An increase of 20% in Minimum wages per year from 2017

In the next July, National Salary Council will hold an official meeting on the issue of increase in regional minimum wages in 2017, in which level and reasons of increase are still a controversial topic.

Experience of International Labour Organization (ILO) shows that minimum wage should be set at between 40 and 60% of average wage because if minimum wage is too high, it will actually become the main salary which is paid to the labourers. In fact,  minimum wage in Vietnam has been set at 70-80 % of average wage that is assessed to be higher than the average wage among the Southeast Asia’s  marketing.

As estimated, each dong of increase in minimum wage, enterprises’ labour cost will be doubled, which means the profit will decrease by an equivalent amount.

On the other hand,  according to Mr. Cam, it takes enterprises a lot of effort to recalculate and adjust the rates and the deductions for employees whenever the wages are increased. Therefore, instead of increasing minimum wages once  a year, the State should adjust the wages once in every 2 – 3 years.

From an economic and labour expert’s angle, Dr. Nguyen Le Minh points out that an increase in minimum wages will balance the benifits between employees and enterprises.

Deputy Minister of Labour - Invalids and Social Affairs, Pham Minh Huan says that the minimum wage increase in 2017 brings challenges in finding the harmonious method among employees and enterprises. The employees’ basic needs such as a higher standard of living with a higher income should be satified while this fact has been a tough issue of competition among enterprises.

According to experts, minimum wage increase is a big issue not only to Vietnam but also to all the Southeast Asian countries because of its effect on competition among countries. Expecially, wage increase demands an equivalent increase in labour’s productivity. Therefore, in addition to ensuring a minimum standard of living for employees, it is imperative that we should have policies to develop high-qualited human resources, improve the qualifications and skills for employees. This is a leverage which can lead to an increase in wage as well as income of employees.

According to the statistics, the increase rate of  the minimum wage in Vietnam has been relatively high. To be detailed, since 2005, the minimum wage has been increased from $ 350,000VND per month to 2.15 millionVND  per month in 2015 (for the region 4). Total general increase in the above period  is  6.14 times; equivalent to an average increase of about 20% per  year.

(cited source: http://cafef.vn/luong-toi-thieu-vung-2017-tranh-luan-toi-bao-gio-20160622100033773.chn)