Don't let price increases worry you before a pay increase

Fear of price increases before wage increases

The basic salary and salary coefficient have not been abolished; current allowances will continue to be implemented; the basic salary will be increased from the current VND 1.8 million to VND 2.34 million/month (30% - the highest level in the history of salary increase). In addition, according to the Government's proposal, it is expected that from July 1, 2024, the pension and social insurance benefits will be adjusted to increase by 15%. When the proposal is approved, this will be the highest increase in pension and social insurance benefits ever.

Consumers buy pork at WinMart Thang Long supermarket (photo by Nguyen Hanh)

The increase in the basic salary and some new adjustments in the salary policy applied from July 1st will bring joy to many civil servants and employees, but it is also accompanied by worries about price increases. Ms. Thu Hoa - Cau Giay District (Hanoi) shared that the market has been stirring to increase prices slightly, pork and rice products have all adjusted to increase prices according to the general trend of market prices.

“The price of eggs was about 25,000 - 27,000 VND/dozen half a month ago, but now it is 32,000 - 33,000 VND/dozen. Pork has also increased to an average of 120,000 - 130,000 VND/kg depending on the type. The price of rice has also increased a few prices. Every little increase in each item creates a significant burden on consumers, especially ordinary workers in the context of a still not very bright job market,” Ms. Thu Hoa informed.

“General price increases do not choose people,” said Ms. Minh Trang, a freelance worker. “We work for a private textile company. Everyone wants a salary increase, but for those of us who work on a piece rate basis, it is not easy because product output has been very difficult in recent years. It is already fortunate that the company is able to maintain jobs for its workers.”

Not being among the subjects eligible for a salary increase, Ms. Minh Trang, like many other freelance workers, is extremely worried because she fears that her family's living expenses will increase when her salary increases. What they hope for now is that the State agencies will take drastic measures to check and prevent the "price storm".

Talking to reporters from the Industry and Trade Newspaper, economic expert Dinh Trong Thinh said that in fact, for many years now, the market's normal reaction has been that when wages increase, prices also increase, and market prices even increased before the wage increase policy took effect, and after the wage increase, prices continued to be adjusted to increase once again.

The situation of prices increasing according to wages often focuses on essential consumer goods and at stages and times when the distribution system is still thin, the supply of goods of enterprises is limited, easily broken, the ability to regulate and intervene in the market is weak, so there is speculation and price increases...

Economists say that if speculative psychology is excluded, wage increases are not the main and direct cause of increased inflation. However, this time the basic wage increase is at a high level, so it cannot be ruled out that many people are taking advantage of this policy to push up prices of goods and services.

Ensuring the significance of wage increase policy and market stabilization

According to the Ministry of Finance's report, the average CPI in the first 5 months of this year increased by 4.03% compared to the same period in 2023. Of this increase, 10/11 groups of goods and services had price indexes increasing, only 1 group had price index decreasing (telecommunications group, down 1.46% compared to the same period in 2023). Notably, the education group increased by 8.7%; the medicine and medical services group increased by 6.87%; the housing and construction materials group increased by 5.49%.

The salary reform from July 1 is highly anticipated by many civil servants, public employees, and workers, because the current salary level only meets basic living conditions. The salary reform with an increase of about 30% for civil servants and public employees has become one of the joys for many wage earners.

However, that joy would be complete without the constant worry that prices increase in line with wages. If market prices increase too much, civil servants, public employees, retirees, social policy beneficiaries, meritorious people, and especially the poor will face difficulties because salary increases cannot keep up with market prices.

Regarding this issue, at the regular press conference of the second quarter of 2024 of the Ministry of Finance on June 18, Ms. Le Thi Tuyet Nhung - Deputy Director of the Price Management Department (Ministry of Finance) - informed that the Ministry of Finance, as the standing agency of the Price Management Steering Committee, has been and continues to closely coordinate with relevant ministries and agencies to closely monitor market price developments; at the same time, proactively forecast, calculate and update inflation scenarios to advise competent authorities to develop an overall price management scenario, as well as deploy specific solutions.

In particular, focusing on solutions such as closely monitoring the supply and demand developments and market prices of essential goods to have appropriate management measures; ensuring smooth supply, circulation and distribution of goods and services, especially for strategic goods. Focusing on strengthening price management and operation during the holidays; preparing early plans to operate prices of State-priced goods and public services according to the market roadmap.

The Ministry of Industry and Trade also said that it will continue to coordinate with local ministries and branches to closely monitor market developments, ensure adequate supply of essential goods to meet people's needs, especially during peak holidays and Tet, and prevent shortages and price hikes. At the same time, it will coordinate with ministries and branches in advising on price management of state-managed goods, including petroleum products, to ensure the supply of petroleum products on the market, contributing to controlling general inflation according to the Government's target.

Ensuring the significance of the wage increase and market stabilization policy, on June 22, 2024, Prime Minister Pham Minh Chinh signed and issued Official Dispatch No. 61/CD-TTg to Ministers, Heads of ministerial-level agencies, Government agencies; Chairmen of People's Committees of provinces and centrally run cities on strengthening price management and operation measures.

Accordingly, the Prime Minister requested the Ministries of Industry and Trade, Health, Education and Training, and Labor - Invalids and Social Affairs, according to their assigned functions and tasks, to urgently review, report, and propose a specific roadmap with the level and expected time of price adjustment of goods and services under their management (medical examination and treatment services; electricity; educational services, etc.); Closely coordinate with the Ministry of Finance, the General Statistics Office and relevant agencies to carefully assess the impact on the consumer price index and specific inflation control targets and scenarios, and report to the Prime Minister before June 30, 2024.

The Prime Minister also assigned the Ministry of Finance to preside over and coordinate with the Ministry of Planning and Investment, the State Bank of Vietnam, the General Statistics Office, relevant agencies and localities to promote the implementation of the work of synthesizing, analyzing, forecasting market prices, updating detailed, specific and timely price management scenarios for the remaining months of the year to advise the Government and the Prime Minister on appropriate and timely measures; Ensure the target of controlling inflation in 2024 within the limit of 4-4.5% in accordance with the Resolution of the National Assembly in all situations, striving for about 4%;

Proactively urge and synthesize the implementation of price management and operation of ministries, ministerial-level agencies, People's Committees of provinces and centrally-run cities to report to the Price Management Steering Committee for handling according to authority, and report to the Prime Minister if beyond authority.

Along with price control, the Prime Minister requested ministries, branches and localities not to allow shortages or disruptions in supply that cause sudden price increases such as: for gasoline, food, construction materials, etc.

For electricity, medical examination and treatment services and items under consideration for price adjustment, it is necessary to carefully review the price formation factors, carefully assess the impact on the socio-economy and price levels to proactively have an adjustment plan according to authority or submit to competent authorities for consideration of price adjustment plans in accordance with developments, market price items in accordance with regulations with appropriate adjustment levels and timing, avoiding causing cost-push inflation resonance, creating expected inflation of the economy. The Prime Minister also assigned relevant ministries and branches to strictly handle cases of spreading false information causing confusion among consumers and destabilizing the market.

The situation of “salary has not increased, price has increased” has happened many times before, leading to salary increases but not creating real impact for salary recipients. However, economic expert Dinh Trong Thinh said that in recent years, the Government, the market itself and the people have adapted to avoid psychological impacts when implementing salary increases. And with the current proactive solutions of the Government and management agencies, hopefully, the salary increase will bring complete joy to workers.

Source: https://congthuong.vn/khong-de-noi-lo-tang-gia-truoc-them-tang-luong-327850.html