Vietnam’s labour ministry rejects proposal for raising minimum wage
- Charles Chau
It has also rejected a demand to implement the raise on July 7 annually instead of on January 1.
The Vietnam General Confederation of Labor had made both proposals during a meeting with the government late last year.
The Ministry of Labor, Invalids and Social Affairs said it is currently not the right time for a wage hike since the pandemic had severely impacted the economy last year and many businesses are still struggling.
“More than 101,700 businesses have either temporarily suspended operations or shut down and are waiting to complete dissolution procedures, almost 14% more than in 2019,” the ministry said in a statement.
The statement also said the unemployment rate was 2.48%, the highest in 10 years, while the average income of workers stayed at VND6.62 million (US$290) per month, marginally down from the previous year.
Vietnam’s existing monthly minimum wage has four tiers linked to geography: VND4.42 million (US$191.3) for region 1, VND3.92 million (US$170.0) for region 2, VND3.42 million (US$148.0) for region 3, and VND3.07 million (US$132.9) for region 4. The figures reflect the cost of living in each area, with Hanoi and Ho Chi Minh City in region 1, while rural areas in region 4.
Last year, the figures rose by an average of 5.5%. The ministry added that even if the rates are kept unchanged this year, workers “could manage a minimum standard of living”.
COVID-19 continues to rage around the world and it is not possible to say when it would end or predict the extent of its impact on Vietnam’s socio-economic development in 2021, it said. “Therefore, the minimum wage should not be increased for now to help businesses recover, and ensure workers keep their jobs.”
The National Wage Council, which advises the government on minimum wages, had earlier said the rates should be kept at existing levels this year.
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The minimum wage rates serve the role for businesses in the formal sector to negotiate salaries with employees. They are derived from multiplying the minimum rates with a coefficient determined by an employee’s qualification and experience.
As for moving the date for amending the minimum wage annually from January 1 to July 1, the ministry said in most countries it coincides with the start of the fiscal year. As Vietnam’s fiscal year starts on January 1, it is only logical to keep it unchanged, reported VnExpress.
