Eliminate the 5% gap between salary grades

In particular, two notable reform points that can be mentioned in this revised Draft are the elimination of the difference between two adjacent salary levels and the exemption of the procedure for submitting salary scales for enterprises with less than 10 employees.

According to Mr. Ha Dinh Bon - Director of the Legal Department, Ministry of Labor, Invalids and Social Affairs, the main contents of the amendment will include adjusting the retirement age, expanding the agreement framework between employers and employees, ensuring the minimum wage is at a level that meets the minimum living standards of employees on the basis of amending the concept of minimum wage and criteria for determining minimum wage.

In particular, the draft reduces costs for businesses while ensuring the rights of workers. Through the amendments, the bill aims at the important goal of improving labor productivity and job quality. As Deputy Minister of Labor, Invalids and Social Affairs Doan Mau Diep said: "Vietnam will adjust salary increases not so much based on seniority, but on productivity and labor skills."

In particular, the highlight of this revised Draft is the elimination of the gap between two adjacent salary levels. Through discussion, Ms. Vi Thi Hong Minh - Deputy Director of the Office of Labor Users, Vietnam Chamber of Commerce and Industry (VCCI) commented that the current problem with the wage policy is that the minimum wage is being used as the basis for establishing the first salary level in the salary scale system. Therefore, when the minimum wage increases every year, businesses have to adjust their entire salary table.

Along with that, in this system, the gap between each level is currently fixed at 5%. "For businesses with 10-20 salary levels, each level is 5% apart, when multiplying progressively, it will increase costs a lot," Ms. Minh pointed out.

Therefore, the proposed solution in the Draft Labor Code (amended) has abolished this 5% hard gap. However, abolishing this regulation does not mean opening the door.

“Instead, businesses will build a salary scale depending on the complexity of management and job level. The salary gap will be based on the requirement to accumulate experience… Simply put, the Draft does not provide a specific level but is based on requirements that encourage workers to improve their professional qualifications. At that time, the salary scale of businesses will only be 5-10 levels because businesses will self-regulate based on actual conditions,” said Ms. Minh.

“For small businesses with less than 10 employees, the payroll is very simple, the business builds and implements it itself. Especially when the number of these micro-sized businesses accounts for 74% of the number of businesses in operation. Therefore, if these businesses are exempted from submitting payroll to the management agency, it will help reduce procedures, time, and costs for businesses, while reducing the public administration apparatus.”,Mrs. Minh analyzed.

In fact, some people are worried about their salaries being reduced. However, Ms. Minh said there is no need to worry because with micro-enterprises mainly located in the household and cooperative sectors, the implementation is very simple according to the agreement between the employer and the employee.

Along with that, the Draft also provides transitional conditions. Specifically, although it is for businesses to be proactive, it stipulates that the salary scale amendment must be publicly announced at the workplace. In particular, when one party requests to change the salary level compared to the labor contract, it must discuss, exchange, and review the salary level in the labor contract. In case of failure to reach consensus from one party, the salary scale adjustment cannot be carried out.