The region-based minimum wage hike proposed for next year is still a hot button topic for debate as employers and employees have yet to come to an agreement, according to Tong Thi Minh, a member of the National Wage Council.

An unidentified person counts Vietnamese banknotes. The region-based minimum wage hike proposed for next year is still a hot button topic for debate

At the second meeting on minimum wages in 2019, held by the National Wage Council in Hanoi today, July 26, Minh, who is also the director of the Department of Labor and Salary under the Ministry of Labor, Invalids and Social Affairs, said that the Vietnam General Confederation of Labor (VGCL), operating on behalf of employees, stands firm on its proposal to increase the region-based minimum wage next year by 8% due to the country’s economic development.

Enterprises have agreed to a minimum wage increase but have yet to announce a detailed rate.

Ngo Duy Hieu, head of the Labor Relations Department under the VGCL, said the two sides are focusing on ways to determine the minimum living needs of workers, which is the foundation for the minimum wage hike calculation.

The minimum expenditure for essential goods per worker has been calculated at VND660,000 per month, compared with the previous amount of VND724,000, while the costs of most products have gone up.

According to the National Wage Council, laborers spend 48% of their salaries on food, while the ideal rate should be 45%.

At another meeting on July 18, Truong Van Cam, general secretary of the Vietnam Textile and Apparel Association (VITAS), said the minimum wage has been high, compared with the previous rate, for a long time.

In addition, annual minimum wage hikes place a heavy burden on enterprises, particularly in terms of sharp increases in their expenditure on employees’ social insurance premiums and trade union operations, Cam added.

Therefore, VITAS has proposed keeping minimum wages unchanged next year to help enterprises improve their competitiveness. The association has also suggested not using the minimum wage as a basis for defining the lowest wage level on the payroll.

Koji Ito, president of the Japan Chamber of Commerce and Industry in Vietnam (JCCI), has written to the Vietnamese Ministry of Labor, Invalids and Social Affairs, asserting that the textile-garments, footwear and industrial manufacturing sectors in the country would suffer the most from a minimum wage hike.

Koji cited the results of a survey of Japanese enterprises in Vietnam, noting that more than three-fourths of the respondents believed wage hikes would negatively affect economic growth. The high minimum wage in Vietnam may force Japanese enterprises to downsize their workforce in the future, he added.

JCCI has proposed the smallest possible increase in minimum wage next year to help develop supporting industries, thus promoting the manufacturing sector.

The minimum wage should be hiked annually based on the actual conditions of the domestic and global economy and other relevant factors, it said.

SGT