On 11 November 2022, the National Assembly approved a resolution to increase the base salary from 1 July 2023. This would see the base salary of government employees increase from VND 1,490,000 (US$63.25) to VND 1,800,000 (US$76.41) per month. This salary represents a 20.8% increase over the current base salary.
This was codified in Decree No. 24/2023/ND-CP dated 14 May 2023.
What Is the Base Salary?
Base salary, sometimes called the statutory salary, is a monthly rate on which public sector wages are based. Essentially, the law stipulates a salary coefficient for various roles in the public service by which the base salary is multiplied to determine a government worker’s monthly wage.
How Does This Impact Foreign Firms?
Whereas the latest changes to the base salary only impact the wages of government employees, maximum social and health insurance rates for workers in private firms are in some instances calculated based on the base salary.
Per the Social Insurance Law 2014, social and health insurance payments in both the public and private sectors are calculated on a worker’s salary, however, this is capped at a maximum of 20 times the base salary. This will therefore increase under the changes to the base salary.
Foreign firms should ensure that their social and health insurance contributions meet these new caps as indicated in Table 1.
No Changes to Unemployment Insurance
Note that there will be no changes made to unemployment insurance. This will still be calculated at the minimum regional wage multiplied by 20 as seen in Table 2.
What Is Social Insurance?
Social insurance covers employee benefits including sick leave, maternity leave, allowances for work-related accidents and occupational diseases, pension allowance, and mortality allowance. Health insurance entitles employees to a medical examination and inpatient and outpatient treatments at authorized medical establishments.