Minimum wage

Employers discuss 2015 minimum wage increase, better co-ordination and evidence-based data needed

Regional minimum wages could increase in 2015 in accordance with growth rate of Gross Domestic Products and inflation, employers’ organizations have recommended.

Press release | 05 June 2014
HANOI (ILO News) – Regional minimum wages could increase in 2015 in accordance with growth rate of Gross Domestic Products and inflation, employers’ organizations have recommended.

The Viet Nam Chamber of Commerce and Industry (VCCI), Viet Nam Co-operative Alliance (VCA), Viet Nam Association of Small and Medium-sized Enterprises, Vietnam Garment and Textile Association (VITAS) and other sectorial associations sat down together in Hanoi today to discuss “Employers’ proposal on adjustment of minimum wages for 2015” at a workshop co-organized by VCCI and the ILO.

Regional minimum wages grew on average by 9.9 per cent in 2010, 30.1 per cent in 2012 and 15.2 per cent this year.

We urge minimum wage adjustment proposals of employers’ organizations and the trade union side to be based on the use of reliable statistics and sound data analysis, taking into consideration both social and economic criteria."
Phillip Hazelton
According to VCCI, the growth rate of regional minimum wages was equivalent to that of Consumer Price Index (CPI) in 2010-2011 but three times higher than CPI growth since 2012.

“The increase of minimum wages for 2015 should ensure both the actual salaries of workers and the production of enterprises,” said VCCI Employers’ Bureau Director Phung Quang Huy.

According to VCCI, minimum wage adjustment mostly affects garment, footwear and fishery industries.

“Increasing minimum wages by 10 per cent could increase enterprises’ costs for salaries by over 17 per cent due to increased allowances and other social benefits,” said VCCI Employers’ Bureau Deputy Director Vi Thi Hong Minh.

Representing employers’ organizations at the National Wage Council are VCCI, VCA, Viet Nam Association of Small and Medium-sized Enterprises, Viet Nam Leather and Footwear Association, and Viet Nam Textile and Garment Association.

ILO Viet Nam’s Chief Technical Advisor on Industrial Relations, Phillip Hazelton, said that it is important to enable and encourage joint and evidence-based discussion and interventions of key employers’ groups on minimum wage adjustment.

The ILO encourages a stronger co-ordination role of VCCI in working with other employer’s organizations on the National Wage Council and hopes that “different associations will be able to work more closely on joint studies and joint activities around this important area”.

“We urge minimum wage adjustment proposals of employers’ organizations and the trade union side to be based on the use of reliable statistics and sound data analysis, taking into consideration both social and economic criteria,” Hazelton added.

Minimum wage is a single wage floor level below which employers cannot go legally.

Minimum wage has limitations and it should not be used to address all poverty issues."
Gary Rynhart
The ILO suggests that the negotiations should look into the needs of workers and economic factors such as payment ability and competitiveness.

“Minimum wage has limitations and it should not be used to address all poverty issues,” said ILO Senior Specialist on Employers’ Activities, Gary Rynhart.

He advised Viet Nam to avoid indexing minimum wages to CPI because CPI measures changes in prices without providing information on incomes and does not cover all household expenditure.

Regional minimum wages in Viet Nam are now deliberated on by the National Wage Council, which was established in 2013 and gave an equal voice to the Government, employers’ organizations and trade unions.

Minimum wages for 2014 range from VND1.9 million (US$90) to VND 2.7 million ($129) per month depending on regions.