Vietnam gov't sanctions lowest minimum-wage bump in a decade

By VnExpress   September 8, 2016 | 12:20 pm GMT+7
Vietnam gov't sanctions lowest minimum-wage bump in a decade
Photo by Pham Thanh Truyen/VnExpress Photo Contest

The monthly minimum wages for 2017 will increase by 7.3 percent, the lowest level since 2007.

The Vietnamese government has agreed to raise the minimum wage for 2017 by an average of 7.3 percent, the lowest level since 2007, when the decree on minimum wage increases took effect.

The National Wage Council, which advises the government on compensation policies, decided last month to raise the monthly minimum wage for 2017 by 7.3 percent on-year to VND3.75 million ($168) per month. The government has signed off this proposal and will officially approve it this month, Deputy Prime Minister Vuong Dinh Hue said on Wednesday.

Currently, minimum wages range between VND2.4-VND3.5 million ($108-$157) a month, depending on location. The Vietnam General Confederation of Labor, the only recognized trade union for Vietnamese workers, maintains that this amount only covers only around 90 percent of a Vietnamese person's basic living costs.

For instance, workers in Region 1 will see their minimum wage increase by 7.1 percent to VND3.75 million per month. Region 1 includes the capital Hanoi, southern commercial hub Ho Chi Minh City, major port city Hai Phong, manufacturing clusters Dong Nai and Binh Duong and oil and gas hub Ba Ria Vung Tau.

The Vietnam General Confederation of Labor had proposed an increase of 10-11 percent to raise minimum wages by VND250,000 - VND400,000 (US$11-$18) per month. But the Vietnam Chamber of Commerce and Industry had even called for a raise of only 6.5 percent.

The National Wage Council comprises of the Labor Ministry, the confederation and the Vietnam Chamber of Commerce and Industry.

The minimum-wage bump was hashed out with the strongest consensus ever reached between representatives of workers and employers, said Pham Minh Huan, Deputy Minister of Labor, Invalids and Social Affairs.

Companies in Vietnam are concerned about rising labor costs which are fuelled by the higher minimum wage and social insurance contributions, Huan said. 

According to the International Labor Organization, the monthly minimum wage for unskilled garment workers, for example, ranged from $70 to $128 in outsourcing hubs like Vietnam, Cambodia and Bangladesh in 2014. Notably, due to the low minimum wage, around a half of employees in the garment industry have to work more than 48 hours per week to supplement their earnings with overtime payments.

Vietnam's annual average income was $2,111 last year, according to the World Bank.

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