As workers struggle to make ends meet, Deputy Minister of Labour, Invalids and Social Affairs Pham Minh Huan talks to Thoi bao Ngan Hang (Banking Times) about how employers keep salaries low.


The ignorance of enterprises about minimum wage regulations is often blamed for employees' low salaries. What is your opinion about that?

It is not that the employers do not understand the regulation. They clearly know how to apply the minimum wage, but they take advantage of the loopholes. The Government is able to establish a salary floor but not a compulsory payment level, as the payment grades are dependent on different work positions and employees' capabilities.


Many enterprises are deliberately paying skilled employees an amount just a little higher than the minimum wage so that they do not breach the law. That is an example of taking advantage of the law. However, we should also consider the financial situation of the enterprises. There are currently many companies facing business trouble, making it difficult for them to raise salaries.

How about sanctions for enterprises that violate the law?

We did find some violations but the number was not high. Like I said, the employers did not pay the skilled workers less than the minimum wage, so it was not possible to say that the employers breached the law.

Sanctions exist but the fine amount is very low. It is going to be raised to more than VND70 million (US$3,360) soon, which is still not too high. In fact, the highest sanction will be publicly naming enterprises that violate the labour law. Global brands will always look for the manufacturers whose products are "clean" in terms of quality as well as legal compliance. Therefore, it is not likely that those brands will place orders with manufacturers that violate the law, especially the labour law. That is what truly matters, in my opinion, not the few dozens of millions that we fine enterprises.

Other countries like Bangladesh and Laos have raised their minimum wages significantly recently, some by as much as 100 per cent. How about Viet Nam?

It should be noted that those countries' minimum wages were constant for a very long time, while our minimum wage has been gradually increasing. I would also like to stress that the minimum wage is closely related to labour productivity. Increasing labour productivity, not administrative measures, is the fastest way to raise payments.

Labour productivity is increasing 3.5 per cent per year while salaries are rising about 8-9 per cent. Unless we can strengthen enterprises' competitiveness, raising the salary too high will negatively impact growth, and could even make enterprises scale down production.

The national wages council's policy is not to raise the minimum wage too fast. We wish to raise wages so that labourers can live a decent life, yet enterprises' health should also be taken into consideration. In the meantime, we encourage wage negotiations between employers and employees to improve the payment levels of labourers.

But isn't wage negotiation virtually non-existent in Viet Nam?

The law allows wage negotiations and in fact, the Government encourages them. Yet such activity is very weak in practice. If we can unite the voices of the labourers, the employers will surely have to compromise with at least some of the employees' requests. What matters here is training labour union officers to use negotiation skills. That is exactly what we will do in the upcoming time.

Of course, the Government will be responsible for providing labourers with information about the labour market and payment grades as references so they can negotiate their salaries. Agencies like the Viet Nam Chamber of Commerce and Industry (VCCI) should also help labourers raise awareness of abiding by the labour law.