Vietnam workers indifferent to minimum wage hike; employers fret

VIETNAM ECONOMY“The wage hike would not benefit us, just put more pressure on us. It can trigger a rise in prices.” Following an earlier wage hike this year, house owners increased rents by 10 percent, Ha said, adding if prices rise after the upcoming salary hike, her monthly income of VND4 million (US$190.4) would not be enough for her to live in the city.

The National Wage Council plans to propose to the government an increase in minimum wage by 15-17 percent from January 1 next year. Many workers are not too keen about the proposed wage hike. Some firms are likely to increase salaries, but could cut allowances, one economist said.

Even government employees are not keen since the majority of their income comes from allowances and bonuses, which are usually based on how well their business is doing.

Le Tien Truong, a member of the National Wage Council, said the salaries that many firms pay their workers are higher than the minimum wage fixed by the government.

So they would not increase wages following the government’s salary increase, he said.

“Thus, the workers’ incomes will be unchanged, and their living conditions will not improve despite the wage hike.”

Any wage hike should be carefully considered to ensure it does not stymie the government’s efforts to generate jobs, he added.

The government hopes to add 1.7 million jobs each year.

“If the minimum salary is set too high, many firms would have to lay off workers, and we may fail to achieve the target,” Truong pointed out.

One more wage hike could hit Vietnam’s competitiveness in the near term, so it needs to be considered “very carefully.”

Source: Thanh Nien, October 7, 2013