Brian Jeffrey
Pham Minh Huan, the former Deputy Minister of Labor, Invalids, and Social Affairs and ex-Chair of the National Wage Council, expressed that the VGCL’s suggested 9.2 percent hike in the regional minimum wage is crucial for enhancing workers’ earnings.
Nevertheless, this increase must take into account the actual circumstances of businesses, especially since many sectors are still on the road to recovery following the pandemic and order cancellations.
A significant number of domestic companies, particularly those in labor-intensive sectors such as textiles, footwear, and electronics, are facing challenges with labor costs as a significant portion of their overall expenses.
At the same time, demand from key markets like the US and the EU is waning, and the unpredictability of trade policies complicates financial planning for these companies.
“While increasing wages is essential, an overly steep raise could exceed what businesses can afford, potentially leading to job cuts or reduced output. This would ultimately counteract efforts to safeguard employment,” Huan cautioned.
Regarding the proposed raise, Huan mentioned that the VGCL’s initial 9.2 percent suggestion emerged during the first meeting of the National Wage Council. Further discussions among workers, employers, and government representatives will aim to reach a final agreement.
“Typically, there is a ‘buffer zone’ for negotiations, so it’s likely the final raise could land around 6-7 percent, a more realistic figure given current conditions,” Huan added.
Huan argued that further delays in adjusting the minimum wage are not feasible at this time. With rising living costs, including expenses for utilities, fuel, housing, and education, failing to make timely adjustments will only diminish workers’ real incomes.
The current highest regional minimum wage is approximately VND5 million, which is significantly below the living costs in major urban areas. If the disparity between minimum wages and basic living requirements continues, it may lead to workers leaving the urban job market, resulting in considerable losses for businesses, particularly those losing trained personnel.
From a policy standpoint, Huan recommended a consistent adjustment plan to prevent prolonged wage freezes followed by abrupt increases that could disrupt both employers and employees. Ideally, adjustments should occur annually or every 18 months, providing a predictable framework for businesses and workers alike.
An expert in labor and wages believes that the proposed 9.2 percent hike is both necessary and justified, given the current low income levels failing to meet the living standards for most workers.
Even if the 9.2 percent increase passes, it will still be minimal compared to the significant price surges witnessed over the past several years.
Recent surveys indicate that most workers only manage to meet basic expenses, lacking savings and often needing to borrow money to maintain their day-to-day living.
Furthermore, the minimum wage, regarded as a “social safety net,” does not adequately capture the true value of labor or the essential living requirements.
Every year, the National Wage Council convenes to recommend minimum wage adjustments to ensure that workers can maintain an adequate standard of living. The last adjustment, codified in Decree No 74/2024, raised regional minimum wages by an average of 6 percent starting July 1, 2024. Current rates are as follows: Region 1: VND4.96 million/month; Region 2: VND4.41 million/month; Region 3: VND3.86 million/month; Region 4: VND3.45 million/month.
Regional minimum wages significantly influence the earnings of workers employed under labor contracts. Since 2009, there have been 16 adjustments to the minimum wage. Over the last decade (2016-2024), these wages have increased at an average annual rate of 5.96 percent, while salaries for employees have risen by 6.57 percent each year.
To facilitate the wage adjustments for 2025, the Ministry of Home Affairs (formerly the Ministry of Labor, Invalids, and Social Affairs) has decided to conduct a survey on labor and wages in 2024, targeting 3,400 enterprises and 6,800 workers from 18 provinces and cities representing the country’s eight economic regions.
The present National Wage Council, led by Deputy Minister of Home Affairs Nguyen Manh Khuong, consists of 17 members, including three vice-chairs: Ngo Duy Hieu (VGCL), Hoang Quang Phong (Vietnam Chamber of Commerce and Industry – VCCI), and Dinh Hong Thai (Vietnam Cooperative Alliance). The council comprises four members from the Ministry of Home Affairs, four from the VGCL, three from employer organizations, and two independent experts specializing in labor, wages, and socio-economic issues.
