VietNamNet Bridge – The wage mechanism applied to state owned enterprises (SOEs) has become no more reasonable in the context of the market economy.

The news that the director of the HCM City water drainage company earns VND2.6 billion a year, or 13 times higher than the pay to the Prime Minister, has stirred up the public.

People cannot understand why the manager of a state owned enterprise for public interest can pocket so much money in front of supervisors, accountants, auditors and the strict regulations set by the Ministry of Labor, War Invalids and Social Affairs on the pay mechanism to SOEs’ workers.

In principle, the income of SOEs’ workers is calculated as follows: minimum wage (x) coefficient (+) allowances.

Under the government’s decree No. 51, the coefficient could be between 6 and 9.1, which depends on the modes of operation of enterprises (company or state owned economic groups).

The highest minimum wage stipulated in the decree is VND36 million a month, which is paid to the chairs of the boards of directors of economic groups. If the companies’ profits keep increasing, they would receive an additional sum equal to 0.5 times of the basic wage. This means that the highest possible pay level to chairs of the boards of directors is VND54 million.

General corporations have to build up the wage, allowance and bonus mechanism to the owners before the implementation, while the owners can only approve the mechanism after the approval by the Ministry of Labor, War Invalids and Social Affairs MOLISA.

In fact, it is very difficult to understand the pay mechanism at SOEs. In 2001-2011 alone, six decrees and 12 circulars that guided the implementation of the decrees were promulgated. The decree No 205 issued in 2004 comprised of 104 pages, while the Circular No 27 comprised of 20 pages.

This shows that the State and SOEs themselves find it difficult to calculate the wages, bonuses and incomes for workers.

Analysts said despite the strict regulations and the existence of a series of legal documents, SOEs still have their ways to dodge the laws and legalize their unofficial incomes.

The former chief accountant of a 100 percent state owned enterprise said he was always asked to fabricate the figures to legalize the account books. A lot of receipt items did not take into account, because they were used to pay to the managers of the enterprise.

Under the Decree No. 51, the bonuses from profitable business would be divided to managers at the end of years, or when their terms finish. However, the said chief accountant said all the receipts are divided immediately.

He said the managers could receive bonuses right after the projects finished, though it was unclear if the projects could bring profits.

As for joint stock companies, the pay for the board of directors is determined by shareholders’ council. Meanwhile, at SOEs, chairs of the boards of directors can approve the payroll plan before submitting to MOLISA.

The chief accountant explained that in order to attract talents, SOEs need to offer the attractive pays to them, which, in most of cases, higher than the pay levels stipulated in the legal documents.

As a result, SOEs have to “fabricate the figures,” so as to both satisfy the talented workers and the State.

TBKTSG