Interviews
Early minimum wage hike creates controversy
05 Aug '11
2 min read
A controversy has been created amongst business circles, including garment manufacturers, and state agencies in Vietnam following the Ministry of Labour, Invalids and Social Affairs' suggestion to raise the minimum wage three months before schedule.
The Ministry has proposed to make the new wages effective from October 1 this year instead of January 1, 2012 as scheduled earlier. However, adjustments in different working zones would follow subsequently.
The new wage would apply to both domestic businesses as well as to those operating in the country with foreign investment.
The new minimum wage would vary in the range of VND 1.4 million or US$ 68 per month in underdeveloped areas to VND 1.9 million or US$ 92 per month in urban localities, i.e. a rise of 27.2 percent and 40.7 percent respectively from existing minimum wage levels.
Wage hike has remained a key demand at several strikes that took place in the Vietnam during last year. In fact, the number of strikes almost doubled during the period than usual.
It has been pointed out that over 250 firms operating with foreign investment in the country paid only the minimum wages as stipulated by the Government, which compelled the workers to work overtime.
However, the decision to grant pre-scheduled wage hike has raised the concern of the garment manufacturers regarding the additional cost of production.
Entrepreneurs believe that in view of existing financial unsteadiness, it would not be fair for the Government to hike the minimum wages.
Pressure of wage hike coupled with mounting cost of raw materials for production and high interest rates are seen to endanger existence of the small and medium scale enterprises.
Also, alongside the rise in monthly wages the cost of insurance for the employee's would also go up. Hence, the wage hike is expected to compel the enterprises to cut down on production by reducing the number of workers or to hike the prices of their goods and services.
Experts believe that while raising the salary it would be essential to balance the interests of the workers as well as the enterprises.
Meanwhile, the Government has urged the businesses to extend their support to its proposal of raising the minimum wage so as to avert any strikes taking place during the year on salary issues, while also ensuring that workers are able to afford good living conditions in the midst of high inflation.
The Ministry has proposed to make the new wages effective from October 1 this year instead of January 1, 2012 as scheduled earlier. However, adjustments in different working zones would follow subsequently.
The new wage would apply to both domestic businesses as well as to those operating in the country with foreign investment.
The new minimum wage would vary in the range of VND 1.4 million or US$ 68 per month in underdeveloped areas to VND 1.9 million or US$ 92 per month in urban localities, i.e. a rise of 27.2 percent and 40.7 percent respectively from existing minimum wage levels.
Wage hike has remained a key demand at several strikes that took place in the Vietnam during last year. In fact, the number of strikes almost doubled during the period than usual.
It has been pointed out that over 250 firms operating with foreign investment in the country paid only the minimum wages as stipulated by the Government, which compelled the workers to work overtime.
However, the decision to grant pre-scheduled wage hike has raised the concern of the garment manufacturers regarding the additional cost of production.
Entrepreneurs believe that in view of existing financial unsteadiness, it would not be fair for the Government to hike the minimum wages.
Pressure of wage hike coupled with mounting cost of raw materials for production and high interest rates are seen to endanger existence of the small and medium scale enterprises.
Also, alongside the rise in monthly wages the cost of insurance for the employee's would also go up. Hence, the wage hike is expected to compel the enterprises to cut down on production by reducing the number of workers or to hike the prices of their goods and services.
Experts believe that while raising the salary it would be essential to balance the interests of the workers as well as the enterprises.
Meanwhile, the Government has urged the businesses to extend their support to its proposal of raising the minimum wage so as to avert any strikes taking place during the year on salary issues, while also ensuring that workers are able to afford good living conditions in the midst of high inflation.
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