Vietnam raises its minimum wage by smallest amount in a decade

Author: PM editorial | Date: 14 Sep 2016

Oxfam describes low salaries for workers as a “race to the bottom” to attract foreign investment

The Vietnamese government has agreed to raise the minimum wage by an average of 7.3 per cent, the lowest annual increase in a decade.
The country’s minimum wage varies depending on region, based on the cost of living, and is currently between VND 2.4 and VND 3.5 million ($108-$157) a month.
Employers in Vietnam are concerned about the rising cost of social insurance contributions and how a significant hike in the minimum wage would affect their ability to compete with manufacturers in neighbouring countries.
However, Oxfam asked organisations across the ASEAN to consider the living standards of their employees: “Oxfam urges the ASEAN to rally behind a regional minimum wage that is set to living wage levels, and give poor workers a tool they can use to defeat poverty,” said Riza Bernabe, policy and research coordinator for Oxfam.
“Minimum wages in the ASEAN do not take into account the real cost of living, which has driven millions of workers below the poverty line.” Oxfam described the push for lower wages for labourers to attract more foreign investment as a “race to the bottom” and said that workers with a better quality of life tend to be more productive than those “trapped in poverty.”
Vietnam’s only recognised trade union for workers, the Vietnam General Confederation of Labour (VGCL) said the current minimum wage only covers around 90 per cent of a Vietnamese’s basic living costs.
The National Wage Council first suggested the 7.3 per cent increase in August. Its proposal was much closer to the Vietnam Chamber of Commerce and Industry’s recommendation of 6.5 per cent than the 10 to 11 per cent recommended by the VGCL.
According to the Philippines’ Department of Labor Employment, the average monthly wage in Vietnam is between $106.54 and $155.37, which compares unfavourably to the average in the Philippines of around $200. But is higher for some of Vietnam’s regions than Cambodia at $140, Lao at $109 and Myanmar at $89.63 a month.