Vietnam on verge of lowest minimum-wage bump in a decade

By VnExpress   August 2, 2016 | 03:55 pm GMT+7
Vietnam on verge of lowest minimum-wage bump in a decade
Laborers work at a garment factory in Bac Giang province, near Hanoi. Photo by Reuters/Kham

It looks like Vietnamese workers will have to tighten their belts with a tough year ahead.

In a move that apparently bows to growing pressure from the corporate sector, Vietnam is looking to raise its minimum monthly salary by 7.3 percent next year, the lowest level since 2007, when the decree on minimum wage increases took effect.

The upcoming raise would also be way below what the only recognized trade union for Vietnamese workers has asked for. At a policy dialogue earlier this month, the Vietnam General Confederation of Labor proposed an increase of 10-11 percent to raise minimum wages by VND250,000 - VND400,000 (US$11-$18) per month.

Currently, minimum wages range between VND2.4-VND3.5 million ($108-$157) a month, depending on location. The confederation maintains that this amount only covers only around 90 percent of a Vietnamese person's basic living costs.

At a meeting on Tuesday in the popular resort town of Tam Dao, 50 miles to the north of Hanoi, the National Wage Council, which advises the government on compensation policies, agreed that it would ask the government to raise the wage floor by 7.3 percent in 2017, meaning the minimum wage would increase by VND180,000-VND250,000, depending on locations.

Prime Minister Nguyen Xuan Phuc will have the final say on the proposal. The government approved a minimum wage hike of 12.4 percent in 2016.

The National Wage Council comprises of the Labor Ministry, the confederation and the Vietnam Chamber of Commerce and Industry (VCCI). The VCCI had even called for a raise of only 6.5 percent.

The corporate sector has been lobbying against any wage hikes next year. Both foreign and local companies often lament that minimum-wage increases hit their operations. They warned that 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 annual average income was $2,111 last year, 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.

Minimum wages rose steeply in many Southeast Asian nations in 2015, the Nikkei Asia Review reported last month, citing figures from the Japan External Trade Organization (JETRO).

Wages rose the most in countries where pay is the lowest, jumping 13.6 percent from the prior fiscal year in Cambodia, according to JETRO. Wages soared more than 10 percent in Vietnam, Indonesia and Myanmar.

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