tasks to the relevant agencies with the focus on reviewing legal policies.

The project on salary and social insurance reform is expected to begin in 2021, thus, it is necessary to make concrete things to do, including the reduction of 10% of the payroll and the preparation of the budget for the reformed salary project.

Social insurance is no longer a 'hot' issue as adjustments to social insurance policies were made in 2014 before the Law on Social Insurance was adopted by the National Assembly in late 2014. Several important adjustments included the increase of the insurance premium, the decrease of social insurance pay-outs, the increase of volunteer insurance and others.
Therefore, social insurance reforms should address shortcomings such as the low coverage of social insurance, under diversified insurance, the possibility of insurance fund imbalances, the increase of retirement age, and others.

Economist Luu Bich Ho also agreed that the PCC should promptly build a specific action plan including the building of a salary scale and payroll based on work positions. "There is not much time left, thus the PCC should map out a plan to assign to each ministry and sector. It also requires a high political determination to fulfil a huge amount of work including the reform of salary and social insurance policies as well as policies towards national contributors", Ho added.

Avoid creating a shock to labourers

Deputy Head of the National Assembly Committee for Social Affairs Bui Sy Loi said that it is a perfect time to implement the reforms of social insurance. However, it is necessary to build a roadmap, particularly in terms of the increase of the retirement age to avoid creating a shock to labourers, while generating benefits to the labour market. Although Vietnam is in the period of a 'golden population structure', Vietnam is among the countries with the fastest aging rate in addition to the danger of an imbalance in the national pension fund. Thereby, the reforms of social insurance and the increase of the retirement age will become more and more essential.

The foundation for an appropriate policy

Deputy Minister of Labour, Invalids and Social Welfare Doan Mau Diep said "The project on the reform of salary, social insurance and policies towards national contributors adopted by the PCC will bring about a comprehensive effect. If salary reform is successfully implemented, it will serve as a foundation for developing an appropriate salary policy, meeting the development requirements of a socialist-oriented market economy. Thus, it will create a motivation to fuel labour power and productivity, while enhancing the quality of human resources and the competitiveness of the economy."

Salary based on work efficiency

Former Deputy Minister of Home Affairs, Nguyen Tien Dinh said that Vietnam should stipulate salary based on positions, job descriptions and work efficiency but not the length of service which may restrain ability and work motivation of labourers.