Monday, October 24 2016


Raise wages to raise productivity

Update: November, 17/2015 - 10:28

Vu Quang Tho, director of the Institute of Workers and Trade Unions spoke to Ha Noi Moi (New Ha Noi) newspaper about the need to increase salaries for wage earners.

As a researcher on labour and wages, what are your comments on the actual living conditions of Vietnamese workers at present?

A recent survey conducted by the Institute for Workers and Trade Unions showed that the majority of the nearly ten million Vietnamese workers' were facing great difficulties in their daily lives, including accommodation, food, schooling for their children and health care as well as spiritual life. Most of them have to seek outside jobs to earn extra money to cover their families' expenses. As a result, their labour capacity has been severely eroded.

Vietnamese workers' current wage can cover about 70 per cent of their minimum living conditions. With the present wage system, the workers could barely exist. They don't have extra energy to work or to create.

What has happened in Viet Nam, I could say, is that many employers only think of how to earn more profit, but forget about their workers' rights and benefits.

Will you please further explain about the mechanism of setting the minimum wages for workers?

At a recent meeting of the National Wage Council, representatives from the Viet Nam General Confederation of Labour (VGCL) who on behalf of the workers pointed to the urgent need to increase the workers' wages. They asked the Wage Council to consider recommendations by the International Labours Organisation (ILO) office in Viet Nam on a pay raise for Vietnamese workers.

At that meeting, the VGCL asked the Wage Council to ask the Prime Minister to raise the workers' wage by 16.8 per cent. Their argument was based on three factors, namely the increase in the inflation rate; the increase in national GDP and that the minimum wage increase will not meet the workers' minimum requirements.

At that meeting, the National Wage Council agreed to increase the 2016 regional minimum wage by 12.4 per cent. However, following the meeting, a month later, the VGCL and the Viet Nam Trade Unions asked the government to raise the workers' minimum wage by 14.4 per cent instead of 12.4 per cent. How do you respond to the new proposal?

I agree that the decision to increase the regional minimum wage by 12.4 per cent by the recently concluded the National Wage Council was to maintain the current job positions, to provide conditions for enterprises to generate more revenue and create opportunities for next year's pay raise. I agree that the increase of 12.4 per cent in pay will only help the workers meet just about 80 per cent of their minimum requirements.

However, more recently, various commodity associations voiced their disagreements with the Wage Council's decision on the 12.4 per cent pay raise. They said the pay raise was too high, it should be at between 6 per cent to 7 per cent only. To respond to such demands by the commodity associations, the VGCL stood up to protect the workers by asking the National Wage Council to change the agreed pay raise for 2016 from 12.4 per cent to 14.4 per cent.

It should be recalled, at the beginning, the VGCL proposed a 16.8 per cent pay raise for the regional minimum wage. They argued that their proposal had already considered the difficulties facing the employers.

Many Vietnamese and foreign experts have blamed the Vietnamese workers' low salary to their low labour productivity. How do you respond to that argument?

It is calculated that, salary depends on labour productivity, commodity prices and GDP growth. In Viet Nam, workers' productivity has increased slowly – mainly within the sector, a switch in economic restructuring plus cheap resources and low labour costs. By now these factors have gradually reduced as the nation is in the process of deeper international integration.

However, when the minimum wage cannot cover their minimum living conditions, the workers don't have motivation to increase their labour productivity and have an attachment to their working place.

In reality, we often mention the factor of labour productivity when the workers can live on their wages. In reality, a worker's wage also depends on various factors, including technical expertise, work experience and others.

Many people have also complained about the delay in pay raises for government officials and public employees. Do you support their complaint?

The key objective of pay raise is to ensure the minimum living conditions for government officials and public employees. However, the pay raise money comes from the State budget, not from the employers as in the case of private or joint stock enterprises.

I'm sorry to say even labour productivity within government officials and public employees also has problems. Many people have complained about the low performance of our public employees. Low salary is one of the key factors leading to corruption in Viet Nam.

During a recent NA meeting, many deputies asked the NA to take action to cut down less effective or wasted spending to have money to pay for the public employees' pay raise. Do you agree?

The salary reform programme lays emphasis on the need to give the pay raise for public employees in 2016. In order to have money for the pay raise, all agencies have to practice thrift and cut down on public spending on some projects, including major construction sites, conferences and others. What's more important is to cut down the number of people receiving salaries from the state budget and give higher salaries for people having high performance in their work. — VNS

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