Proposal to soon start negotiations to increase minimum wage in 2024

The union believes that the National Wage Council should soon meet to discuss increasing the minimum wage to adjust with the wage reform in July 2024.

At the first session in August to discuss the minimum wage in 2024, the National Wage Council agreed to postpone the next negotiation session until November. The reason was the economic downturn, more than half a million workers lost their jobs, working hours were reduced, the consumer price index (CPI) in the first six months of the year increased by 3.29%, inflation increased by 4.74% compared to the same period last year.

The Vietnam General Confederation of Labor - representing the workers, said that the year is almost over and the National Wage Council needs to start negotiations soon so that if it cannot adjust in early 2024, it will still be in time for the public sector wage reform to be applied in July 2024.

Mr. Le Dinh Quang, Deputy Head of the Legal Policy Department, Vietnam General Confederation of Labor, analyzed that if the salary negotiations have not yet started, it will certainly not be possible to increase on January 1st as has been the practice for many years. Because from the time the parties meet to finalize the increase, the time of increase until the adjustment resolution is submitted to the Government, issued and takes effect, it will take time. There are only two suitable times for the increase: April 1st or July 1st.

According to Mr. Quang, choosing April 1st would allow workers to get an early pay raise in the context of rising prices and living costs, but it would not be favorable for the company's production plan. Adjusting in early July would be more reasonable, beneficial for both parties, and avoid disruption.

"The sooner the salary is increased, the better because Resolution 27/2018 stipulates that from 2021, the state will periodically adjust the regional minimum wage based on the recommendations of the National Wage Council. Regardless of the time, it will be nearly two years since the last adjustment was on July 1, 2022," said Mr. Quang.

Daily life of a worker's family in Da Nang. Photo: Nguyen Dong — Daily life of a worker's family in Da Nang. Photo: *Nguyen Dong*

Regarding the increase, the new wage policy in the public sector will be applied in July 2024 and is expected to increase by an average of 7% per year from 2025. According to Mr. Quang, the minimum wage adjustment rate in the private sector should be at least approximately this level. Because in addition to inflation compensation, many other factors need to be taken into account after nearly two years without adjustment.

Resolution 27 stipulates that "the State statistical agency shall annually announce the minimum living standard as a basis for determining the minimum wage and recommending wage policy orientations." However, after 5 years, the statistical agency has yet to announce it.

Mr. Ngo Duy Hieu, Vice President of the Vietnam General Confederation of Labor, assessed that the General Statistics Office has not yet announced the minimum living standard as the basis for calculating the minimum wage, causing many difficulties for the parties when negotiating. The Council still has to rely on the calculations of the technical department.

According to this calculation, the minimum monthly living standard of workers includes the cost of food, which accounts for 48% and non-food, which accounts for 52%. The cost of raising a child is equal to 70% of that of an adult. Before each negotiation period, the union repeatedly said that the formula was old and had been maintained for decades, so it proposed to adjust it. Now that life is developing, the cost for the non-food group must be increased, reducing the cost of food.

"When there is a minimum standard of living, the parties can negotiate with each other on a more scientific and convincing basis," Mr. Hieu said, adding that the current calculation method of the technical department is only an estimate. The increase in each adjustment period is therefore almost to compensate for inflation, while the actual salary that workers receive is not much more.

According to the announcement of the General Statistics Office, GDP in the third quarter of 2023 is estimated to increase by 5.33% over the same period last year. The increase is seen as positive, although it is only higher than the same period in 2020 and 2021, the bottom period due to the pandemic. In the first 9 months, GDP increased by 4.24%. While the average CPI in the past 9 months increased by 3.16% over the same period in 2022, core inflation increased by 4.49%.

Dr. Nguyen Viet Cuong, Deputy Director of Mekong Development Research Institute, commented that the economic situation has not seen many positive changes, but this is the time for the National Wage Council to restart negotiations on adjusting the minimum wage. The parties need to update the current situation of workers' lives, business health, and inflation index compared to the first meeting as a basis for proposing an appropriate increase, so as to balance both sides.

Traditionally, each council meeting takes place in 2-3 sessions. The plan and timing of salary increase are usually finalized in the third session, and fastest in the second session when all parties find common ground.

The minimum wage was most recently adjusted on July 1, 2022 with an increase of 6%, equivalent to 180,000-260,000 VND compared to before. Specifically, the minimum wage in region I is 4.68 million; region II is 4.16 million, region III is 3.64 million and region IV is 3.25 million.

Hong Chieu

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