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Make Minimum Wage a Vital Social Safety Net Now

Minimum wage must truly become “social safety net”

One evening, after wrapping up her shift at a dairy shop, Hoa from Trung My Tay Ward (HCM City) went home feeling drained, burdened by the persistent stress of managing expenses in this costly city.

With a joint monthly income of around VND13-14 million from her and her husband’s jobs, they earn more than the minimum wage in HCM City (which is nearly VND5 million per person each month). Although this might seem adequate, once they pay for rent, food, utilities, and their children’s school fees, there’s hardly anything left.

Every time utility rates go up, Hoa can only express her frustration. Each cost needs meticulous planning as they struggle to make ends meet.

This season, they’re particularly worried about getting new books and uniforms for their kids’ school year. To increase their earnings, Hoa’s husband takes extra evening shifts driving for Grab or delivering goods.

Hoa’s situation is not unique. In major cities like Hanoi and HCM City, countless workers face the same plight where their earnings fall short of their spending. Many toil longer hours at the expense of their health and time with family just to survive in these urban settings.

In the past two years, the minimum wage has only seen a 6 percent increase. Conversely, electricity prices have surged four times, leading to higher costs for production and basic goods. Consequently, the purchasing power of workers’ incomes continues to diminish against the backdrop of rising living expenses.

Currently, regional minimum wages span from VND3.45 million per month (Region IV) to VND4.96 million per month (Region I), equating to around VND16,600-23,800 for each hour worked. Despite the National Wage Council’s proposal for a 7.2 percent wage increase effective early 2026, the ongoing low starting point means that annual increases of 5-7 percent will still fall short of keeping up with rising living costs.

To tackle this issue effectively, it’s crucial to redefine the fundamental objective of the minimum wage. It should guarantee a basic standard of living for workers and their families in all regions. Adjustments should be tailored and grounded in genuine surveys that take into account essential expenses such as housing, utilities, education, healthcare, and transportation.

Any raise in the minimum wage will only be meaningful if accompanied by cost-control strategies. If wages rise yet the costs of fuel, electricity, and food soar—potentially outpacing income increases—workers’ circumstances won’t improve. Maintaining the real purchasing power of wages is essential in tandem with wage policy reforms (for instance, if wages climb by 7 percent while inflation is at 5 percent, the genuine increase would be merely 2 percent).

For any meaningful rise in the minimum wage to be sustainable, enhancing labor productivity is vital. Companies must invest in technology, refine production practices, and assist workers in acquiring new skills to adapt to ongoing digitization. Enhanced productivity can lead to substantial income improvements, thereby transforming the minimum wage into a genuine support mechanism for sustainable living.

Moreover, the government should establish measures to ease the financial burdens on workers, such as developing affordable housing or rental options and improving access to essential services like healthcare and education near industrial work zones. These initiatives are crucial in helping workers stabilize their situations and remain engaged in the workforce.

For the minimum wage to truly act as a “social safety net,” policies must extend beyond modest yearly adjustments. A holistic approach is necessary: redefining the minimum wage based on the actual cost of living in different regions, regulating prices, improving labor productivity, and broadening social welfare systems. This challenge encompasses not just wages but the overarching goal of achieving sustainable development, fairness, and long-term stability in the labor market.

The Ministry of Home Affairs has suggested a revision of regional classifications for minimum wage applications following provincial consolidations. The proposal specifies the classification of regions I, II, III, and IV as follows:

Region I and Region II: Covering wards and communes within Hanoi City.

Region I, Region II, and Region III: Covering wards and communes in HCM City and Hai Phong City.

Region II, Region III, and Region IV: Covering wards and communes in the provinces of Bac Ninh, Ninh Binh, Hung Yen, Phu Tho, Lao Cai, Thai Nguyen, Thanh Hoa, Nghe An, Quang Tri, Khanh Hoa, Lam Dong, Vinh Long, Dong Thap, An Giang, Ca Mau, as well as the cities of Hue, Da Nang, and Can Tho.

Region I, Region II, Region III, and Region IV: Covering wards and communes in the provinces of Quang Ninh, Dong Nai, and Tay Ninh.

Region III and Region IV: Covering wards and communes in the provinces of Tuyen Quang, Cao Bang, Dien Bien, Lai Chau, Son La, Lang Son, Ha Tinh, Quang Ngai, Gia Lai, and Dak Lak.


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