Major change on salary and social insurance policies

Recently, the Central Committee of the Communist Party of Vietnam promulgated Resolution No. 27-NQ/TW dated 21 May 2018 on reforming the salary policy for cadres, civil servants, armed forces and employees in the enterprises ("Resolution 27") and Resolution No. 28-NQ/TW dated 23 May 2018 on reforming the social insurance policy ("Resolution 28"). The followings are major changes in the salary and social insurance policies to which the enterprises and employees should pay attention.

Supplementing the provisions on hourly region-based minimum wage

Currently, the Government regulates the monthly region-based minimum wage only. However, it is inappropriate to apply the monthly region-based minimum wage for the employees working for the enterprises who are paid hourly wage. In order to ensure the interests of seasonal or part-time employees, Resolution 27 identifies one of the reforms in terms of salary in the enterprise sector to be supplementing provisions on the hourly region-based minimum wage to increase the coverage of minimum wage and to respond to the flexibility of the labor market.

Expanding the subjects participating in compulsory social insurance

In addition to the subjects participating in the compulsory social insurance in accordance with the 2014 Law on Social Insurance, pursuant to Resolution 28, the compulsory social insurance will be expanded to include the following subjects: (i) Owners of business households; (ii) Managers of enterprises, managers of cooperatives without salary; (iii) Employees working in the flexible regime.

Amending the provision on the incomes on which social insurance premiums are based

In order to overcome the situation of absconding and insufficient contribution of social insurance premiums, the State will consider revising the provisions on the social insurance premium rate of the enterprise sector to be at least equal to 70% of the total salary and other wages of the employees. In addition, the rate of contribution to social insurance fund will be studied to be adjusted in harmony with the rights and interests of employers and employees.

Raising the retirement age according to the plan

Under Resolution 28, as from 2021, the State will adjust the retirement age to increase the retirement age in general. With respect to special occupations, the employees are entitled to retire 5 years earlier or later than the general retirement age. In addition, the pension eligibility conditions are amended to reduce the number of minimum years of social insurance premium contribution for pension benefits from 20 years to 15 years, towards 10 years with the benefit rate properly calculated in order to favour the elder employees who have few years to contribute social insurance to access to and enjoy social insurance benefits.