Minimum wage should reflect bigger picture

Update: June, 06/2014 - 08:31
Workers produce shoes at the Pou Yuen Viet Nam Company in HCM City. Experts have said minimum wage adjustments should take into account regional discrepancies and costs to employers. — VNA/VNS Photo Thanh Vu

HA NOI (VNS) — The Viet Nam Chamber of Commerce and Industry (VCCI) has recommended that the regional minimum wages be increased by 10-12 per cent next year, lower than the 15.2 per cent adjustment this year.

The recommendation was made public at a workshop held yesterday to discuss employers' attitudes towards minimum wages for 2015.

The chamber also said the minimum wage should be carefully adjusted, taking into account the financial burden on employers during economic downturns.

Apart from the chamber, others at the function included the Viet Nam Co-operative Alliance, Viet Nam Association of Small and Medium-sized Enterprises, Viet Nam Garment and Textile Association.

Vi Thi Hong Minh, deputy director of the Employers' Bureau at VCCI, said the recommendation to raise wages by up to 12 per cent was based on Viet Nam's GDP growth, inflation and the average living standards of the people.

According to VCCI, the growth rate of regional minimum wages was equivalent to that of Consumer Price Index (CPI) in 2010-2011, but three times higher than CPI growth since 2012.

Regional minimum wages grew on average by 9.9 per cent in 2010 and leapt by 30.1 per cent in 2012. However, Minh said this was not reasonable and placed huge burdens on struggling companies.

The increase in minimum wages, however, was more carefully adjusted this year at 15.2 per cent on average.

Minh said some employers struggling to cope with low growth still had to find the money to pay workers' demands. She said this often meant cutting investment in material resources.

Increasing minimum wages by 10 per cent could lift running costs by more than 17 per cent due to increased allowances and other social benefits, said Minh.

She said many companies that wanted to expand could not afford to pay for extra wages at the increased rate.

She added that labour productivity was still too low to keep pace with the demand for salary increases. This was reflected in the fact that labour productivity grew by only about 3.3 per cent since 2013.

Phung Quang Huy, director of the Employers' Bureau of VCCI said minimum wage adjustments mostly affected the garment, footwear and fishery industries, in which companies usually hired a large number of workers, many with limited training and skills.

"The increase of minimum wages for 2015 should ensure both the actual salaries of workers and the production of enterprises," said Huy said.

The International Labour Organisation (ILO) agreed, saying that negotiations for minimum wages should look into the needs of workers and the ability of employers to pay.

Gyorgy Sziraczki, director of ILO Viet Nam, urged decision-makers to go beyond the economic factors and take into consideration the need for social-insurance payments and improving work safety and vocational training.

He urged the parties to look at the larger picture before adjusting minimum wages.

Regional minimum wages in Viet Nam are now deliberated on by the National Wage Council, which was established in 2013. They give an equal voice to the Government, employers'organisations and trade unions.

The Viet Nam Chamber of Commerce and Industry, Viet Nam Co-operative Alliance, Viet Nam Association of Small and Medium-sized Enterprises, Viet Nam Leather and Footwear Association, and Viet Nam Textile and Garment Association represent employer organisations at the National Wage Council.

Minimum wages for 2014 range from VND1.9 million (US$90) to VND2.7 million ($129) per month depending on regions. — VNS