Regional minimum wage to rise 12.4% next year

The regional minimum wage in 2016 will be raised by 12.4% as approved at the third meeting of the National Salary Council on September 3.

The increase level for Region 1 is VND400,000 (US$17.8) while the respective figures for Region 2, 3 and 4 are VND350,000 (US$15.6), VND300,000 (US$13.3), and VND250,000 (US$11.1). The expected minimum wages will be VND3.5 million (US$155.6), VND3.1 million (US$136.4), VND2.7 million (US$118.8), and VND2.4 million (US$105.6), respectively. 

Regionally-based monthly minimum wages vary in four different regions based on four separate benchmarks determined by living standards in each area. 

Region 1 covers urban Hanoi and Ho Chi Minh City; Region 2 covers rural Hanoi and Ho Chi Minh City along with urban Can Tho, Danang and Haiphong cities; Region 3 applies to provincial cities and the districts of Bac Ninh, Bac Giang, Hai Duong, and Vinh Phuc provinces; and Region 4 encompasses the remaining localities. 

Chairman of the Council Pham Minh Huan – who is also the Deputy Minister of Labour, Invalids and Social Affairs – said 92.4% of the meeting participants agreed on the 12.4% hike. 

The first two meetings of the council in August failed to reach consensus on the wage augmentation due to disagreements between the Vietnam General Confederation of Labour (VGCL), which represents employees, and the Vietnam Chamber of Commerce and Industry (VCCI) – the representative of employers. 

VGCL Vice President Mai Duc Chinh said the approved gap of VND50,000 (US$2.2) in the pay increase among the regions is the same as that in 2015 and would help workers share the expense burden with their employers. 

Companies are not expected to be affected much by the hike, as most in Hanoi, Ho Chi Minh City and Binh Duong province pay their employees VND5.5 million – 6 million (US$244.5 – 266.8) per month, 1.5 times higher than Region 1’s current minimum salary (VND3.1 million). 

Earlier, the confederation revised its proposed minimum wage rise down from 16.8% to 14.3%, equivalent to VND350,000 – 400,000. 

Meanwhile, VCCI Vice President Hoang Quang Phong expressed dissatisfaction with the approved level, elaborating that businesses are facing an array of difficulties and such a hike exceeds payment capacities of many of them. 

The chamber proposed a minimum pay increase of 10.7% after considering the suggested level of between 5% and 10% by most of the 16 surveyed business associations, including 14 foreign ones, he noted. 

The agreed 12.4% hike will be submitted to the Prime Minister for approval.