Once the government approves the National Wage Council’s proposal, the regional minimum wage will increase by 5.5 per cent in 2020, lower than the last two revisions.
Accordingly, the increase stands between VND150,000 ($6.52) and VND240,000 ($10.4) in 2020 (See chart below).
Minimum wage in 2019
Minimum wage from early 2020 (million VND)
Le Dinh Quang, deputy head of the Labour Relations Department at the Vietnam General Confederation of Labour (VGCL) said that while the increase is not as high as expected by the VGCL, it will meet the minimum living standard of workers.
“The annual hike of the regional minimum wage will put pressure on enterprises, however, it will also motivate workers to increase productivity, leading to the general development of enterprises,” said Quang.
Hoang Quang Phong, vice chairman of the Vietnam Chamber of Commerce and Industry (VCCI) representing the business community, said that enterprises’ increase in wage expenses is often higher than the hike approved by the government. For example, if the government approved the hike of 5.3 per cent in 2019, total wage increase could be 6 per cent on-year.
“Enterprises will have to build plans to offset the expenditure and get used to the annual hike, including investing in modern technology in order to increase manufacturing capacity and decrease unnecessary expenditures,” said Phong.
According to Resolution No.27-NQ/TW on wage reform that the Central Party Committee issued in May 2018, the regional minimum wage has to meet the minimum living needs of employees by 2020. At present, the minimum wage only meets over 90 per cent of minimum living needs.