Millions of employers and workers in Vietnam must be suffering stress as their representatives have been clashing over how much the region-based minimum wages should be raised next year.

Every year, the Ministry of Labor, Invalids and Social Affairs and organizations including the Vietnam General Confederation of Labor (VGCL) on behalf of workers and the Vietnam Chamber of Commerce and Industry (VCCI) representing employers meet to discuss a minimum wage spike. This year they have had a tense discussion as they have not comprised.

The National Wage Council, which has 15 members representing the labor force, employers and the labor ministry, has been arranging meetings between the labor unions and business associations to discuss a salary increase plan for 2016. The already-tense debate has heated up following the recent devaluation of the dong, which might make the inflation target of 5% harder to achieve.

The mandatory minimum wage is a basis for businesses to fix salaries for their workers by multiplying the basic amount by a coefficient assigned to each worker based on their education, skills and experience.

The current minimum monthly wage varies depending on the costs of living in each particular region. The salary in Hanoi and HCMC is VND3.1 million (US$137) a month, in Can Tho, Danang, Haiphong and on the outskirts of Hanoi and HCMC VND2.75 million, in Bac Ninh, Bac Giang, Hai Duong and Vinh Phuc provinces and provincial cities VND2.4 million while in the other locations VND2.15 million.

Employers and employees must be watching a tug-of-war between stakeholders. The labor confederation, which represents the labor unions across the country, has insisted that their workers deserve a 16.8% pay rise. Meanwhile, VCCI has fought for a 10% raise. The Vietnam Textile and Apparel Association whose member companies employ nearly three million workers has lobbied for a raise of a mere 6.7%. It has even suggested turning the annual pay raise into a biennial one to avoid hurting the competitiveness of the corporate sector which has been grappling with a host of woes in recent years.

The parties concerned have not compromised in two separate meetings this month. Each party has the right to request a halt to negotiations. VCCI exercised that right at the meeting on August 4 and VGCL did the same at Tuesday’s gathering.

Hoang Quoc Phong, vice chairman of VCCI, says in Thanh Nien newspaper that businesses would find it hard to survive a high pay rise as 70% of them are not profitable. Life might turn more uncertain for businesses in the coming years as a lot of new laws and regulations will come out after the country signs a range of free trade deals.

Phong cites a report showing that 37,800 businesses shut down in the first seven months of the year, a year-on-year increase of 1.2%. Moreover, a staggering 97% of the enterprises in the nation were small and medium, so a high pay increase would deliver a blow to them.

Phong called for workers to share with the business community. For VCCI, to increase workers’ pay, labor productivity should be increased first. In fact, productivity at Vietnamese enterprises is lower than in many other regional countries. With 70% of businesses making no profit, it is hard, if not impossible, to invest in new technologies and equipment to improve productivity. Therefore, a sharp pickup in paychecks would make an improvement in productivity a pipe dream.

But, Mai Duc Chinh, vice chairman of the labor confederation, hit back, saying workers are too poor to show sympathy.

“I have asked officials to visit workers’ dorms at industrial zones to see what is happening out there. We cannot make good policies in an air-conditioned room as we never know about all the hardships experienced by workers,” Chinh says in Tuoi Tre newspaper.

The confederation-proposed pay rise could help workers cover 89% of expenses for necessities as the current wage is sufficient to cover 75% of their basic needs.

A survey conducted in April-May by the confederation at 60 businesses in rural and urban areas found 92% of workers were struggling to spend on necessities within the current wages.

Around 20% of them said the money was not enough for them to live on, 31.3% said they had to be very thrifty while 40.7% said they barely made ends meet. Only around 8% said they could save a little.

Bui Sy Loi, deputy head of the National Assembly’s Social Affairs Committee, backs the VCCI’s stance, saying a 10% salary rise would ensure fairness for both employers and employees.

“VCCI and the labor confederation should understand that 10% is fine. I once thought about 10% to 12% but 10% would be better for all sides. Businesses can survive and thus maintain jobs for workers. Employees may suffer a little but can still improve their livelihoods. This is a win-win solution for companies, workers and the State. Employers and employees should show sympathy and good will,” he urges.

If both sides cannot reach agreement at a final meeting set for September 3, the wage council will make a decision and propose a percentage of pay rise to the central Government for approval.