Vietnam to up minimum wage by 5.3 pct in 2019

By Doan Loan   December 14, 2018 | 12:53 am PT
Vietnam to up minimum wage by 5.3 pct in 2019
A employee works at a mechanical factory in Hanoi, Vietnam. Photo by Reuters/Kham
Vietnam will raise the minimum monthly wage by VND160,000-200,000 ($6.86-8.58) depending on the region from January 1, 2019.

Overall, the average increase across all regions will be 5.3 percent.

Starting January 1, the minimum wage will increase to VND4.18 million ($179.25) in region one, VND3.71 million ($159.09) in region 2, VND3.25 million ($139.38) in region 3, and VND2.92 million ($125.23) in region 4, according to a decree recently issued.

The four different minimum wage regions are supposed to reflect the cost of living in each area. Region 1, including Hanoi and Ho Chi Minh City, has the highest minimum wage, while region 4, rural areas, has the lowest.

Businesses use the minimum wage to calculate salaries for their workers by multiplying the base level by a coefficient assigned to each worker based on their skills and experience.

Some representatives of businesses have said that the minimum wage increase will affect business results of companies, especially small and medium ones.

According to a survey released by employment website late last year, salaries in Vietnam are rising faster than in any other Southeast Asian country. The average annual growth rate of Vietnam's payroll stands at 20-24 percent, compared to 14-20 percent in Thailand, the Philippines, Indonesia, Myanmar and Singapore.

However, despite the rapid growth, wages in Vietnam are still low. The Vietnam General Confederation of Labor (VGCL), which represents the laborers, had earlier demanded an 8 percent increase in minimum wage, or by VND220,000-330,000 ($9.4-14.6) per month, depending on the area.

It said that even this increase would only meet 95 percent of laborers’ living costs.

VGCL last June published a study on minimum wage and cost of living after surveying over 3,000 laborers in 150 different businesses in the country. 26.5 percent said they were "barely getting by," while 12.5 percent said their incomes were not enough to support their families, and they have to work overtime or extra jobs to make ends meet.

Laborers need to work an extra 28 hours a month on average just to make ends meet, the study found.

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