VietNamNet Bridge – The process involved in adjusting the minimum wage of workers has recently been under a lot of scrutiny from policy makers, public officials and labour experts.

While most agree that the gap between the current minimum wage and minimum living standards is unacceptable, the mechanism for raising the minimum wage has been considered unsatisfying.

According to recent research from the Viet Nam Chamber of Commerce and Industry (VCCI), over the last few years the minimum wage has been regularly adjusted, but still only covers 60 per cent of minimum living standards.

The research also revealed that many enterprises did not approve of the current approach to adjusting the set wage, arguing that it had negatively affected business operations, raised the costs of social and medical insurance and reduced competition.

While many agreed that the minimum wage is low and not stimulating, they felt that the current system only benefits insurance agencies, not enterprises and their employees.

Ngo Dai Quang, deputy director of the Viet Nam Leather and Footwear Association, said the Government's policies of setting different minimum wage levels in different regions and differentiating between public employees and enterprise employees is unfair and unreasonable.

This is because the minimum wage serves as the basis to determine not only the salary of workers but also the compensation and allowances that they are entitled to, he stressed.

He also pointed out that the policy is affecting the natural labour distribution between regions.

Dang Quang Dieu, director of the Institute for Workers and Trade Unions, told the media that the country's target of setting the minimum wage in line with the minimum standard is not feasible.

He said the increase in the minimum wage in 2013 had already fallen behind the target initially set; meaning increases in 2014 and 2015 must be very high to bridge the gap. That seems impossible considering the difficult economic conditions, he pointed out.

According to Yoon Youngmo, chief technical advisor on industrial relations from the International Labour Organisation in Viet Nam, altering the minimum wage has been perceived as the main mechanism for adjusting the actual wage but in reality, it is no longer an effective measure.

He explained that most of the workers in large companies already receive a wage that is much higher than the minimum wage, while the lowest wage in relatively large companies is already higher than that as well.

"If the situation and capacity of larger companies are used as the benchmark, the resulting rate of increase may have a serious impact on smaller companies."

Youngmo stressed the importance of putting the focus on adjusting the minimum wage for the groups of workers who receive the lowest wage in the whole labour market.

Le Xuan Thanh, deputy director of the Labour and Wage Department under the Ministry of Labour, Invalids and Social Affairs, said 80 per cent of strikes last year were related to disputes over wages.

Thanh said there was a dilemma facing the minimum wage adjustment policy.

In particular, if the minimum wage is adjusted according to the initial road map, struggling enterprises will fail to follow.

He said that if it is raised to fully meet the living standards of people this year then many enterprises, especially those employing a large number of workers in the textile and leather production sectors, could even face bankruptcy.

"Companies are already struggling to follow the current wage regulations and some have even had to delay payment of salaries or evade insurance payments," Thanh argued.

He added that during the period 2008-12, the Government adjusted the minimum wage for public employees five times, while they changed it six times for employees at regional enterprises.

"We have not had a set of criteria for minimum living standards, so minimum wage adjustment is mostly based on the national budget," Thanh said.

Bui Sy Loi, deputy director of the National Assembly's Committee for Social Affairs, said it was difficult to raise the salaries of public employees while the national budget is limited and the number of workers in public sectors is still increasing year after year.

"If we want to raise the salaries, then we certainly need to review the public personnel and cut down on staff," he proposed.

Source: VNS