Monday, December 5 2016

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Policy to affect workers' salaries

Update: February, 23/2016 - 09:04

Pham Minh Huan, deputy minister of Labour, Invalids and Social Affairs and chairman of the National Wage Council, speaks with Vietnam Plus about workers' salaries this year.

The year 2016 will witness a lot of significant changes in social insurance policies, including an increase in the payment of enterprises for their workers' social insurance. In your opinion, will the change in social insurance policies affect workers' salaries?

This year is the first year the Revised Law on Social Insurance has been implemented. There was a change in the payments for social insurance premiums under the new law. Previously, the Social Insurance Law stated that the employer paid the social insurance sum for his or her employee based on their minimum wage and according to the region where they work. Under the new law, the insurance money includes base wages and allowances in 2016 and 2017. And as of 2018, the insurance money paid by the employee will be subjected to changes if any amendments are made to the new labour contract signed between the employee and the employer.

Currently, the gap between income – including salary, allowance and additional incomes – and social insurance payments is between 30 and 60 per cent. Under the new regulation, the Ministry of Labour, Invalids and Social Affairs calculate the total social insurance contributions of enterprises in accordance with their models of production. It is expected that the spending for social insurance will increase by 10-12 per cent.

The increase in social insurance contributions will also affect the cost of wages for enterprises. Given the fact that there will be an adjustment in regional minimum wages this year, according to a roadmap, the rising cost of social insurance will affect the increase in minimum wage.

The year 2015 witnessed a fierce negotiation over a minimum wage rise. Has the National Wage Council set up a plan for the negotiations?

There are a lot of changes in social insurance schemes this year.

In fact, the higher salaries are adjusted to meet the minimum daily needs, the more they affect the cost for the businesses – especially those who use a lot of labour.

The negotiations on reaching a consensus on a minimum wage increase were quite tense last year, so they should be carried out sooner this year. The National Wage Council will meet at the beginning of the year to set out plans. In my opinion, it is necessary for the technical department of the representatives of three parties [The Viet Nam General Confederation of Labour, which represent employees; and the Vietnam Chamber of Commerce and Industry, which represents employers and National Wage Councils] to agree on calculation methods on minimum wage adjustment.

Currently, the parties have different points of views on how to calculate the minimum living standards as the basis for calculating the reasonable wage increase. Experiences from other countries show that it is very difficult to reach consensus when it comes to calculation method. In general, the differences in calculation methods should be narrowed down to a minimum.

Aside from salaries, bonuses are also an issue that concerns workers. How is the issue discussed in the Labour Code?

According to Article 103 of the Labour Code, the bonus is the amount of money the employers give employees based on annual production results and performance of employees.

Ending the business cycle, there is usually a bonus that falls on the New Year or Lunar New Year, commonly known as a Tet bonus. But in reality, the issue was not regulated in the Labour Code.

The bonuses will be based on the consensus between employers and employees through labour contracts or collective agreements. The bonus regulation is decided by employers and publicised after consultation with their representatives.

In my opinion, enterprises must publicise information on production results, and most importantly, trade unions at the local level should represent employees. When the enterprises have good production results but the employers fail to provide enough information, trade unions have the responsibility to negotiate and talk with the employers to develop rules on bonuses.

2016 marks great changes in the country's integration process. Viet Nam joined the ASEAN Economic Community (AEC) and Trans-Pacific Partnership agreement. Will the integration affect wages?

Integration will create opportunities for more jobs and chances to increase incomes. However, for those jobs with good incomes, workers will also face competition from the free movement of labour in the integration process.

The biggest challenge will be how we prepare workers for the upcoming integration process. If we do not prepare well, it will be very difficult for Vietnamese workers to compete with workers from other countries for positions with high income in certain fields. And investment might shift to areas where they have better human resources. — VNS

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