Business
State-owned firms could have wage autonomy
  • | tienphong, dtinews.vn | May 08, 2018 08:08 PM
The Ministry of Finance has proposed salary reform that will allow state-owned firms to decide salaries so that boards of directors will be hired rather than appointed as currently.

   

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According to the proposal, the leaders will be paid from the company's post-tax profits. The reform will be submitted to the National Assembly at the 7th Plenum of the Communist Party of Vietnam’s Central Committee.

Pham Minh Huan, former Chairman of the National Wage Council, said such method had been implemented in many countries and discussed many times before. According to Huan, in other countries, board salaries are paid from the company's annual profits. Meanwhile, in Vietnam, the leaders are appointed and paid high monthly wages despite billions in losses.

Le Dang Doanh, former head of the Central Institute for Economic Management, also supported the proposal. To many appointed leaders, they are not concerned about funds at state firms and will claim collective responsibility.

Huan suggested making the leaders are more responsible for the company's productivity and profits to avoid cases when firms are in difficulty but the leaders still earn high salaries.

"The leaders should only be able to receive wages when they can protect the company's investment and meet their business targets. Their wages can be raised when the profits are higher than expected. If they fail to meet the targets, they can be fired and forced to compensate the company," Huan said.

Doanh agreed and said that if a company goes bankrupt, the leaders' assets will be seized. He said, "There are many people who are appointed to be the CEOs. But in reality, they do nothing at the company and may not even be able to read a financial report."

According to the regulations, the monthly basic wages for chairmen at 100% state-owned companies is VND36m (USD1,600) and VND35m for directors. Combining with bonuses when profit targets are met, the highest wage will be VND72m. The highest monthly wage at firms where the state is the majority shareholder is VND90m.

Statistics from the Ministry of Labour, Invalids and Social Affairs show that the average monthly wage of the managing board at 345 state-owned firms in 2013 was VND26m (USD1,100). In reality, some leaders were paid up to VND155m (USD6,800) a month when the companies were profitable. Unprofitable firms still paid VND45m a month to the managers.

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