Proposal to adjust minimum wage to increase by 6% from July 1, 2024

The Ministry of Labor, War Invalids and Social Affairs is drafting a Decree regulating the minimum wage for employees working under labor contracts. Accordingly, the Ministry proposes to adjust the minimum wage to increase by 6% compared to the current level to apply from July 1, 2024.

Illustration photo. (Source: Internet)

Need to consider adjusting minimum wage

The Ministry of Labor, War Invalids and Social Affairs said that Decree No. 38/2022/ND-CP dated June 12, 2022 stipulates the minimum wage for employees working under labor contracts, effective from July 1, 2022, in which: (i) The monthly minimum wage is adjusted to increase by an average of 6% compared to 2020, with the following levels: Region I is 4,680,000 VND, Region II is 4,160,000 VND, Region III is 3,640,000 VND, Region IV is 3,250,000 VND; (ii) The hourly minimum wage is issued for the first time, with the following levels: Region I is 22,500 VND/hour, Region II is 20,000 VND/hour, Region III is 17,500 VND/hour, Region IV is 15,600 VND/hour.

However, according to the Ministry of Labor, War Invalids and Social Affairs, up to now, there have been a number of issues that need to be considered in adjusting the minimum wage stipulated in Decree No. 38/2022/ND-CP.

Specifically, socio-economic factors, labor market, and business capabilities in 2023 will change in a more positive direction compared to 2022: The macro economy continues to be stable, economic growth rate (GDP) reaches 5.05%; the labor market continues to maintain recovery momentum; business production of enterprises tends to be better; wages and income of workers continue to be stable and increase, each quarter is higher than the previous quarter.

The actual value of the minimum wage in Decree No. 38/2022/ND-CP will gradually decrease over time due to the increase in the consumer price index (CPI). With the expected CPI increase of 4% - 4.5% in 2024, the above minimum wage will no longer ensure the minimum living standard of workers and their families in the second half of 2024 (about 4% lower).

The current minimum wage is determined by region and linked to the district-level administrative boundaries. However, up to now, some areas where the minimum wage is applied are no longer suitable due to changes in administrative boundaries (renaming, new establishment, merger, dissolution) after restructuring according to Resolutions of the National Assembly Standing Committee; or changes in infrastructure conditions, labor market, investment attraction policies, etc., and need to be reviewed and updated.

On January 12, 2024, the National Wage Council issued report No. 02/BC-HDTLQG to the Government recommending an average increase of 6% in the minimum wage, effective from July 1, 2024.

From July 1, 2024, the wage policy will be comprehensively reformed according to Resolution No. 27-NQ/TW dated May 21, 2018 of the 7th Conference of the 12th Central Executive Committee, public sector wages will increase, accordingly, there needs to be an adjustment of the minimum wage of the enterprise sector to ensure general correlation.

Based on the above reality, according to the Ministry of Labor, War Invalids and Social Affairs, it is very necessary to develop a Decree regulating the minimum wage to be applied in 2024, in order to ensure the minimum living standard of workers, increase workers' wages in accordance with labor productivity, economic growth, and competitiveness of enterprises as prescribed in Article 91 of the 2019 Labor Code; update and adjust the zoning of areas applying the minimum wage to suit the actual situation.

Adjust minimum wage increase by 6%

In the draft Decree regulating the minimum wage for employees working under labor contracts, the Ministry of Labor, War Invalids and Social Affairs proposed to adjust the minimum wage to increase by 6% compared to the current level to apply from July 1, 2024.

Regarding the minimum wage, the Ministry of Labor, War Invalids and Social Affairs proposed to regulate the monthly minimum wage according to 4 regions: region I is 4,960,000 VND/month, region II is 4,410,000 VND/month, region III is 3,860,000 VND/month, region IV is 3,450,000 VND/month.

According to the Ministry of Labor, War Invalids and Social Affairs, the above minimum wage increases from VND 200,000 - VND 280,000 (equivalent to an average rate of 6%) compared to the current minimum wage. The above minimum wage adjustment is about 2% higher than the minimum living standard of workers until the end of 2024 to improve the living conditions of workers; it is expected to basically ensure the minimum living standard in 2025 (pre-calculating a part of the CPI of 2025 into the minimum living standard so that workers can enjoy it from mid-2024). This adjustment level shares and harmonizes the interests of workers and businesses, paying attention to improving the lives of workers while paying attention to ensuring the maintenance, recovery and development of production and business of enterprises. 100% of the members of the National Wage Council agree and recommend the Government to adjust according to this level.

Minimum hourly wage

The Ministry of Labor, War Invalids and Social Affairs proposed to regulate the minimum hourly wages according to 4 regions: region I is 23,800 VND/hour, region II is 21,200 VND/hour, region III is 18,600 VND/hour, region IV is 16,600 VND/hour.

According to the Ministry of Labor, War Invalids and Social Affairs, the hourly minimum wage continues to be determined based on the equivalent conversion method from the monthly minimum wage and standard working time as prescribed by the Labor Code. This is the method that ILO experts have recommended Vietnam to choose and have used when calculating the hourly minimum wage in 2022. 100% of the members of the National Wage Council agreed and recommended the Government to adjust according to this level.

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