VietNamNet Bridge –The Ministry of Labour, Invalids and Social Affairs' proposal to increase the minimum wage three months earlier than scheduled has caused controversy among enterprises and State agencies.

Workers of LTD Co make bras in the central province of Khanh Hoa's Suoi Dau Industrial Zone. Enterprises are resisting a proposal to increase the minimum wage earlier than scheduled. (Photo: VNS)
Under the ministry's proposal, the increase would go into effect on October 1, with adjustments to follow in the different working zones. It will be applied to both domestic and foreign – invested businesses operating in the country.

The new monthly minimum wage will range from VND1.4 million (US$68) in underdeveloped localities to VND1.9 million ($92) in urban areas, up 27.2 per cent and 40.7 per cent from current levels, respectively.

The salary increase aims to ensure good living conditions for labourers despite rising inflation, said Deputy Minister Pham Minh Huan.

The Viet Nam General Confederation of Labour (VGCL) suggested a steeper increase, ranging from VND1.6 million ($77) to VND2.2 million ($106.3), saying that the salary proposed by the ministry would fail to sufficiently help workers.

According to Tran Van Tu from the VGCL's Department of Policy and Law, the current salary only met about 60 per cent of the amount necessary for subsistence. "A real salary increase is urgently needed," Tu emphasised.

The confederation's survey showed that the current lowest salary on average was even higher than the level proposed by the ministry, he added.

"Low salaries will discourage labourers from working," said vice president of the VGCL Mai Duc Chinh.

Vice director of Ha Noi's Industrial Zone Management Department Ngo Chi Hung said the number of strikes in the city's industrial zones has doubled in the last year. The major demand was wage increase, he added.

Hung also said more than 250 foreign-invested enterprises only offered the minimum salary as regulated by the Government, forcing them to work overtime.

The vice director of Bac Ninh Industrial Zone Management Department, Bui Hong Mai, agreed, saying that strikes happening in foreign – invested enterprises in his province were all related to wage issues.

However, the salary increase ahead of schedule has made enterprises concerned about the burden of production costs.

Vice president of the Viet Nam Textile Association Dang Phuong Dung said that it would be unreasonable for the Government to increase the minimum wage considering the recent economic instability.

The burden of a salary increase, combined with rising production input costs and high interest rates, would put small-and medium-sized enterprises at risk, said vice director of Hoang Ha Mineral Company Tran Anh Tu.

In addition, the cost of insurance for workers would rise alongside the monthly salary, he said.

Economic experts agreed that the salary increase would force enterprises to pare down the scale of production by cutting down the number of workers or increase the price of their products and services.

"It will be important to balance the needs of both labourers and enterprises when increasing salary," said Tong Thi Minh, director of the Department of Labour - Salary.

Deputy Minister Huan asked enterprises to support the Government's policy of increasing the minimum wage to prevent salary-related strikes for the rest of the year, while ensuring living conditions for workers during high inflation.

He did not commit to a further salary rise in 2012 in case inflation is curbed.

VietNamNet/Viet Nam News