The Vietnam General Confederation of Labor has proposed increasing the minimum wage in 2017 by VND250,000 ($11.2) to VND400,000 ($17.94) per month, or 10-11 per cent, Mr. Le Dinh Quang, Deputy Director of the Labor Affairs Department at the Confederation told a policy forum on social insurance on July 13.

A Confederation survey showed that life for Vietnam’s working class is quite difficult, Mr. Quang said. The incomes earned by about 20 per cent of the workforce do not cover living costs, while only about 8 per cent of workers can save money and the remainder struggle.

He acknowledged that a wage increase would create difficulties for enterprises but the minimum only covers 80 per cent of living costs.

Mr. Truong Van Cam, General Secretary of the Vietnam Textile and Apparel Association (Vitas), told local media that enterprises in the textile sector and elsewhere have proposed not raising the minimum salary in 2017. Increases in previous years have affected the well-being of enterprises and their spending is already at its limits.

Salary increases also impact on efforts to increase productivity, expand, and employ more workers, especially rural workers. He added that a salary increase should only be proposed every two or three years.

Inflation forecasts, on which minimum wage claims are largely based, have proven to be unreliable. In 2014 it was forecast at 7 per cent but came in at 4 per cent, while in 2015 the forecast was 5 per cent but it increased just 0.63 per cent. Overly high forecasts have resulted in many enterprises paying higher wage increases than turned out to be necessary, said Mr. Cam.

Deputy Minister of Labor, Invalids and Social Affairs Pham Minh Huan, who is also Chairman of the National Wage Council, has said he expects the wage increase in 2017 would not be as high as 2016’s 12.4 per cent.

The National Wage Council will meet at the end of the month to conclude its plans for a minimum wage increase in 2017, for submission to the government, Deputy Minister Huan said. He expects to hold only one meeting and gain consensus from related parties on the final plan.

Last year the minimum wage increase for 2016 triggered much disagreement. The differences in initial proposals from labor representative and enterprise representatives were significant. While the General Confederation of Labor proposed a 14.3 per cent increase the Vietnam Chamber of Commerce and Industry proposed 10 per cent.

After two meetings in September 2015 the two parties had not found common ground. Deputy Minister Huan announced at that time that as Chairman of the National Wage Council he would decide the final figures if a third meeting failed to find agreement. At that third meeting, in September 2015, the parties agreed that the 2016 minimum wage increase would be 12.4 per cent.