Minimum wage plan gives hand to workers, (Illustrative image: VietnamPlus)

The National Wage Council has agreed to submit a proposal to raise the region-based minimum wage by 6 per cent from July to the prime minister after a second working session. If approved, the pay rise will be valid until the end of 2023.

The adjustment is considered a part of Vietnam’s effort in supporting local workers to improve their livelihoods, and is equivalent to a rise of $7.85-11.35 per month, which varies between regions.

Specifically, the minimum wage for workers in Region 1, which covers Hanoi and Ho Chi Minh City’s urban areas, would be $203.50 per month. Region 2, covering the two cities’ rural areas along with major urban areas in the country like Can Tho, Danang, and Haiphong, would be $108.85 each month.

In Region 3, featuring provincial cities as well as Bac Ninh, Bac Giang, and Hai Duong provinces, employees will earn at least $158.55 every month, while the rest of the country in Region 4 would hit a minimum of $141.30.

The news that the proposal to increase the regional minimum wage was submitted has made many workers feel happy, including Hoang Hop, a worker of a garment company in Hanoi’s Thang Long Industrial Park.

Hop’s basic monthly salary is $190, which is $5 lower than the current minimum wage in Region 1. With her overtime salary and allowances, her total monthly income is more than $260, a modest figure compared to the expensive living standards in the capital.

Deducting the cost of renting a house and the monthly remittance back home to support her family, she only dares to spend less than $2.60 per day on food.

“Although my income would only increase by more than $8.70, that amount is only enough for me to buy food for 3-4 days,” Hop said.

She and a lot of workers earning low income look forward to the time for a salary increase because the adjustment will contribute to improving their livelihoods.

Ngo Duy Hieu, vice chairman of the Vietnam General Confederation of Labour (VGCL), said that the government has not adjusted the regional minimum wage in the past two years. But the life of many workers is very difficult, while the prices of commodities are continuously escalating.

“At this time, the pay rise is not only to support workers to overcome difficulties but also to motivate them to improve labour productivity, helping businesses recover quickly and thrive,” he said.

According to the latest data from the General Statistics Office, the consumer price index in the first quarter increased by 1.92 per cent over the same period in 2021. The reason stems from strong fluctuations in prices including some essential commodities, such as gasoline prices up 48.8 per cent, rice prices up 1.1 per cent, and house maintenance materials prices up 8.08 per cent compared to the first three months of last year.

According to the survey results conducted by the VGCL with 1,533 workers in six cities and provinces in March, 46.2 per cent said that the wage they received was not enough for them to cover their minimum living needs. Around 11 per cent said that they often have to borrow money every month to stabilise their lives, 35.6 per cent borrow money every 3-4 months, 35.6 per cent of employees have to borrow money 1-2 times per year, and only 17.7 per cent have not had to borrow money from others.

Despite the adjustments on the way, the quality of life of many workers will remain low because of the exponential rise in the price of goods. Many food items have increased in price by up to 50 per cent, and even the selling prices of some items, such as sugar and some vegetables, are up 70 per cent. On average, the cost of food accounts for nearly half of the total expenditure of a family.

Na Huong, general director of helmet producer Protec Vietnam at Ba Thien II Industrial Park in the northern province of Vinh Phuc, said that the actual salary her company pays employees is now higher than the specified area minimum. Therefore, the new regulation will not make much difference to Protec or many other foreign-invested enterprises in that respect.

However, Huong added that when the regional minimum wage increases, the insurance contribution for employees that businesses have to pay will be higher, which will make it more difficult for large enterprises with thousands of employees that are still trying to get past the pandemic difficulties.

“The issue of keeping local workers’ income to harmonise with the current situation gives some companies a headache. But in the context that the labour force is still lacking, pay rise is the most effective solution to employ and retain qualified workers,” said Huong.

Meanwhile, union chairman at a leading South Korean footwear manufacturer in the southern province of Dong Nai, which boasts nearly 40,000 employees and is a Nike manufacturer, told VIR, “We agree with the adjustment on the regional minimum wage. The only concern is the time to apply the adjustment. It may be too soon for some enterprises to balance the finance for this expenditure, and we would prefer to start to apply this adjustment from early next year.”

Responding to concerns about the increase in the regional minimum wage at this time could make the social insurance debt situation of enterprises worse, a representative from Vietnam Social Security said an increase of 6 per cent does not have much impact on small- and medium-sized groups.

“For large businesses with several thousand employees and more, it can be quite a number. But I believe businesses will find a balanced financial solution and choose long-term benefits,” the representative said.