Basic salary and pension will increase from July 1, regional minimum wage is expected to increase in the second half of 2024. It is unlikely to have much impact on commodity prices. Faced with concerns about commodity prices increasing "following the rain", authorities have proposed many solutions to prevent it.
Total amount salary increase not big
On July 3, at the workshop on market and price developments in Vietnam in 2024, Dr. Nguyen Duc Do - Deputy Director of the Institute of Economics and Finance, Academy of Finance - assessed that the 30% increase in basic salary from July 1 will not have much impact on the price level. According to Mr. Do, Vietnam has about 50 million workers, but the proportion of public sector workers (who receive a basic salary increase) only accounts for about 8%. Therefore, the impact of the additional salary increase on the price level is insignificant.
According to Dr. Nguyen Ngoc Tuyen, former Director of the Institute of Economics and Finance, in the second half of 2024, there will be 3 groups of people who will receive salary increases, including: a 30% increase in basic salary for public sector workers; a 15% increase in pensions and an expected 6% increase in minimum salary.
“The total amount of pension and social insurance allowance increases will be about 16,000 billion VND in the last 6 months of 2024. This is equivalent to nearly 3,000 billion VND per month from salary increases. This salary increase is not too large, so it will not have too much impact on consumer goods prices,” said Mr. Tuyen.
However, there has always been a mentality that whenever wages increase, the price of goods immediately increases. According to Mr. Tuyen, to prevent the price of goods from increasing with wages, the authorities need to coordinate many solutions. In particular, the Government directs price control to avoid unreasonable price increases. Ministries, sectors and localities in the field of management ensure abundant production, smooth circulation and adequate supply of goods.
“For state-managed goods such as healthcare and education, localities need to coordinate under the direction of the Government “conductor” to help prevent price increases when wages increase,” Mr. Tuyen proposed.
Previously, from July 1, the basic salary (for civil servants and public employees) increased by 30%, equivalent to an increase from 1.8 million VND to 2.34 million VND. Pensions increased by 15%, those receiving a salary of less than 3.5 million VND will receive an increase of 300,000 VND/month. The regional minimum wage (for employees at enterprises) is also proposed to increase by 6%.
Commodity prices will fluctuate little in the second half of 2024
Dr. Nguyen Duc Do predicts that inflationary pressure in 2024 will not be too great. Mr. Do commented that in the second half of 2024, there will not be many factors causing sudden price increases. Therefore, the average inflation for the whole year of 2024 will be around 3.2 - 3.6%.
According to the Price Management Department of the Ministry of Finance, Vietnam's inflation is currently controlled at an appropriate level to support economic growth. Prices of state-priced goods are basically stable. For essential consumer goods such as food and foodstuffs (accounting for a large proportion of the basket of goods used to calculate the consumer price index - CPI), prices are relatively stable. These goods have a relatively high production growth index, and abundant supply to meet domestic consumption and export demand.
“We request that localities strengthen supervision of the implementation of measures on price declaration and posting; and publicize price information. Competent agencies shall organize inspections and checks on compliance with price laws, promptly detect and correct shortcomings, and strictly handle violations of price laws,” said a representative of the Price Management Department.
The Institute of Economics and Finance has proposed 3 inflation scenarios for 2024. Accordingly, in the high scenario, CPI will increase by an average of 0.23%/month in the last 6 months of 2024 (equivalent to the increase in the first 6 months of 2024). Inflation compared to the same period in December 2024 is 2.8%, average inflation for the whole year of 2024 is 3.6%.
In the medium scenario, oil prices and exchange rates are stable, CPI increases by an average of 0.1% per month in the second half of 2024. Average inflation for the whole year will be 3.4%. In the low scenario, the US economy falls into recession at the end of 2024, oil prices and exchange rates decrease, CPI increases by an average of 0% per month, and may even decrease in the second half of 2024. In this scenario, year-on-year inflation in December 2024 will decrease to 1.4% and average inflation for the whole year of 2024 will be 3.2%.
According to economist Ngo Tri Long, to control inflation to support economic growth in 2024, authorities need to closely monitor market developments for each commodity, especially essential goods and services. Agencies should proactively review plans to adjust prices of state-managed commodities and public services that are implementing market roadmaps; carefully assess the impact on price levels and inflation control targets to have appropriate price adjustment plans.
Source
Comment (0)