Push to increase Vietnam's minimum wage gains traction

Hanoi

THE purchasing power of Vietnam's minimum wage is sinking amid rising prices of essential goods, a by-product of the Russia-led war in Ukraine and the fallout from Covid-19 supply chain issues.

But raising the minimum wage is a contentious issue with businesses still struggling to recover from prolonged lockdowns.

As a result, there is a lot of uncertainty around when minimum-wage workers might actually get some relief.

Binh Nguyen, a labour rights researcher and a law professor at Binh Duong University, told The Business Times (BT) that he was unsure if there would be a wage rise this year but said there was a strong push for an increase in 2023 after 2 years of delays.

"Employers know that the minimum salary is maybe 65 to 70 per cent of living costs for the employee so they need to increase it," he noted.

Two consecutive reviews, in 2020 and 2021, were indefinitely delayed due to the pandemic leaving workers on pay rates at 2019 levels.

That equates to 4.42 million dong (S$262.60) per month in major urban centres which have the highest rate among the 4 wage-regions into which the country is divided.

Since 2019, however, fuel prices have gone up by nearly 50 per cent, from about 20,000 dong a litre in December 2019 to 30,000 dong in March this year, and this has put upward pressure on the price of other essential goods. Inflation has hovered at around 3 per cent annually for the last 2 years.

The International Labour Organization (ILO) has also argued that further delays would not only create problems for workers but also for businesses.

"If the minimum wage is delayed for the next few years, then any decision will lead to sudden and significant jumps in minimum wage rates, making it challenging for enterprises to absorb the cost increases," an ILO spokesperson told BT in an email.

The review process kicked off in March this year when the National Wage Council, which makes recommendations to the government on wage hikes, convened and began consultations with business groups and workers.

The ILO stressed that in the current climate it was important that consultations were inclusive of all relevant stakeholders.

"The central role of social dialogue in setting minimum wages has acquired particular urgency in the current situation," the spokesperson said.

Workers in Vietnam are represented by the Vietnam General Confederation of Labour (VGLC) which is an extension of the Vietnamese Communist Party.

Independent trade unions are effectively outlawed although there was some wiggle room provided in the 2019 Labour Code that would allow workers to organise at an enterprise level.

Nguyen, the law professor, said that this is unlikely to have an impact on the current wage negotiations.

There is pressure for the council to wrap up its negotiations quickly. Whereas increases to the minimum wage would normally wait until Jan 1 of the following year, the VGLC is pushing for a pay rise to take effect on July 1 this year instead.

A similar request was made last year but was denied by The Ministry of Labour, Invalids and Social Affairs.

Vietnam's National Assembly passed a resolution in March this year to increase overtime hours from the current 40 hours to 60 hours a month. However, the total number of overtime hours cannot exceed 300 annually.

But Nguyen says that it is already not unusual for garment workers to work 80 hours of overtime a month or 1,000 hours of overtime a year.

He does, however, note that overtime hours are often a big attraction for job seekers. "In the labour market, every employee, especially production workers, when they come to interviews they will always ask how much overtime they can get each month. Overtime is the only way for them to increase their salary," he added.