WB report: Vietnam’s pension system facing serious challenges

According to WB experts, the official pension system is facing major challenges which will become increasingly serious when the aging process accelerates. Currently, the population aged 65 and older in Vietnam is 6.5 million, but the number is expected to increase by 3 times to 18.4 million by 2040. In 2014, Vietnam made reforms but they were not fast and powerful enough to restore financial balance of the retirement fund. Before the amendment, economists forecast that the fund would be in deficit in the early 2020s and the reserves will be exhausted by mid-2030. Read more

Consultations begin on 2017 Minimum Wage

At a meeting in Haiphong on July 22, the council’s technical department proposed increases of 9.7-10.4%, 8.6%, and 7.1-8.3%. Vu Duc Giang, chairman of the Vietnam Textile and Apparel Association (Vitas), member of the council, stressed that the minimum wages should not go up in 2017 as textile and garment firms are now struggling with increasingly high input costs. “Textile and garment firms cannot expand investment and production if minimum wages are adjusted up again. This will lead to massive layoffs. Who will be responsible for this?” Giang said. Read more

Vietnam’s 2016 Minimum Wage Decree

The Minimum Wage Adjustment for 2016, the third since the establishment of the National Wage Council under the revised Labour Code of 2012, is about 12.4%.  Decree No. 122/2015/NĐ-CP, 14/11/2015 was published on Nov 14, 2015, and will go into effect on Jan 1, 2016.  The adjustment  is twice the level of forecast 2016 GDP growth (6.2%), three times CPI inflation (1.8% in 2015 and 4% in 2016), and four times average annual productivity growth (3.3%). On the other hand, it is lower than increases in the past four years: 2012 (29%), 2013 (17.5%), 2014 (15%), 2015 (15.1%). The MW in Region 1 for 2016 would be 3.5 million vnd/month. If present trends continue, the minimum wage in Region 1 will be about 5.1 million vnd/month in 2020. For the second year in a row, the adjustment is within 1% of our trend line estimate.

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World Bank: Lương tối thiểu khu vực tư nhân của Việt Nam cao, khoảng 58% lương trung bình

English

Chuẩn đối sánh lương tối thiểu là dựa trên mối quan hệ với mức lương trung bình. Đối với Việt Nam, bức tranh này chia mảng rõ rệt giữa khu vực chính phủ và khu vực tư nhân. So với các tiêu chuẩn khu vực và trên thế giới, lương cơ bản của Việt Nam thấp, chỉ khoảng 30% lương trung bình trong khi lương tối thiểu của khu vực tư nhân cao với tỷ lệ trung bình giữa lương tối thiểu và lương trung vị là gần 58%. Read more

World Bank: Vietnam’s private sector minimum wage is high, 58% of the median wage

A key benchmark of minimum wages is the relationship to median wages, and for Vietnam the picture differs sharply between the government and private sectors. Vietnam’s state sector wage is low by global and regional standards at around 30% of the median wage, while the private sector minimum wage is high, with the average ratio of minimum to median wage around 58%.

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From the archives: Vietnam’s “Minimum Wage Roadmap” to 2020

Written in August 2014, the below article provides some background for the Minimum Wage 2016 discussion.

For planning purposes, businesses should note that MOLISA’s Vice Minister said “the increases will be greater in 2016 and 2017.” MOLISA is operating on a “Minimum Wage Adjustment Road Map” to 2020, based on (1) Article 56 of the 2012 Labour Code, which provides that “ … then the Government will adjust the MW in order to preserve real wages;” and (2) “Party Central Committee Decision 23-KL/TW, May 29, 2012, which provides that “Adjust the minimum wage more rapidly … so that … it will reach the level of the Basic Needs Wage. Read more

A reckless wager

This is the worst time to be raising the cost of workers. Technological advances are enabling firms to replace more and more people with computers and robots, imperilling jobs. Some low-skilled positions, such as cleaning, are hard to automate. But millions of low-skilled workers sitting at checkouts and receptions, picking products off warehouse shelves are vulnerable to replacement. An ever-higher minimum wage will encourage investment in the technology to replace them. That is why Nobel Prize Economist Milton Friedman described minimum wages as a form of discrimination against the low-skilled. Read more

Vietnam’s 2015 Minimum Wage Proposal

The proposed Minimum Wage Adjustment for 2015, the second since the establishment of the National Wage Council under the revised Labour Code of 2012, is about 15.1%. It will be submitted to the Government for discussion and approval at the next regular meeting, and go into effect on Jan 1, 2015.  According to media reports, the proposed adjustment  is triple the level of GDP growth (5.5%) and CPI inflation (4.9% in the first seven months of 2014). It is on a par with increases in 2013 (17.5%) and 2014 (15%). The proposed MW in Region 1 for 2015 would be 3.1 million vnd/month. If present trends continue, the minimum wage in Region 1 will be about 5 million vnd/month in 2020.

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Vietnam’s 2016 Minimum Wage Proposal

The proposed Minimum Wage Adjustment for 2016, the third since the establishment of the National Wage Council under the revised Labour Code of 2012, is about 12.4%. It will be submitted to the Government for discussion and approval at the next regular meeting, and go into effect on Jan 1, 2016.  According to media reports, the proposed adjustment  is twice the level of forecast 2016 GDP growth (6.2%), CPI inflation (1.8% in 2015 and 4% in 2016), and four times average annual productivity growth (3.3%). On the other hand, it is lower than increases in the past four years: 2012 (29%), 2013 (17.5%), 2014 (15%), 2015 (15.1%). The proposed MW in Region 1 for 2015 would be 3.5 million vnd/month. If present trends continue, the minimum wage in Region 1 will be about 5.1 million vnd/month in 2020. For the second year in a row, the proposed adjustment is within 1% of our trend line estimate.

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Pay increases depend on productivity – Bui Sy Loi

Bui Sy Loi, Deputy Head of the National Assembly’s Social Affairs Committee, speaks to Ha Noi Moi (New Ha Noi) about salary reforms.

Will you please ex-plain why workers’ average wages in Viet Nam are lower than their peers in the region and the world?  

It is a universal truth that adjustment of a worker’s minimum wage and their basic monthly salary depend on the economic growth rate, labour productivity and consumer price index (CPI) of the country. Read more