Minimum wages likely to grow 10% next year

VietNamNet Bridge – The average minimum wage by region is projected to rise by just over 10% in 2016 thanks to projections of low inflation and lingering challenges for enterprises, according to the chairman of the Vietnam Chamber of Commerce and Industry (VCCI).

Vu Tien Loc told reporters about the projection of regional minimum wage rises on the sidelines of a dialogue on labor and wage policies in Hanoi last Friday. The event was organized by the Ministry of Labor, Invalids and Social Affairs and VCCI.

Loc said Vietnam’s economy has been back to high growth this year but labor productivity has not improved and many enterprises are still struggling with difficulties. So, employers want an average salary rise of just over 10% for 2016, the same as in 2015.

Deputy Minister of Labor, Invalids and Social Affairs Pham Manh Huan, chairman of the National Wage Council, said many participants at the dialogue agreed that the minimum wage by region should not spike strongly due to slow improvements in labor productivity and the low consumer price index.  

“Increases of minimum wages by region will help improve the living standards of workers but push up production costs. We should carefully calculate wage rises next year as social insurance premiums are up,” Huan said.

He added next year enterprises will have to pay additional fees for female employees and labor safety and hygiene. Employers must bear all these fees.  

Loc said regional minimum wage adjustments are an important yet sensitive issue for both the employer and the employee and will impact on the country’s economic growth.

The region-based minimum wage rises should ensure higher incomes for workers as well as the competitiveness of the corporate sector and the nation’s economic growth, Loc stressed.

Loc said strong wage increases would dampen corporate competitiveness and economic growth and that it is laborers who would take a hit. But low salary rises make life tough for employees, which will in turn affect productivity and economic growth.   

Loc said reasonable wage rises should be based on the fall of Vietnam dong against the U.S. dollar, labor productivity and incomes for the basic needs of laborers. Annual minimum wage adjustments are still a controversial issue.

Enterprises bemoaned that the minimum wage rise by two to three times higher the growth rates of gross domestic product and CPI in recent years have made it hard for their operations and affected their capability to fulfill obligations for social, health and unemployment insurance payments and labor union fees for their employees.

Deputy Minister Huan said the National Wage Council is working with experts, administrators and scientists over surveys on minimum living standards to decide minimum wages and other issues for both the employer and the employee.

The National Wage Council plans to convene a meeting at the end of this month to review regional minimum wage adjustment plans next year before submitting its proposal to the Government for consideration this October.

Members of the council are officials from the Ministry of Labor, Invalids and Social Affairs, VCCI and the Vietnam General Federation of Labor.    


VCCI, minimum living standards, minimum wage, consumer price index