Industrial relations

Historic resolution guides Viet Nam’s wage reform

Party Resolution 27-NQ/TW, one of the two important documents issued as the result of the Central Party meeting on 7-12 May 2018, takes into account ILO Viet Nam’s suggestions in reforming the country’s wage policies.

News | 31 May 2018
HANOI (ILO News) – A new Party resolution has been issued, demonstrating Viet Nam’s determination to reform its wages policies in the context of modernization of the economy and deeper international integration.

Party Resolution 27-NQ/TW dated 21 May 2018 recognizes that “proper pay is the investment for human resource development, creating motivation for higher labour productivity and efficiency of workers, thus making important contribution to social progress and equality, ensuring socio-political stability, and improving the quality of growth and promoting sustainable development”.

In the public sector, the important document identified complicated wage coefficient system and too many types of allowances, as key problems. It proposes a new public sector wage system, linked to positions and grades, while stating the lowest wage level should be equal to the average of regional minimum wages by 2021. It also suggests public sector pay should ensure a reasonable correlation with wages in labour market, which means gradual move towards a pay parity between public and private sectors.

The public sector component of the Resolution represents a major breakthrough not only in public sector wage system, but also in public sector governance,"

ILO Viet Nam Director,Chang-Hee Lee
“The public sector component of the Resolution represents a major breakthrough not only in public sector wage system, but also in public sector governance,” said ILO Viet Nam Director, Chang-Hee Lee. “Outdated and complicated wage system in public sector has been a major bottleneck for social and economic development of Viet Nam. The Resolution sets the public sector reform on the right track, which would lead to gradual but steady improvement of public sector performance.”

He noted that, while saying “devil is in the details”, “it would be important to develop detailed action plan for immediate, mid and long term reform agenda”.

Meanwhile, in the non-State sector, the resolution rightly recognizes the role of minimum wages as “the lowest floor [wages] to protect vulnerable workers”, while seeing minimum wages as “bases for wage negotiation and labour market regulation”. It emphasizes the roles of National Wage Council for periodic adjustments of minimum wages in full consideration of productivity and CPI.

While noting that roles of trade unions in collective bargaining is still limited in today’s Viet Nam and also recognizing that “the State does not directly intervene in the wage policies of businesses”, the Resolution emphasizes that “negotiation and agreements between employers, workers and their representatives” should become a basis for wage fixing at the enterprise level. In this respect, the Resolution highlights the need to “enhance the role and capacity of trade union organization, which is representative organization of workers, in labour relations in line with the socialist-oriented market economy and international integration”.

According to the ILO Viet Nam Director, the non-State component of the Resolution resonates strongly with the founding principles of the ILO, which emphasizes the role of social dialogue and, more specifically, roles of collective bargaining in fixing wages and working conditions in market economy.

“The Resolution shows Viet Nam is ready for the Labour Code revision in line with 1998 ILO Declaration on Fundamental Principles and Rights at Work, and also ready for the ratification of ILO Convention No 98 on the Right to Organize and Collective Bargaining Convention in the near future,” he said.

In this respect, he appreciated Minister of Labour, Invalids and Social Affairs, Dao Ngoc Dung’s confirmation of the ministry’s plan to submit the dossier for ratification of the ILO Convention 98 in 2019 when the ILO celebrates its centenary.

The Minister held a meeting with the ILO Viet Nam Director on 23 May where he praised the effective technical support of the ILO in the process of preparing two key resolutions.

On 23 May, Party Resolution 28-NQ/TW was also issued to guide the country’s social insurance policy reform. The ILO in Viet Nam would soon publish another article on this important document.

* Funding for the New Industrial Relations Framework project is provided by the United States Department of Labor under cooperative agreement number IL- 29690-16-75-K-11. This material does not necessarily reflect the views or policies of the United States Department of Labor, nor does mention of trade names, commercial products, or organizations imply endorsement by the United States Government. One hundred percentage of the total costs of the project or program is financed with Federal funds, for a total of 4 million dollars.

* This story is a product of the European Union-funded project on Promoting ILO fundamental conventions towards ratification of Conventions 87, 98, 105, and actions to eliminate discrimination and forced labour in Viet Nam. Its contents do not necessarily reflect the views of the European Union.