Vietnam mulls lowest minimum-wage hike in 4 years

By VnExpress   July 14, 2016 | 12:55 pm GMT+7
Vietnam mulls lowest minimum-wage hike in 4 years
Laborers work at a garment factory in Bac Giang province, near Hanoi October 21, 2015. Photo by Reuters/Kham/File Photo.

Workers say it's not enough, but companies warn it's too much.

Vietnam is looking to raise its minimum monthly salary by 10-11 percent next year, the lowest level since 2013, a move that has still faced fierce opposition from the corporate sector.

Le Dinh Quang, a senior official at the Vietnam General Confederation of Labor (the only legal trade union for Vietnamese workers), told the press at a policy dialogue on Wednesday in Hanoi that his organization has proposed an increase of VND250,000 - VND400,000 (US$11-$18), depending on the location. The government approved a minimum wage hike of 12.4 percent in 2016.

Currently, minimum wages range between VND2.4-VND3.5 million ($108-$157) a month, depending on locations. But Quang said even that salary only covers only around 80 percent of a Vietnamese person's basic living costs, citing studies commissioned by his agency.

Even though he acknowledged that the salary hike would affect the operations of businesses, “we want to implement a roadmap of minimum-wage increase that can ensure the basic living standard for workers and their families,” Quang said.

The National Wage Council, which advises the government on wage policies, is set to finalize the proposed wage hike this month and submit it to the government for approval.

vietnam-mulls-lowest-minimum-wage-hike-in-4-years

Men work at a steel mill in Hai Duong Province. Photo by Reuters/Kham.

The proposal comes as the corporate sector is lobbying against any wage hikes next year. Both foreign and local companies often lament that minimum-wage increases will hit their operations. They warn any further wage hikes will have grave consequences on Vietnam’s competitiveness in the short-term, adding it needs to be considered “very carefully”.

Vietnam's per capita GDP remains just around $2,000, according to the World Bank. Experts say the minimum-wage hike is a step in the right direction, but even the annual adjustments are not sufficient enough for workers to make ends meet. 

A total of 245 wildcat strikes took place across Vietnam last year with disgruntled workers demanding better pay and working conditions and protesting against overtime.

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