Collective bargaining helps to increase workers' wages

The ILO and the Ministry of Labour, Invalids and Social Affairs hosted the two-day conference.

Participants discussed Viet Nam's wage policy in the context of a market economy and economic integration. The organisers released the Report on the ASEAN Community 2015: Managing Integration for Better Jobs and Shared Prosperity during the event.

In a market economy, collective bargaining and setting a minimum wage complemented each other, the ILO said in the brief, which cited the ASEAN Community report.

The brief added that this was a key issue to the development of sound industrial relations in Vietnam and could help employers and employees find constructive solutions to wage disputes.

Pham Minh Huan, deputy minister of Labour, Invalids and Social Affairs and chairman of the National Wage Council, said that with the establishment of the council in 2013, Vietnam significantly strengthened its minimum-wage-setting mechanisms.

The council gave trade unions' representatives and employers' representatives a direct stake in minimum wage negotiations and recommendations.

So far, both collective wage bargaining and regular enterprises-level dialogue is uncommon in the country.

"Improving the legal and institutional framework for collective bargaining and democratic representation for workers, and strengthening the capacity of employers' and workers' organisations to engage in effective collective agreement are all critical," Huan said.

Vietnam could benefit from joining the more than 150 other countries who have ratified relevant international conventions, he said.

Wage-earners

About one-third of workers in Vietnam depend on wages for their livelihoods as opposed to being self-employed. This compares with a world average of more than 50%, according to the ASEAN Community report.

Labour officials said the amount of salaried workers in Vietnam was expected to grow rapidly in the coming decades, meaning the country could narrow its distance from the world average. In 2013, salaried workers represented 34.8% of total employment, up from 16.8% in 1996.

Malte Luebke, the ILO's senior regional wage specialist, said that while half of working people made a living with agriculture, little more than a tenth of salaried employees worked in the sector.

Agricultural work offers one of the lowest average monthly wages – VND2.6 million (US$125), compared with financial intermediation, banking and insurance sector workers, where workers earn about VND7.2 million (US$344) per month, according to the Labour Force Survey 2013.

Participants at the conference also discussed disparities in the amount men and women earn. Although the overall gender pay gap in Vietnam is less than 10%, it is extensive in the low-wage sector of agriculture, where women earn 32% less than men.

However, in the sectors with the highest wages, financial intermediation, banking and insurance, and technologies and sciences, female workers are paid 3.4 and 1.4 per cent more than their colleagues, respectively, according to the ILO brief.

Middle of the pack

In 2012, average monthly wages in Vietnam reached VND3.8 million (US$181). This placed Vietnam ahead of Laos (US$119), Cambodia (US$121) and Indonesia (US$174). By comparison, average monthly wages in Thailand were US$357, $609 in Malaysia and US$3,547 in Singapore.

The large wage discrepancies between ASEAN member states reflected substantial differences in a number of factors, including labour productivity, Luebke said.

As countries adopt new technologies, invest in infrastructure, encourage structural reforms and improve the skills of their workforce, they lay the foundation for enterprises to become more efficient and to move into activities with higher returns, Luebke said.

Officials at the conference said Vietnam, which is entering more broad trade relationships, could see exponential growth in the coming decade.