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Consensus not reached on Vietnam’s regional minimum wages for 2016

Consensus not reached on Vietnam’s regional minimum wages for 2016

Wednesday, August 26, 2015, 13:05 GMT+7

A meeting intended to determine what the regional minimum wages for Vietnamese laborers should be in 2016 ended with no agreement reached on Tuesday.

The four-hour discussion in Hanoi was held by the National Wage Council and which was attended by the Vietnam Chamber of Commerce and Industry (VCCI) and the Vietnam General Confederation of Labor (VGCL).

The VCCI represented local employers, whereas the VGCL joined the discussion on the behalf of employees, and the two failed to reach a common voice on how much the regional minimum wages should be raised next year.

The VGCL thus demanded to end the fierce debate, leaving the unsolved issue to the final meeting slated for September 3.

Each party of meetings on wages has the right to request a halt to the debate or negotiation, Pham Minh Huan, chairman of the National Wage Council said, citing the council’s regulations.

The VCCI used that right in the similar meeting on August 4, and the VGCL followed suit in the Tuesday event, Huan said.

The VGCL has suggested the regional minimum wages for 2016 be hiked by 16.8 percent from the 2015 rates, whereas the VCCI wants a much smaller increase, 10 percent.

The Vietnam Textile and Apparel Association even proposed an increase rate of only six or seven percent, VGCL deputy chairman Mai Duc Chinh told reporters after the meeting.

The 16.8 percent increase rate raised by the VGCL was based on different factors, including minimal living cost of workers, the country’s social and economic conditions, the wage rates in the labor market and inflation rates, Chinh said.

Therefore, the VGCL is determined to maintain the proposed increase rate of 16.8 percent, he added.

If the rate is approved, the regional minimum wages for 2016 will increase by VND350,000-500,000 (US$15.5-22.2) per month from the current ones, depending on each zone.

Specifically, the monthly minimum wage for Zones 1, 2, 3 and 4 will be VND3.65 million ($162), VND3.2 million ($142), VND2.6 million ($115.4) and VND2.5 million ($111), respectively.

Based on these minimum rates, employers can negotiate with their employees over actual monthly salaries.

Meanwhile, under the proposal of the VCCI, the regional minimum wages for 2016 will increase by only VND150,000-250,000 ($6.6-11.1).

Zone 1 covers urban Hanoi and Ho Chi Minh City; Zone 2 is applicable to rural Hanoi and Ho Chi Minh City, along with urban Can Tho City, Da Nang City and Hai Phong City; Zone 3 comprises provincial cities and the districts of Bac Ninh Province, Bac Giang Province, Hai Duong Province, and Vinh Phuc Province; and Zone 4 consists of the remaining localities.

Minimum wage meets 78-85% of minimal living costs

According to the VGCL, the current (2015) minimum wage rates, which are 14.3 percent higher than those in 2014, can only meet 78-85 percent of the minimal living cost of laborers. 

National Wage Council chairman Huan commended that the VGCL’s proposal is reasonable, with a view to ensure that minimum wages meet minimal living costs nationwide in 2017.

However, he also paid attention to VCCI’s analysis that businesses will suffer great financial pressure in raising wages.

“The issue here is that not only laborers’ interests should be protected, but also businesses’ competitiveness and development are ensured,” Huan said.

The minimum wage issue will finally be settled at the third meeting of the council, scheduled for September 3, the chairman said.

If the two sides still fail to reach a common voice at the coming meeting, the council’s chairman will use his right provided for in the agency’s statute to make a final decision on a plan for increasing the regional minimum wage rates for 2016, and will submit it to the Government for approval, Huan said.

If approved, this plan will be applied from January 1, 2016, the official added.

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