Government wage hike plan draws criticism

According to Government Office Chairman Vu Duc Dam, the government has received a regional minimum wage increase proposal with hike levels ranging between 14 to 17 per cent from the National Wage Council and is under consideration before making a final decision. The wage hike shall be applicable from January 1, 2014.

“We understand the importance of this wage increase to the lives of labourers, who are struggling against many hardships. However, we have to carefully consider the overall economy as well. We are being thorough and cautious,” Dam said.

When the National Wage Council proposed a regional 14-17 per cent wage hike for 2014, the Vietnam General Confederation of Labour suggested 36 per cent and the Vietnam Chamber of Commerce and Industry said 10 per cent.

Though a final decision is still pending, Dam said it is likely to be 14-15 per cent.

At current there are four minimum salary levels applied to labourers in different regions. The highest is VND2.35 million ($110) per month and the lowest is VND1.65 million ($79) per month.

Some companies, such as Thanh Hoa-based Bim Son Cement say the increase will not affect their workers’ pay as they are already getting well over the minimum wage, around $140-$190 a month. The pay hike is a problem for the company because it will require they pay more to social insurance.

“With more than 2,000 workers we will have to spend several hundred thousand dollars more to social insurance, thus driving up our input expenses at a time we are seeing slowing sales. This would put us in a very difficult situation,” said a source from Bim Son.

Also against pay rises head of the Import Export Department at Phuc Yen Footwear in Hanoi Nguyen Chi Toan said they would also be heavily burdened by increased social insurance payments.

“Our company is in the field of export processing and exports are down because of shrinking global consumption. These wage hikes would require us to negotiate higher value contracts with foreign partners, and this is very difficult,” said Toan.