More businesses will die if they’re forced to raise workers’ wages

VietNamNet Bridge – Businesses have voiced their concern over the implementation of the new wage policy. Some of them said they would cut down the labor force to cut down expenses.

Vietnam, minimum wage, MOLISA, input costs, capital, difficulties

Mr. Nguyen Huu Su from the Hanoi Industry and Trade Enterprises’ Association

The Vietnamese Labor Code taken effects since May 1 stipulates that the minimum wage policy must ensure the income high enough to cover the basic needs of workers and their families.

At present, the minimum wages just can cover 60 percent of the workers’ basic needs. This means that businesses would have to pay higher for the wage funds.

The labor code has made businesses worried sick. The businesses have got exhausted in the struggle to survive the current difficulties, would bear a heavier burden with the new wage policy. This could be the “final straw” which leads the pale businesses to death.

Nguyen Minh Chi, a consultancy expert from the Vietnam Chamber of Commerce and Industry (VCCI), said she has found from a recent VCCI’s survey that businesses are considering cutting down the labor force, if they are forced to pay higher to workers.

The organization, therefore, has suggested that it would be better not to raise the minimum wage too sharply, believing that the ceiling 15 percent increase would be more reasonable.

Nguyen Huu Su from the Hanoi Industry and Trade Enterprises’ Association also said that it’d be better to ask businesses increase the wages for their workers later, when the national economy recovers, not at this difficult moment.

“The question businessmen always ask each other now at the meetings is whether they are “alive” or “dead” already,” Su said.

“I know a lot of businesses are at the point of death. And I am sure they would die if they are forced to adjust the salary policy,” he added.

Vu Thi Mai Thu, Deputy Chair of the Hanoi Female Entrepreneurs’ Association, compared businesses with the people who have to climb a slope with too heavy luggage on their shoulders.

“The exhausted people would die if they have to bear any other things,” Thu said.

According to her, many businesses still have not had any plan for the new wage policy, simply because they are too busy dealing with their financial problems. Therefore, Thu has suggested delaying the process of increasing the minimum wages.

A representative from the Vietnam Leather and Footwear Association also said footwear makers are now worried stiff, because the wage increase would lead to the increase of other input costs, including the ones on electricity and water, workshop premises rents.

“This would make businesses suffocated,” he said, warning that if businesses go bankrupted, workers would suffer more than now when they receive lower wages.

Minister of Labor, War Invalids and Social Affairs Pham Thi Hai Chuyen, at the TV program “Dan hoi, bo truong tra loi” (people ask, ministers answer) some days ago also said that if the minimum wage is adjusted right now, many businesses would go bankrupt. If so, workers would become unemployed. Therefore, Chuyen said, any decision on the minimum wage adjustment will only be made after a thorough consideration.

The defining of the minimum wage would be undertaken by the National Wage Council which is expected to become operational in July. The agency would draw up the wage increase roadmap which can both ensure the enforcement of the law and the health of businesses. The minimum wage increase plan would be then submitted to the government.


Vietnam, minimum wage, MOLISA, input costs, capital, difficulties