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High time to restructure State payroll
Monday,  May 14, 2018,22:44 (GMT+7)

High time to restructure State payroll

The 7th Party Plenum that wrapped up in Hanoi on May 12 has endorsed an important resolution on wage reform with an aim to make the State payroll more transparent. Key points in the new resolution include incorporating allowances and other financial benefits into formal wagesfor public servants, and gradually changing their income to approach the market level. In other words, employees in the public sector will see their wages increase.

However, a big question is readily looming: how to find financial resources to afford the pay rise.

Ensuring regular expenses from the State budget for the State machinery, overwhelmingly to pay wages, has for long years been a chronic headache and the key source of budget overspending. In the past ten years or so, regular expenses have always accounted for around two-thirds of the total budget spending, leaving little for investment. The situation is all the more worrisome as the country from now on has to earmark incremental sums to service public debts.

At issue is the ever-rising amount for regular expenses, as the State machinery remains bulky despite efforts and political commitment to trim the State workforce. Data from State agencies shows as many as 11 million people are living on the State budget, which is a colossal number given the total population of less than 100 million.

This huge number includes around 2.8 million people in the State machinery, plus some 4.7 million other people like the police and military forces and State-supported pensioners.

To make the burden heavier, numerous other social and political organizations, especially associations under the State umbrella, are clinging to the State budget as a cash cow. An estimate puts total expenses for such organizations at between 1% and 1.7% of gross domestic product.

In a report last Friday, the Ministry of Finance said that of the total budget spending at VND410 trillion in the first four months of this year, regular expenses made up VND301.5 trillion, rising 5.4% year-on-year and accounting for 73.5% of total budget spending. This burgeoning proportion gives ground for concern as it far exceeds last year’s regular expenses proportion at just 64% of the total budget spending.

Apparently, it is imperative to put a check on the rising proportion of regular expenses if the State budget is to be pulled back from sinking into the deep hole of uncontrollable deficit, and the only way to do so is to drastically streamline the State machinery, which is moving at a snail’s pace.

If the Government is to have more money for investment rather than to see it dwindling, if the State budget is to achieve balance rather than to continue ticking to deficit, and if the Party’s resolution on wage reform is to be efficiently worked out, the State payroll must be restructured now, no matter how painful the process could be.

The Saigon Times Daily

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