Business News

An increase in the minimum wage moved a step closer yesterday after the National Wage Council agreed to increase basic salaries. The committee confirmed they will look at a rise of more than 5 per cent compared to last year.

The Vietnam Chamber of Commerce and Industry (VCCI), representing employers in the nation, has suggested keeping region-based minimum wages unchanged from next year as annual minimum wage hikes place a heavy burden on enterprises.

The minimum wage will be officially increased from January 1, 2018 by an extra VND180,000-230,000 ($8.07-10.13), depending on the region. The government has issued Decree No.141/2017/ND-CP, amending regional minimum wages for workers employed under a labour contract. Accordingly, the increase stands at an average of 6.5 per cent (See chart below).

The minimum wage increase, coupled with the increase for social insurance and union fees, is putting financial burdens on enterprises operating in labour-intensive sectors, such as the garment and textile sector.

The forthcoming spikes in the region-based minimum wages are expected to improve workers' incomes but production costs in labor-intensive industries will certainly pick up.

Increasing the regional minimum wage has raised concerns over a potential trade-off with social allowances that would block the new wages from increasing employees' real income.

The regional minimum wage will increase by 6.5% in 2018, representing the lowest rise, according to the National Wage Council. The Council convened the third meeting on August 7 in Ha Noi to make the final decision on the proposal on salary hike in 2018 before submitting it to the PM.

The Ministry of Information and Communication (MIC) estimates that Vietnam would need 600,000 workers in the IT industry by 2020, but training establishments can provide only 400,000.