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Vietnam’s regional minimum wages may rise 12.4% next year

Thursday, September 03, 2015, 18:18 GMT+7

The Vietnam National Wage Council has arrived at a consensus that the regional minimum wages in 2016 should be 12.4 percent higher than the current rates. At 12:30 pm on Thursday, after nearly five hours of debate, the council conducted a poll on the increase rate and 92 percent of the members voted for a 12.4 percent rise, Chairman Pham Minh Huan said. This is the third meeting to have been held in Hanoi by the council to work out solutions to the issue. In the two previous meetings, the council failed to seek a common voice between the Vietnam Chamber of Commerce and Industry (VCCI), which represents employers and asked for an expansion of no more than 10 percent, and the Vietnam General Confederation of Labor (VGCL), which supports employees and requested that the increase rate be 16.8 percent. However, during the third meeting, the VCCI demanded an 11 percent increase while the VGCL agreed to lower its rate to 14.3 percent. After further discussions, both sides agreed for a poll to take place and an increase rate of 12.4 percent was then passed.   Before the meeting, many experts advised the two sides to make concessions in order to reach a common ground. With the agreed rise, the regional minimum wages for 2016 will increase by VND250,000-400,000 (US$11.1-17.8) per month, depending on each zone. Accordingly, the monthly minimum wage for Zone 1 will increase from the current VND3.1 million ($137.9) to VND3.5 million ($162.2), and that of Zone 2 will rise from VND2.75 million ($122.3) to VND3.1 million. For Zones 3 and 4, the monthly minimum wages will go up from VND2.4 million ($106.8) and VND2.15 million ($95.7) to VND2.7 ($120.1) million and VND2.4 million, respectively. Zone 1 covers the urban parts of Hanoi and Ho Chi Minh City; Zone 2 is applicable to the rural areas of Hanoi and Ho Chi Minh City, along with the urban regions of 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.

The council will submit a plan on hiking the regional minimum wages to the central government for approval before announcing it in October this year. If ratified, the new regional minimum wages for 2016 will be applied from January 1. According to the VGCL, the 2015 minimum wage rates, which are 14.3 percent higher than those in 2014, can only cover 78-85 percent of the minimal living costs of employees.

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