The Vietnam General Confederation of Labor (VGLC) has submitted plans to increase the minimum wage by 16-17 percent in 2016 to the National Salary Council.
If the plan is approved, each minimum wage level for all four of the country’s wage zones will increase from 350,000 VND to 550,000 VND (16-25 USD).
“To put forth the increase proposal, VGLC performed studies and took into account economic forecasts, like a five percent increase in the Consumer Price Index, 6.5 percent economic growth and 3-3.5 percent rise in social labour productivity,” said VGLC Vice Chairman Mai Duc Chinh.
The proposed monthly minimum wages are 3.65 million VND (168 USD) for Zone 1, a 550,000 VND (25 USD) hike; 3.2 million VND (145 USD) for Zone 2; 2.8 million VND (127 USD) for Zone 3; and 2.5 million VND (113 USD) for Zone 4.
Zone 1 covers urban Hanoi and HCM City; Zone 2 covers rural Hanoi and HCM City along with urban Can Tho, Da Nang and Hai Phong cities; Zone 3 applies to provincial cities and the districts of Bac Ninh province, Bac Giang, Hai Duong, and Vinh Phuc provinces; and Zone 4 takes care of the remaining localities. The salary hike is expected to meet only 86 to 88 percent of minimum acceptable living conditions.
The 2014 Law on Social Insurance stipulates that salaries be based on whether employees include social insurance premium in pay, give allowances or provide other supplements. Therefore, in deciding the new minimum wage, VGLC took into consideration these other factors that might have significant impacts on enterprises’ expenditures.
Nevertheless, VGLC stated that the hike must be sufficient to both cover the slippage in product prices (about 5 percent per year) and match the annual 3-3.5 percent increase of labour productivity in order to improve labourers’ livelihoods.
“Increased productivity is closely associated with enterprises’ competitiveness, therefore, productivity elevation should go along with raised minimum wage,” said Vice Chairman of the National Assembly’s Social Affairs Committee Bui Si Loi.
“In other words, minimum wage increases must satisfy labourers’ basic living standards whilst allowing enterprises to compete in a period of integration, and to expand production and create more jobs,” Loi added.
Nguyen Thi Thanh, a worker at the Bac Thang Long Industrial Park in Dong Anh district, Hanoi, however, felt the wage increases still fail to provide for her basic needs.
A recent survey by VGLC showed that the pay labourers receive this year rose by 14.75 percent due to a minimum wage hike. The minimum wage, however, does not meet minimum living standards.