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Increasing basic salary and arising problems -
Lesson 2: Efforts to balance payment sources

Nguyen Nguyen - Thanh Le • July 12, 2024 10:09

Nghe An currently has 1,685 public service units, of which more than 740 units have self-financed regular and investment expenditures; self-financed regular expenditures; and partly self-financed regular expenditures. In the context of no increase in service prices, not to mention a number of units with declining revenue, finding sources of additional salary payments is a great pressure and challenge.

Difficulty in finding sources of funding for additional salaries

Nghe An Agricultural and Irrigation Planning Group is a public service unit under the Department of Agriculture and Rural Development. This unit currently has 40 officers and employees (including 27 officers receiving state salaries, 1 contract 68, 12 contracts under self-financing) and is implementing partial self-insurance of regular expenses.

Revenue from public service activities in the economic and other fields of the unit is very low and unstable, revenue from career activities is also through programs and projects from the State budget. Mobilizing revenue to develop career activities has been very difficult since 2015 when the Bidding Law took effect, especially since 2020, this source of revenue has been almost non-existent.

The increase in basic salary from July 1, 2024 is a difficult problem for the Nghe An Agricultural and Irrigation Planning Group in balancing financial resources to pay salaries for 12 self-financed contracts.

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The annual budget for public services is increasingly tight and limited. Meanwhile, the source of public services is highly competitive because many non-state units participate. That leads to many difficulties for units paying monthly salaries and especially when salaries increase, it is even more difficult to find additional sources to pay salaries for contract workers.

Mr. Pham Hong Thuong - Head of Nghe An Agricultural and Irrigation Planning Delegation

Meanwhile, the Center for Application of Scientific and Technological Advances, under the Department of Science and Technology, is an autonomous unit, self-responsible for conducting registered scientific and technological activities, financially autonomous, and proactively allocating funds to carry out tasks according to assigned functions and tasks. This center currently has 26 professional staff and 6 security contracts that must pay salaries.

According to Mr. Ngo Hoang Linh - Director of the Center for Application of Scientific and Technological Advances: The source of salary payment for staff at the unit is taken from the budget for activities according to the State's orders and is usually approved according to the plan of the previous year. The salary increase from July will cause difficulties for the unit in the last months of 2024, because the technical and economic norms, the mechanism for calculating labor and salary are following the old norms from the previous year. That means the unit is having a "headache" finding sources because it lacks 30% of the cost to pay the increased salary for staff in the last months of the year.

The above difficulties and challenges are the reality in public units that are autonomous or have budget allocations across the country. In Nghe An, there are currently 1,685 public service units, of which more than 740 units have self-insured regular and investment expenditures; self-insured regular expenditures; and partly self-insured regular expenditures. When there is a decision to increase the basic salary, the units with high levels of autonomy require more efforts to find sources of revenue to balance expenditures. However, the difficulties in the current period are what make leaders of autonomous units worried.

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In the period of 2015 - 2021, the whole country has about 10% of public and career units receiving salaries from the State budget, implementing financial autonomy. According to Conclusion No. 62-KL/TW of the Politburo on the implementation of Resolution No. 19-NQ/TW of the 12th Party Central Committee on continuing to innovate the organization and management system, improving the quality and efficiency of public career units, by 2025, the whole country strives to have at least 20% of financially autonomous units.

Step by step to overcome difficulties

Vinh City General Hospital, a unit that has been 100% autonomous in paying salaries to more than 800 staff, doctors, nurses, attendants and regular expenses for many years (level 1 autonomy). Therefore, balancing daily and monthly income and expenses is a problem that poses very high requirements for the hospital's board of directors. So, what will happen when the new salary increases?

Regarding this issue, Dr. Nguyen Hong Truong - Director of Vinh City General Hospital shared: "In principle, increasing salary will increase income for workers. However, for a 100% autonomous unit like our hospital, we are ensuring that the total income of workers does not decrease while it has not been increased. That means we are still increasing salaries for staff, doctors, nurses, and service staff according to State regulations to calculate insurance and other benefits, but the unit must regulate and reduce the monthly additional income of workers. In the long term, to increase income for workers, hospitals must be allowed by all levels and sectors to collect the correct and sufficient amount of services to balance revenue and expenditure."

Nghe An Health sector alone has nearly 14,000 staff, doctors, nurses, and workers, most of whom are in hospitals implementing the autonomous model. Therefore, the implementation method like Vinh City General Hospital is being applied by many hospitals.

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In the coming time, to increase revenue, Nghe An Health sector must synthesize all fields, with the participation of the Finance sector, propose the Provincial People's Committee to submit a draft Resolution on calculating the correct and adequate prices of all types of services in the Health sector for the Provincial People's Council to consider. To do that, it takes time and guidance from ministries and branches...".

Comrade Nguyen Thi Hong Hoa - Director of the Department of Health

Agreeing with the increase in basic salary, National Assembly delegate Duong Minh Anh (Hanoi National Assembly Delegation) also mentioned concerns. Speaking at the recent 7th Session of the 15th National Assembly (May 23, 2024), this delegate expressed: Raising salaries for medical staff and teachers aims to improve the quality and effectiveness of medical examination and treatment, health care for people, and improve the quality of education. But voters are concerned that when raising salaries for medical staff and teachers, will it come from the budget or from the autonomous revenue of autonomous public units? If it comes from the autonomous revenue of public units, it will be a burden for the public service units themselves. Thus, all costs must be calculated correctly and fully, and then the burden will be on patients and students when it is included in the cost of medical examination and tuition.

Regarding the resolution of difficulties in additional salary expenditure sources, the Ministry of Finance is currently drafting a Circular guiding the determination of needs, sources and methods of expenditure for salary reform implementation from July 1, 2024. On that basis, it will seek opinions from ministries, branches, units and localities; at the same time, submit to the Ministry of Justice for comments on promulgation according to simplified procedures and order for promulgation as soon as possible.

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After receiving the Circular of the Ministry of Finance, the Department will promptly deploy it to sectors, units and localities to assess the needs and funding sources for salary reform in 2024, synthesize and report to the Provincial People's Committee to submit to the Provincial People's Council to allocate from the salary reform source in 2024 to supplement the missing funding (if any) for sectors, units and localities at the nearest Provincial People's Council meeting".

Mr. Nguyen Tien Dung - Deputy Director of Nghe An Department of Finance.

Implementing the 30% increase in basic salary, public service units in the province that are implementing autonomy in groups 1, 2, 3 are basically under a lot of pressure from balancing financial resources to implement the policy of increasing salary for cadres, civil servants and employees. In the immediate future, units continue to have to "tighten their belts"; at the same time, actively seek investment cooperation opportunities, strive to increase revenue and wait for policies to remove difficulties from all levels and sectors.

Increasing basic salary and arising issues - Part 1: Motivation from new salary