The issue of salary increases has long been repeated across every policy forum, from parliament halls to meeting rooms and even tea tables where public employees and workers gather. Yet, does higher pay really make life better?

Answering that question is never easy. “Higher pay” is a relative concept, while “a better life” is a complex blend of material well-being, mental stability, social security, and faith in the future.

In Vietnam, whenever there is information on adjusting base salary, social media surges with hope mixed with doubt.

On the one hand, it is a positive sign, showing the state's efforts to ensure the lives of public sector workers.

On the other hand, everyone understands that living costs are often much more sensitive than the payroll, and that after a few months, the additional salary will vanish in electricity prices, gasoline prices, food prices and rent.

“Salary increases” just exists on paper

In reality, the “higher wage - higher price” question is nothing new. In economics, this is a classic spiral of expected inflation: when income rises, prices will follow; and if labor productivity does not increase correspondingly, the real value of wages will decline.

In Vietnam, the base salary has been adjusted several times over the past decade, yet real estate prices, as well as education, healthcare, and consumer costs, have surged far more quickly. An average apartment in Hanoi in 2010 cost around VND20–25 million per sqm; now that figure is four to five times higher, while the base salary has risen less than threefold.

The gap between wages and housing prices keeps widening, turning the dream of home ownership for young public employees into something increasingly fragile. 

Therefore, salary policy should not be viewed merely as “compensation for hardship.” Wages must be seen as a structural tool enabling workers to live decently, perform well, and contribute sustainably. 

When wages only chase prices, without linking to productivity, quality of life, or opportunities for advancement, “higher pay” is merely a temporary sum on paper.

It is also undeniable that living costs in Vietnam’s major cities are approaching those of mid-tier Southeast Asian cities, while average income remains significantly lower.

A newly graduated teacher with a salary coefficient of 2.34, plus a 30 percent allowance, after deductions for insurance and contributions, takes home about VND8 million per month. If they receive only 85 percent of that during the probation period, the income is barely enough to survive in large cities.

Saving for a house, marriage, or raising children becomes almost impossible as housing prices grow exponentially, far outpacing normal saving capacity.

A public employee can only buy a home after saving for 30 years, assuming prices do not keep rising, and that they remain single, healthy, and childless. In rural areas, living costs may be lower, but that basic salary also brings countless other difficulties: lack of services, few part-time opportunities, and limited professional growth.

In many OECD countries, public-sector salaries are typically 10–15 percent higher than in the private sector to ensure stability and attract talent. But in Vietnam, employees in private or foreign-invested companies may earn double or even triple what their public-sector counterparts receive.

In 2007, a public employee’s base salary was VND450,000 per month, while gold was priced at VND13.5 million per tael, meaning one month’s salary. Recently, gold prices have surpassed VND140 million per tael, and the base salary now buys only about 0.017 tael of gold.

Of course, comparing wages to gold is imperfect, since gold does not directly reflect living standards. Yet it highlights the growing gap between income and savings capacity. When wages fail to keep up with rising housing prices, education, healthcare, or even a simple meal, “salary increases” just become beautiful numbers in bank accounts that do not necessarily improve real living conditions.

When talented people leave the public sector, the consequence is not only a personnel shortage but also a cost burden for society. People will have to pay more to receive services that the state previously provided at reasonable costs.

Living costs increase faster than salary

Even higher salaries cannot “rescue” living standards when costs rise faster and when the welfare system fails to provide a solid safety net.

Therefore, increasing wages without simultaneously stabilizing the macroeconomy, curbing inflation, or controlling housing and service prices only creates a vicious circle: wages rise, prices rise, and life stays the same.

Vu Diep