Firms alarmed at MoLISA’s wage plan

The Ministry of Labour, Invalids and Social Affairs (MoLISA) is seeking opinions about its draft on revising up minimum salaries for blue-collar workers at local and foreign enterprises in the country’s four geographical zones next year. If they were approved by the government late this year, MoLISA’s proposed  new minimum salary rates would be applied from January 1, 2011.

Poor salaries have turned many workers off working at some industrial parks

According to the ministry’s proposal, for state run and domestic private enterprises the lowest minimum salary per worker will be VND830,000 ($43.6) per month and the highest VND1.27 million ($66.8) per month, up an average 21.5 per cent against the current levels.

For foreign invested enterprises, the minimum salary per worker will be the lowest at VND1.1 million ($57.9) per month and will be the highest at VND1.5 million ($78.9) per month, up 10.8 per cent against the current levels.

Hoang Minh Hao, deputy director of the MoLISA’s Wage and Salary Department, said that with such proposed increases in payroll, both local and foreign invested enterprises’ production costs might have  increased by 0.4-0.5 per cent per month. For enterprises using many workers like textiles or footwear firms, the rise would be 1.2 per cent.

“We think that our draft minimum salary hike is suitable to any enterprise’s affordability and will come in line with the government’s roadmap to set up  common minimum salary levels in local and foreign invested enterprises planned for 2012-2013 period,” Hao said.

However, the MoLISA’s proposal is now hitting criticisms  from the business community.

“Some 90 per cent of local enterprises have paid workers with minimum salaries higher than the levels stipulated by the government. I think that the MoLISA’s proposed salary hike is still too low and cannot meet workers’ demand,” said Nguyen Viet Thang, deputy director of the Hanoi-based Garment X26 Joint Stock Company, which now employs more than 1,000 workers.

Long An Provincial Industrial Parks Management Authority shared a similar concern, saying that  the levels proposed by the  MoLISA still failed to catch up with the current inflation.

“Some 80 per cent of strikes nationwide stem from workers’ low salaries,” he said, adding that low salaries also caused a dearth of workers  in many industrial parks.

However, foreign invested enterprises claim any salary hike in Vietnam will be definitely their burden in the current context of growingly competitive business environment. 

Nguyen Hong Van, deputy general director of Thai-backed Charoen Pokphand Group’s Vietnam-based branch, saw the MoLISA’s hike proposal as a big danger for enterprises with low financial capacities.

“Thus, I think the future increased salaries will make it more difficult for enterprises, while customers will have to buy goods at higher prices,” Van said.