Warning about civil servant salary increase plan in 2018

Regarding the 2018 state budget expenditure estimate for salary reform, although agreeing with the Government's proposal to increase the basic salary to 1,390,000 VND/month (about 7%), the National Assembly's Finance and Budget Committee also noted that salary increase must go hand in hand with staff streamlining to avoid putting pressure on the state budget.

On October 12, at the meeting of the National Assembly Standing Committee on the socio-economic situation, the issue of budget revenue and expenditure was also considered.

Presenting a preliminary audit report on the implementation of the state budget in 2017, Chairman of the Finance and Budget Committee Nguyen Duc Hai expressed concerns about the budget revenue structure.

Specifically, domestic revenue for the year is estimated to increase by only 2.1% compared to the estimate. In particular, revenue from three economic sectors: state-owned enterprises, foreign direct investment (FDI), and non-state-owned enterprises all failed to meet the estimate.

Notably, the state-owned enterprise sector had the sharpest decrease in revenue (-7.7%) compared to the estimate. Besides the reason due to the acceleration of equitization, the restructuring of state-owned enterprises also shows that the competitiveness and development capacity of this sector is still limited.

Mr. Hai reflected that many opinions said that the amount of dividends, remaining profits of state-owned enterprises, and money from selling state capital at enterprises in the first 9 months of the year only reached more than 48,000 billion VND compared to the estimate of 120,000 billion VND, especially the revenue from selling state capital only reached 16.7% (10,000 billion VND) but the Government still estimated that achieving 100% for the whole year was very difficult.

This will affect the balance and allocation of capital to implement investment projects in the last months of 2017 - the auditing agency emphasized.

According to the audit agency's analysis, if excluding land use fees (93,500 billion), dividends, remaining profits after tax, money from selling state capital in enterprises (120,000 billion) and lottery revenue (26,200 billion), domestic revenue will decrease compared to the estimate.

The audit report also stated that the actual monitoring results showed that the decrease in domestic revenue reflected the slow recovery of economic growth, and that revenue from the economy itself was not sustainable and lacked stability. In addition, although the handling of tax arrears had been implemented vigorously, the amount of tax arrears was still large (about 74.9 trillion VND as of July 31, 2017).

Salary increases must go hand in hand with streamlining the apparatus.

National Assembly leaders chaired an important discussion session on the socio-economic situation and budget for 2017 and 2018.

In implementing budget expenditures, the audit agency also pointed out many limitations and weaknesses.

Specifically, the disbursement of capital for basic construction investment from the state budget was the slowest in the last 5 years (53.1%), and the disbursement of government bond capital reached 7% of the estimate. The appraisal agency said this progress was very slow compared to the same period.

Many reasons were pointed out by the auditing agency such as slow investment project preparation, slow budget delivery, complicated investment procedures, difficult site clearance, and problems with some legal regulations on public investment...

The Standing Committee of the Finance and Budget Committee said that in the context of limited investment resources and difficulties in capital mobilization, many ministries, branches and localities have been allocated capital but have not yet disbursed or the disbursement rate is too low, leading to a waste of borrowed resources, reducing investment efficiency, slowing down economic growth, job creation and reducing budget revenue.

One notable content in the 2018 expenditure estimate is the amount set aside for planned salary increases. The majority of members of the Finance and Budget Committee agreed with the Government’s proposal to increase the basic salary to VND1,390,000/month (about 7%) as per the National Assembly’s resolution.

However, there are opinions that, in the context of low economic growth and difficulties in budget revenue, especially the balanced revenue of the central budget, it is necessary to consider increasing the basic salary by 7% and propose that salary adjustment must go hand in hand with streamlining the payroll, rearranging the state administrative apparatus, improving work efficiency, promoting the autonomy and self-responsibility mechanism of public service units.

At the same time, there are opinions suggesting that the Government evaluate the roadmap for implementing service price adjustments of public service units in conjunction with cutting regular budget expenditures. The implementation of this mechanism for the health sector in 2018 is estimated to cut only 90 billion VND compared to 2017, the education and training sector reduced 153 billion VND compared to 2017, which is quite low, accordingly, the impact of autonomy on reducing regular expenditures is not much.

In addition, some opinions suggest that, based on the roadmap to increase the basic salary by about 7% annually from now until 2020, some localities can be allowed to regulate revenue to the central budget on the basis of a commitment to ensure sufficient resources to implement salary reform according to the roadmap, and to use 50% of the remaining balance of the Salary Accumulation Fund to supplement development investment capital because the Salary Fund of some localities still has a large surplus after having arranged enough to implement salary increases according to regulations but has not been used, causing waste.

According to Dan Tri