VietNamNet Bridge – Deputy Minister of Labour, Invalids and Social Affairs Pham Minh Huan discusses proposals to increase the minimum wage with Nong thon Ngay nay (Countryside Today) newspaper.

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What is your assessment of the proposed increase in minimum wage for enterprises that the Ministry of Labour, Invalids and Social Affairs intends to submit to the Government this year?

The ministry conducted a survey on 1,700 enterprises throughout the country earlier this year. The survey found that over 98 per cent of enterprises were paying their employees equal to or higher than the State’s regulated minimum wage of VND730,000 per month (US$38). Many enterprises are even paying a higher rate than the proposed increase, which would be implemented next year if approved. As a result, the increased minimum wage will not greatly affect the expenses of some enterprises.

Still, labourers and job centres complained that the proposed rate is still low. What do you think about their opinions?

The newly proposed minimum wage increase will be changed depending on geographic location.

As planned, enterprises will have to increase the minimum wage from between VND100,000 to VND270,000 per month starting next year.

Labourers in many provinces will receive a wage increase as well as an increase in their allowance for moving from plain regions to mountainous areas to work.

Under the ministry’s proposal, average minimum wage will be increased by 21.5 per cent at State-owned enterprises. The increase will be only 10.8 per cent at foreign-invested enterprises. Why is there a difference in the increase of minimum wage between the two?

Currently, workers’ incomes at foreign-invested companies are significantly higher than those of workers at State-owned enterprises and according to the 2008-12 salary reform project, the goal is eventually to, more or less, equalise incomes across all enterprises by 2012.

Because of this income disparity, it is necessary to impose a greater minimum wage increase for State-owned enterprises in order to accelerate the rate at which the income gap closes.

Will the proposed increase help improve the living standard of workers of foreign-invested enterprises who have a history of going on strike?

The consumer price index rose 5.08 per cent in the first eight months of this year compared with December last year. In comparison with the first eight months of last year, the consumer price index for food, housing, traffic and services increased 9.39 per cent, 14.97 per cent, 15.94 per cent and 11.79 per cent, respectively.

Thus, the proposed increase is not very high. It merely has the potential to play a small part in improving the lives of labourers.

The most crucial determining factor, however, will be the salaries enterprises are capable of paying labourers. If employers are forced to pay salaries beyond their means, there could be a backlash - workers might be let go.

There is a widening gap in minimum salary across different areas. For example, the salary rate in Zone 1 is 1.5 times higher than that in Zone 4 - the area with which rural labourers are most concerned. Why is this the case?

When adjusting minimum wage, we have to think of salary increase in combination with investment levels in various areas. Zones 3 and 4 are developing more slowly and attracting less investment than other zones. It will be very difficult for local authorities to attract investment if these areas have high minimum wage levels. Thus, it is these areas that are deliberately and strategically not increasing the minimum wage too drastically.

VietNamNet/Viet Nam News