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Minimum wage to rise next year

Update: July, 16/2015 - 09:27

Vu Tien Loc, chairman of the Viet Nam Chamber of Commerce and Industry, spoke to Thoi Bao Kinh Te (Vietnam Economic Times) about plans to increase the minimum wage in 2016.

What do you think about minimum wage levels?

The adjustment of minimum wage is very important to both employers and employees, and plays an important role in the country's current economic growth.

Adjusting the minimum wage should be done if it can ensure two factors are met: raising incomes and improving living conditions for workers, as well as maintaining companies' competitiveness and sustainable development of the economy.

Strong wage increases dampen corporate competitiveness and economic growth; eventually labourers are the ones who take the hit. Small salary hikes, however, make life tough for employees, in turn affecting productivity and economic growth.

Annual salary adjustment is a difficult matter between businesses and workers, trying to find a level suitable for both.

As a representative of employers, what increase will VCCI recommend at the National Salary Council meeting later this month?

In 2015, the economy is thriving but productivity has not increased. Enterprises still face many difficulties. So I expect the increase will be slightly over 10 per cent next year.

Additionally, the government has already approved a plan to increase the minimum wage by 15 per cent for this year.

Do you think labourers' minimum wage is still too low to sustain decent living conditions for workers?

The minimum wage is still quite low and does not satisfy minimum living conditions. I think next time the adjustment of minimum wage should be based on three factors.

First, the increase needs to offset currency depreciation. The Government has managed to keep inflation at 5 per cent.

Secondly, make sure that the salary hike is matches current productivity. Productivity increases about 3 per cent per year on average.

Thirdly, we should be concerned about supplementing salaries to shorten the gap between the current salary levels and minimum acceptable living conditions for workers.

The increase of minimum wage by 10 per cent will satisfy the three factors above.

In my opinion, if the wage hike outpaces productivity, it will affect the operations of businesses and eventually drag down economic growth.

The problem seems to be that low productivity constrains the minimum wage. How can the tension be resolved?

Viet Nam is one of a few countries in which labourers enjoy salaries higher than the productivity they generate, according to a report by the International Labour Organisation.

Thailand, Malaysia and Indonesia have national salaries lower than productivity. So, we should carefully consider how much a salary rise could affect companies' competitiveness, encourage and promote domestic and foreign investment, and create more jobs. It would be make sense to improve productivity so that a sustainable program of salary hikes can as continue. — VNS

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