State-owned groups trim staff salaries
  • | Tien Phong, dtinews | July 16, 2012 08:23 PM

Many state-owned corporations and groups have cut their staff salaries by 5-30% to meet their commitments to the Ministry of Finance and save operational costs this year.

Representatives from Electricity of Vietnam (EVN) and the Vietnam National Coal and Mineral Industries Group (Vinacomin) reported they had been slashing salaries over the past few months.


Many state-owned corporations and groups have cut their staff salaries by 5-30% 

Staff at a number of EVN affiliates have had their salaries cut by over 10%, and those at Northern Power Corporation have had to suffer a 30% wage cut.

An official from the Hanoi Power Corporation said their staff’s salaries were safe for the time being, but an allowance for some positions had been adjusted.

The situation at EVN has partially been caused by affiliate EVN Telecom, that has failed to attract subscribers after starting operations more than seven years ago. EVN Telecom is now in debt to many of its partners, including Viettel and the Vietnam Post and Telecommunications Group (VNPT).

“My salary was over VND8 million (USD380.9) per month, but now it has been cut to less than VND6 million (USD285.7). My wife and I have a combined salary of only VND10 million (USD476), so we’re struggling with day to day expenses,” said an EVN staff member.

An EVN official said that the group targets to save VND1.8 trillion (USD85.7 million) in its business and production costs this year, including VND160 billion (USD7.6 million) in salary cuts. The firm targets to save 1% of electricity used for people’s daily activities, equal to VND1.3 trillion (USD61.9 million). He, however, declined to comment on the pay cuts.

At the Vietnam Oil and Gas Group (PetroVietnam) where the staff salaries are much higher than many other firms, cuts have also been made over the past few months.

PetroVietnam Chairman Phung Dinh Thuc confirmed the salary reduction of 5-10% to save costs.  However, to retain senior staff, PetroVietnam are still rewarding those it deems to be deserving.

Leaders should cut their own salay

Economist Pham Chi Lan said it is wrong for the companies to cut staff salaries to save costs. Meanwhile, a Government instruction also clearly stipulates that they are not allowed to do so.

“In Vietnam, managers always receive the highest bonuses, but when firms face problems, their salaries aren’t cut,” she noted.

Saving costs is mainly aimed at improving management systems to mitigate waste. The wage cut seems to be widespread, while companies ignore other factors that can also be attributed to high operational costs.

She emphasised that corporations and groups needed to calculate what percentage of their operational costs could be attributed to salaries and productivity.

She cited several experts as saying that for the same electricity output, Vietnam has to use more labourers than other countries, which shows the country’s human resource waste, one cause of EVN’s high operational costs.

Salary cuts are necessary, but they should start with the management.

“The Ministry of Finance has to tighten control of salary cuts to ensure efficiency,” Lan said.

According to the Ministry of Finance, early May this year, up to 83 groups and corporations and four banks had committed to save total VND13 trillion (USD619 million).


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