The regional minimum wages in Vietnam will increase by 12.4 percent from the current rates on average as of January 1, 2016, the government rules in a newly issued decree.
The new wage rates will be VND250,000-400,000 (US$11.1-17.8) per month higher than the current ones, depending on geographical zones, according to the decree No.122 dated November 14, 2015.
Localities in Vietnam are divided into four groups based on their geographical locations.
Zone 1 covers the urban parts of Hanoi and Ho Chi Minh City, while 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 monthly minimum wage for Zone 1 will increase from the current VND3.1 million ($138) to VND3.5 million ($155.8), and that of Zone 2 will rise from VND2.75 million ($122.4) 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 ($120.2) million and VND2.4 million, respectively.
The National Wage Council had proposed the mean rate of 12.4 percent to the government after conducting three meetings with the Vietnam Chamber of Commerce and Industry (VCCI) and the Vietnam General Confederation of Labor (VGCL) on how much the minimum wages should be raised.
However, during the third meeting, on September 3, 2015, 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 eventually passed.
Prior to the meeting, many experts had advised the two sides to make concessions in order to reach a common ground.
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.