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Wage policies must conform to the realities of life

Update: August, 24/2016 - 09:00
Bùi Sỹ Lợi.
Viet Nam News

Bùi Sỹ Lợi, Vice Chairman of the National Assembly Committee on Social Affairs spoke to Thời báo Kinh tế Việt Nam (Việt Nam Economic Times) about changes to the 2012 Labour Code.

What’s the role of the tripartite consultation process in the development of the law on pay rise in the 2012 Labour Code?

Under the 2012 Labour Code, the tripartite mechanism in the wage policy, particularly the minimum wage through activities of the National Wage Council, has contributed to a big change in setting the regional minimum wage which is based on the market.

In the past, the regional minimum wage was decided by the government, but now it is decided by the Việt Nam National Wage Council through a tripartite consultation process of representatives from the Ministry of Labor, Invalids and Social Affairs; the Việt Nam Confederation of Trade Union and the Việt Nam Chamber of Commerce.

After reaching consensus on the pay rise for wage earners in the four different regions of the country, the Council will then submit to the government for approval.

What criteria were used to define the minimum wage for each region?

Three factors were used: worker’s living cost, national socio-economic growth and the enterprise’s production and labour supply and demand.

As the consumption price index (CPI) increases, the worker’s minimum wage should be increased to cover living costs and so they can have peace of mind to focus on their performance. In addition, the increase in the minimum wage is an occasion for the employer and the employees to decide whether to extend their labour contracts and agree on the new payment or not.

Though the minimum wage is adjusted annually, it still may not cover the worker’s minimum requirements. How do you respond to that?

According to the Labour Code, the minimum wage includes the minimum wage for each region and minimum wage according to the type of job. The region’s minimum wage is decided by the government based on the recommendation of the National Wage Council while the minimum wage per job is decided by collective bargaining in that sector. But that minimum wage must not be lower than that of the region’s minimum wage.

Lastly, the minimum wage must meet the living requirements of the worker and their family.

Under the law, every year the government has to adjust minimum wages for all four regions to meet basic living costs in each region.

However, I have to concede that the minimum wage in Việt Nam has not met the minimum living requirements of workers and their families.

In my understanding, in other countries, a minimum wage is the lowest remuneration that employers may legally pay to workers and it is calculated according to the working hours of an employee. I support that way of calculating the minimum wage as it will promote labour productivity. Raised minimum wages means more purchasing power, economic growth and job creation.

During the recent tripartite meeting to adjust the minimum wage, all participants tried to embed the idea of calculating the minimum wage according to working hours.

It is expected that at the second meeting of the incumbent National Assembly later this year, deputies will discuss amendments to the 2012 Labour Law though it has only been in force for three years. Why?

The 2012 Labour Law came into force on May 1 2013. And since then it has settled some disputed issues, particularly in labour standards and labour relations. However, in the last three years, many serious disputes between employers and workers have occurred due to conflicts of interest.

Our objective is to develop harmonised, stable and progressive labour relations between employers and employees. We hope the revision of the 2012 Labour Law will be able to fix problems from the past three years, particularly the issues of wages, overtime, labour disputes and strikes.

In the revised law, we’ll try to create a level playing field between wage scales applied in State owned enterprises and private enterprises. Each worker will have to pay their social insurance or other social duties in accordance to their salary. At present, each worker has to pay up to 35 percent of their monthly wage to the Việt Nam Social Security group. This is too much for a non-state worker in Việt Nam._VNS

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