Raise of minimum wage may be higher than expected

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The Ministry of Labour, Invalids and Social Affairs (MoLISA) plans to seek the government’s approval for its new pay raise proposals.

As a result, a minimum wage of VND2 million ($97) per month is expected to be applied for the first zone, including Hanoi, Quang Ninh province, Danang city, Ho Chi Minh City, Vung Tau City, Binh Duong and Dong Nai provinces. The expected payment would be VND100,000 ($4.8) more than the earlier proposals.

The raise, in total, would be VND450,000-VND650,000 ($21.8-$31.5) higher than the current minimum wage for domestic companies and foreign-invested enterprises.

The ministry proposed to increase the minimum wage for second zone including Haiphong city, Vinh Phuc, Thai Nguyen, Khanh Hoa, Binh Phuoc, Tay Ninh, Long An, An Giang, and Ca Mau provinces, as well as Can Tho city, to VND1.78 million ($86.34) per month. This raise would be VND50,000 ($2.4) higher than earlier proposals.

The pay raise for third zone will remain the same as the one previously proposed: VND1.55 million ($75.18) a month. The third zone includes Bac Ninh, Hai Duong, Hung Yen, Hue, Binh Dinh, Gia Lai, Dak Lak, Lam Dong, Ninh Thuan, Binh Thuan, Dong Thap, Tien Giang, Vinh Long, Ben Tre, Kien Giang, Hau Giang, Soc Trang, and Bac Lieu.

For thefourth zone, including all the remaining localities will be also the same as those earlier proposed: VND1.4 million ($67.91) a month.

Deputy Minister of MoLISA Pham Minh Huan said the government had already approved pay raises early  this year. However, to date, the sharp rise in the consumer price index has had a serious affect on local workers' lives.

According to Huan, the proposal would begin from October 1 of this year. The earlier plan was for implementation in January of next year. The move is expected to improve the living standards of local workers who are struggling with high inflation and lagging wages.

During the process of contributing ideas for the pay raise, the Vietnam General Confederation of Labour (VGCL) had proposed MoLISA to seek the government’s approval for a minimum wage of VND2.2 million ($106.7) per month for the first zone, VND2 million ($97) a month for the second zone, VND1.8 million ($87.3) a month for the third zone, and VND1.6 million ($77.6) for the fourth zone.

The VGCL explained that these proposals were based on real economic conditions. While the prices of goods are rising, workers make wages that cannot sustain inflation, particularly those who are employed in industrial parks.

The head of the MoLISA’s Department of Labour and Employment Policies said the ministry’s new pay raise proposal was made taking into account such other changing elements as the GDP, CPI and wages for manual labourers.

The method of calculating the minimum wage also took into account the results of the General Statistics Office’s (GSO) recent population census, he said.

The new proposal was well-received by both people and businesses, he added.