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
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
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%.
The World Bank’s most recent update on Vietnam’s economic developments concluded that (1) a high minimum wage, if enforced, will reduce formal employment; (2) outside the government sector, Vietnam’s minimum wages have risen rapidly in recent years, outstripping productivity growth, ; and, (3) , Vietnam’s private sector minimum wage is high relative to other countries. Read more
In an Aug 3 meeting of the National Wages Council, VCCI said a 6-7% increase is “acceptable.”
while inflation is at just over 6%. The Minimum Wage Adjustment for 2014, the first since the establishment of the National Wage Council under the revised Labour Code of 2012, was more moderate than adjustments in recent years, much lower than the 26~34% increase proposed by the Vietnam General Confederation of Labour, and even slightly lower than the original proposal in September 2013 by MOLISA of 2,750,000 vnd/month in Region 1.