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VietNamNews

Wages may rise up to 35%

Update: August, 21/2012 - 09:52

 

Customers at a market in Thanh Hoa Province. At present, many people find it difficult to afford all but the cheapest dishes because of skyrocketing inflation. Wage increases of up to 35 per cent are proposed by the Ministry of Labour, Invalids and Social Affairs. — VNA/VNS Photo Doan Tung
HA NOI — The Ministry of Labour, Invalids and Social Affairs has proposed raising the monthly minimum wage by up to 35 per cent - the highest rise ever – to help employees tackle skyrocketing living costs.

In a draft decree, it introduces two options on raising the minimum wage from the current VND1.4 - 2 million (US$67 - 96) to VND1.9 - 2.7 million ($91-30). The second option would be to raise wages to VND1.8 - 2.5 million ($86 - 120).

Deputy Director of the ministry's Labour-Salary Department Hoang Minh Hao told Viet Nam News yesterday that the increases were needed because current wages were insufficient to meet basic living standards.

Although the Consumer Price Index so far this year was down on previous years, the rises were needed to make up for earlier price increases – plus anticipated rises next year, Hao said.

He also said that the monthly minimum wage would be adjusted from time to time if inflation rose more than expected.

The country now has different wage rates covering four regional zones, ranked according to the socio-economic development level of each zone.

Zone One covers urban Ha Noi and HCM City. Zone Two covers rural Ha Noi and HCM City plus urban Can Tho, Da Nang, and Hai Phong. Zone Three covers provincial cities and the districts of Bac Ninh, Bac Giang, Hai Duong, and Vinh Phuc. Zone Four covers the remaining localities.

The monthly minimum wage that companies would have to pay in Zone One, would be VND2.7 million ($130) a month.

In Zone Two it would be VND2.4 million ($115) a month; in Zone Three, VND2.13 million ($102); and in Zone Four, VND1.93 million ($92). (See Table below).

All these regional wages are the minimums only. Employers will be encouraged to pay employees more than this wherever possible.

However, allowances and social benefits will be calculated based on the minimum wage, in accordance with the existing law.

The draft decree also proposes paying skilled employees at least seven per cent more than the monthly minimum wage.

The Government will announce any changes in October, said the Deputy Minister of Labour, Invalids and Social Affairs, Pham Minh Huan.

If approved, the decree will take effect from the beginning of next year for every company, business, co-operative, farm, household, individual and organisation that hires people.

However, Huan acknowledged that any increases might create difficulties for domestic and foreign-direct-investment companies because of the extra payments involved.

But Le Thanh Ha, deputy head of the Viet Nam General Confederation of Labour's Institute of Workers and Trade Unions said that the proposed minimum wage met only 46 per cent of employees' cost of living in Zone One and 70 per cent in Zone four.

Calculations by the institute in May showed that to achieve minimum living standards, the minimum wage should be VND4 million ($192) in Zone One (currently VND2 million) and VND3 million ($144) in Zone Four (currently VND1.4 million), Ha said.

However, he added that it was imperative that a road map be set up to do this.

The Department of Salaries and Wages will meet with companies in August before making its final decision.

Hoang Minh Chau, a director of Nam Duoc Joint Stock Company, agreed that it was necessary to raise the monthly minimum wage, adding that his company had been paying workers more than the proposed minimum for a long time.

The labour ministry last wage rise was in October last year, when wages were lifted from VND730,000 to 980,000 ($35-47) to VND830,000-1.35 million ($40-65) for domestic companies – and from VND1-1.34 million ($48-64) to VND1.1-1.55 million ($53-75) for foreign-direct-investment companies. — VNS

 

Zone Current Option 1 Option 2
One VND2 million VND2.7 million VND2.5 million
Two VND1.78 million VND2.4 million VND2.25 million
Three VND1.55 million VND2.13 million VND1.95 million
Four VND1.4 million VND1.93 million VND1.8 million

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