WAGE SPIKE MAY BE LOWER THAN 12.4%

Huan was quoted by the Vietnam News Agency as saying that the council will weigh a number of regional minimum wage increase plans and look into businesses’ reports on the impact of the wage raise and insurance payments on their operations before submitting a final salary rise proposal.

This year, the technical division of the council will prepare analyses for the minimum wage rise plans suggested by representatives of different agencies and discussed by members of the council. The members are officials from the Ministry of Labor, Invalids and Social Affairs, the Vietnam General Confederation of Labor and the Vietnam Chamber of Commerce and Industry (VCCI).

“In previous years, the parties concerned put up their minimum wage increase plans for discussion (before a final wage rise plan was decided by the council) but this year the technical division will analyze reasonable factors of the proposed plans. Preparations should be made more carefully this year,” Huan said.

Huan expected this year administrators and scientists would help the council select the best wage hike plan for 2017.

He acknowledged the minimum salary raise is a big challenge for enterprises amid mounting competition. The performance of many domestic firms is lower than that of their peers in other regional markets, so they will not have money to invest in new technology and equipment to improve productivity if they have to spend heavily on their employees.

Therefore, Huan projected the average minimum wage rise for next year would be lower than 12.4% applied for this year as approved by the Government in Decree 122/2015/ND-CP on regional minimum wage increases.

The decree was issued in November last year, nearly three months after the council made a wage hike proposal following heated debates between the confederation and VCCI.

On January 1 this year, the regional minimum wage rose by VND400,000 to VND3.5 million a month for region one, VND350,000 to VND3.1 million a month for region two, VND300,000 to VND2.7 million a month for region three, and VND250,000 to VND2.4 million a month for region four.

Region one comprises Hanoi and HCMC (except for rural districts); Bien Hoa City and Nhon Trach, Long Thanh, Vinh Cuu and Trang Bom districts in Dong Nai Province; Thu Dau Mot City, Thuan An, Di An, Ben Cat and Tan Uyen townships and Bau Bang and Bac Tan Uyen districts in Binh Duong Province; Vung Tau City; and Thuy Nguyen, An Duong, An Lao and Vinh Bao districts in Haiphong City.

Source: Business Times