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Reform may see labourers paid for their productivity

Reform may see labourers paid for their productivity

VietNamNet Bridge – Businesses will likely narrow the pay gap among labourers and recalculate salary scales based on productivity at work instead of seniority, the Ministry of Labour, Invalids and Social Affairs has said.

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Workers at a solid waste treatment plant in Tam Diep City in Ninh Binh Province sort organic waste to produce micro-organic fertilisers. — VNA/VNS Photo Minh Duc

This is among the breakthrough regulations on building salary scales and payrolls the ministry has proposed to amend and supplement the Government’s Decree No49 issued in 2013.

According to the ministry, the current pay gap of at least five per cent between every wage rate has affected salary policy, structure of salary scales and payroll of enterprises, and is unsuitable with market mechanisms.

It has forced many businesses to build their salary scales based on seniority in order to create the stipulated gap. Businesses had to pay high salaries and high social insurance premiums – usually two or three times higher – for senior labourers who performed the same jobs as junior ones. As a result, many businesses sought to fire senior workers to recruit new ones.

Under the draft decree, the ministry has proposed two options to replace the current regulation.

In the first option, the regulation of five per cent pay gap at every wage rate would be discarded. Enterprises and their trade unions would discuss to determine payments for labourers based on their performances and job titles. The pay gap between wage rates must encourage labourers to improve their professional and technical skills, accumulate experience and develop their talents.

This option would increase the autonomy for enterprises but labourers’ benefits would be at risk.

In the second option, the pay gap would be defined and reduced from 5 per cent to 3 per cent. Based on it, the State would be able to create the lowest rate to ensure the benefits of labourers. However, enterprises would be restricted in building their salary scales and payroll.

The ministry said that under the current labour market conditions and the capacity of trade unions, there should be a road map to implement the options. It also recommended the second option.

The draft decree has received opinions from experts and enterprises. Bui Sy Loi, deputy chairman of the National Assembly’s Social Affairs Committee, supported the draft decree, saying to Nong thon Ngay nay (Countryside Today) newspaper that salaries had been considered barriers that hindered the development of each labourer and enterprise.

Those with good performance were paid the same as others because of salary calculation according to seniority.

Nguyen Xuan Duong, Chairman of Hung Yen Province’s Business Association and chairman of Hung Yen Garment Corporation said that regulations on reducing the pay gap below 5 per cent or even eliminating it would create conditions for enterprises to self-regulate the design of salary scales. This meant that enterprises would use wage funds to increase wages for hard-working labourers with high productivity instead of increasing the wages for all labourers.

Nguyen Thi Lan Huong, employment specialist, had different point of view. She said there were positions that should be compensated according to seniority, such as policy makers, as junior labourers have little experience.

Vu Quang Tho, head of the Workers’ Trade Unions, said that the salary of workers was too low. Each time the pay rises, their salary could increase only a few tens of thousands of dong—not even enough for employees to buy a pack of candy.

With the new pay gap of three per cent, labourers’ lives would be very hard, he said.

Pham Minh Huan, former deputy minister of Labour, Invalids and Social Affairs, said that in fact, many companies were facing financial burdens under the current regulation.

Basic salaries have been increasing, so the payment following seniority would be higher year by year while the work productivity will not improve much.  

Huan said the draft decree did not aim at removing the salary calculation based on seniority.

In discussing the option proposed by the ministry, he said that the second option would be a good choice because it would improve negotiation capacity between labourers and employers, which is currently low. 

Source: VNS

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