Friday, 15 October 2010

Minimum wage to rise again

The Ministry of Labour, Invalids and Social Affairs (MoLISA) has circulated a proposal to adjust Vietnam's complicated minimum wage structure. It puts forth an almost 21.5 per cent increase in the minimum wages of domestic firms and a rise of around 10 per cent for foreign firms.

The minimum wage structure is split into four regions and two enterprise sectors, and foreign enterprises are forced to pay more than domestic firms. The government is slowly trying to bring the difference in wages between foreign and domestic enterprises closer together in order to have one set of minimum wages by 2012 or 2013.

The minimum wage in a domestic firms is set to rise to $43.60 (VND830,000) per month for the lowest bracket and $66.80 (VND1.27 million) for the highest bracket, applicable in Hanoi and Ho Chi Minh City.

For foreign firms the lowest bracket will rise to $57.80 (VND1.1 million) per month from $52.00 (VND1 million) and the highest bracket, again applicable in Hanoi and Ho Chi Minh City, will rise to $78.90 (VND1.5 million) from $70.50 (VND1.34 million).

Of course, many firms were quick to criticise the proposal, especially as this will mark the third increase in less than 18 months. The government also plans to raise the earnings of its public-sector employees.

Benchmark or basic salary?

Strikes in Vietnam are increasingly common and most concern wages more than working conditions.Labour analysts assert that firms use the government's minimum wage as their basic salary, rather than a benchmark below which they shouldn't fall.

As a result many sectors, especially garments and textiles, experience high staff turnover as people move for even a small increase in wages.

The Central Institute for Economic Management (CIEM) argued in a recent report that the minimum wage as set by the state meets only 60 to 65 per cent of workers'basic needs.

A study by the now defunct Institute for Development Studies (IDS) found that the minimum wage in Vietnam was 40 per cent lower than the regional average. Low wages in the public sector have long been blamed for the high level of corruption.

For more news and expert analysis about Vietnam, please see Vietnam Focus.

© 2010 Menas Associates

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