Minimum wage proposed to increase by 200,000-280,000 VND

Monthly salaries of employees in enterprises can increase by 200,000-280,000 VND (6%) depending on the region, adjusted at the same time as salary reform in the state sector, from July 1.

The Ministry of Labor, War Invalids and Social Affairs is seeking opinions from ministries and sectors on a draft decree regulating minimum wages for workers working under contracts. The ministry proposes to adjust monthly and hourly minimum wages by 6% compared to the current level from July 1, following the recommendation of the National Wage Council.

If approved, the minimum monthly wage in region 1 will increase to 4.96 million VND; region 2 to 4.41 million VND; region 3 to 3.86 million VND and region 4 to 3.45 million VND. Current wages in the regions are fluctuating between 3.25-4.68 million VND.

The hourly minimum wage increases by 6%, ranging from 16,600 to 23,800 VND. Specifically, region 1 increases to 23,800 VND; region 2 increases to 21,200 VND; region 3 increases to 18,600 VND; region 4 increases to 16,600 VND.

Shift time of May 10 workers in Hanoi, February 2024. Photo: Ngoc Thanh — Shift time of May 10 workers in Hanoi, February 2024. Photo: *Ngoc Thanh*

The Ministry of Labor, War Invalids and Social Affairs assessed that the current monthly and hourly minimum wages "ensure the minimum living standards of workers and their families, help expand the coverage of minimum wages to flexible and part-time working groups, and are suitable for the affordability of businesses".

However, the real value of wages has been gradually decreasing over time due to the soaring consumer price index (CPI). The CPI is expected to increase by 4-4.5% this year, and the current minimum wage will no longer ensure the living standards of workers, so it needs to be adjusted soon.

The 6% increase is assessed by the Ministry of Labor, War Invalids and Social Affairs as "harmonious between the two sides (enterprises and workers), basically ensuring a minimum living standard in 2025". This means that the Ministry has calculated a part of next year's CPI into the minimum living standard for workers to enjoy this year.

Along with the minimum wage increase, some areas will be updated. Specifically, the adjustment from region II to region I for Quang Yen town, Dong Trieu town, Uong Bi city, Mong Cai city (Quang Ninh); the adjustment from region III to region II for Thai Binh city (Thai Binh province); Thanh Hoa city, Sam Son city, Nghi Son town, Bim Son town (Thanh Hoa); Ninh Hoa town (Khanh Hoa); Soc Trang city (Soc Trang).

Adjusting from region IV to region III the districts of Thai Thuy, Tien Hai (Thai Binh); Trieu Son, Tho Xuan, Yen Dinh, Vinh Loc, Thieu Hoa, Ha Trung, Hau Loc, Nga Son, Hoang Hoa, Nong Cong (Thanh Hoa); Ninh Phuoc district (Ninh Thuan).

Along with the increase in salaries of employees in enterprises, from July 1, salaries in the public sector will also change. Officials, civil servants, and public employees will be paid according to their job position instead of the current equalization coefficient. It is expected that from 2025, salaries in this sector will continue to increase by an average of 7% per year, until the lowest salary in the public sector is equal to or higher than the lowest salary in region 1 of the enterprise sector.

If approved, this will be the second time in four years that the regional minimum wage has increased in early July, following an adjustment on July 1, 2022 due to the impact of the Covid pandemic. For more than 10 years, the regional minimum wage has increased on January 1.

The second quarter 2023 survey by the Institute of Workers and Trade Unions showed that the average income of workers is about 7.88 million VND, while their monthly family expenditure is 11.7 million VND. Money spent on food and foodstuffs alone accounts for 70%. Workers' spending has increased by 19% compared to 2022, mainly due to high prices and electricity and water bills.

Only 24.5% of workers surveyed said their income was just enough to cover their living expenses, while the rest were always short of money. Many had to work extra jobs to supplement their income outside of their factory jobs.

According to a study by the International Labor Organization (ILO) in Vietnam, the nominal minimum wage increased by 42.7% in the 2015-2019 period, but inflation caused real wages to increase by only 20.1%. In the 2020-2022 period, the minimum wage was adjusted by over 6%, but real wages increased by only 0.7%.

Hong Chieu

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