According to the ministry, the salary increase will help improve the living conditions of salary earners, especially those who receive wages from the State budget, and retirement pensioners.

However, the adjustment will also affect enterprises, increasing the cost of salaries and insurance for employees, and it may also lead to price hikes. "The government will work out measures to control prices, particularly the price of commodities," the ministry said.

Deputy Minister Le Duy Dong said the rise is in line with the Prime Minister's decree signed on Sept. 7 and it is part of the scheme to reform policies on salaries, social welfare and other priorities to people.

The adjustment is based on a rise in the Gross Domestic Product (GDP), the increase in salaries in the open market, and the consumer price index for 2006, Mr Dong added.