Minimum salary rises not a bother for foreign businesses

The Ministry of Labour, Invalids and Social Affairs (MoLISA) has proposed to raise minimum salaries at foreign-invested enterprises by 10.8 per cent on average, raising the lowest minimum level from VND1 million ($52) to VND1.1 million ($57.8) and the highest minimum level from VND1.34 million ($70.5) to VND1.5 million ($78.9).

The move is part of the government’s roadmap in applying similar salary levels at domestic and foreign-invested enterprises. The MoLISA said the new minimum salary would be implemented from January 1, 2011.

The MoLISA said the increase could raise costs for foreign invested enterprises (FIEs) by 0.4-0.5 per cent, but many FIEs claimed it would not impact on their operations because they were already paying higher than the proposed levels.

“We support the MoLISA’s proposal. It will contribute to improving living standards of Vietnamese workers,” said Nguyen Van Dao, deputy general director of Samsung Vina.

Duong Thi Quynh Trang, director of public relations at Big C, said the retailer already paid higher than the minimum salary regulated by the government.

According to a MoLISA survey conducted early this year at 1,700 foreign enterprises, about 90 per cent of enterprises increased salaries greater than the minimum levels proposed for 2011.

The increased salary is said to ensure that FIEs have enough workers for production as many complained about low pay amid inflation concerns.

Inflation this year is forecasted at 8-8.5 per cent, according to the General Statistics Office. In 2008 and 2009, the rates recorded at 19.89 per cent and 6.52 per cent respectively.

Many foreign enterprises could not recruit enough workers with salaries slightly higher than minimum levels.

Phan Thanh Phi, head of Industrial Parks Management Authorities in southern Long An province, said the proposed minimum salary remained too low for workers. He said many enterprises operating in the province’s industrial parks were paying salaries of at least VND2 million ($105) per month.

According to a recent survey conducted by Japan External Trade Organisation (Jetro), of 935 firms in the manufacturing, wholesale and retail, construction, transport and financial and banking services fields, the average salary for a manufacturing sector worker in Vietnam was $101, or $22.1 higher than the highest minimum salary proposed by the MoLISA.

Nguyen Mai, chairman of Vietnam Association for Foreign-Invested Enterprises, said the minimum salary hike would not impact on Vietnam’s investment climate because it was lower than other neighbouring countries.

While Vietnam’s average salary for manufacturing workers is just $101, it is $217 in China and $231 in Thailand, according to the Jetro’s survey.