The National Wage Council reportedly agreed on the proposal to increase base wages by VND250,000-400,000 in 2014, which is making not only Vietnamese companies but also workers worried.
A salary rise in Vietnam now carries a sadder tone. Only a small number of State employees have their wages increased, but consumer price hikes that result from it have direct effects on the livelihoods of millions of people, affecting people with no wage increase.
Increase in theory
The syndrome of salary increase anxiety has existed for years. When the Government advocates adjusting base wages annually, the average income of some areas has been increased. However, consumer prices soar ahead of salary increases.
Dr Nguyen Minh Phong from the Hanoi Institute for Economic and Social Development Studies, said, although salary has been repeatedly increased and the incremental amount is significant, the average wage of most State employees is still far from the "minimum wage" level.
He said our salary is the salary with full content and nature of (market) economy. Up to now, the salary increase in Vietnam is basically a passive situational response to inflation. The "race" after price is strong enough but the salary eventually lags far behind the price. Clearly, the current salary hike cannot solve the problem. It only makes the problem worse because it makes the salary go off its nature more distantly. We need a true salary reform rather than a “marathon chase” of salary to price.
Mr Dang Nhu Loi, former Chairman of the National Assembly’s Commission on Social Issues, said it is right to increase minimum living standard of workers when CPI climbs. However, the base salary rise must take into account other factors such as labour productivity growth and economic growth, not only CPI.
If the salary rise only aims to offset price hike, this move does not make things better when it directly impacts prices. Wage increase results in continued price rise. Therefore, wage increase must be based on the value of labour used.
In principle, the wage is the price of labour. It must ensure the regeneration of labour and better living quality of labourers. Nevertheless, as an input of production and business distributed as an output, the wage depends on personal productivity, business efficiency of enterprises and general living conditions of the country. Moreover, wage policies must be placed in an overall picture of distribution and redistribution, ensure social justice, fair employment.
Reasonable pressure for businesses
In practice, many companies do not base their wages on the government’s base wage policy. But, although they do not increase salary as provided, the base wage rise policy still takes more costs. Mr Chu Minh Tuan, President of the Board of Directors of Song Da Simco Joint Stock Company, said that a big salary rise will result in bigger payments for social insurance and other insurances.
The rise in base wages also causes social insurance to rise, a heavy burden in the current context of economic hardships. The wage increase can negatively impact businesses. While companies are bracing themselves for inflation, rising interest rates and capital shortage, the rise in base salary will cause insurance payments and wage-related funds to rise. Perhaps, some companies may have to consider bankruptcy or layoffs. Then, many labourers may face unemployment.
Besides, on the flip side of increased labour costs, companies have to be more careful and thoughtful about employment or even accept massive layoffs. However, Dr Bui Sy Loi, Deputy Chairman of the National Assembly’s Commission on Social Affairs, said the increased labour productivity is also a facility to accelerate adjust base wage but it must ensure fair, harmonious interests of labourers.
The wage increase forces companies to invest in technological innovation and labour productivity improvement. Nguyen Huu Su, a representative of Hanoi Industry and Trade Association, said the rise in base wage requires efforts of not only companies but also authorities. Amid economic recession, companies are struggling to survive. A rise in base wage may cause many companies to go to the wall more quickly.
Stable and sustainable policies
In fact, Vietnam’s salary policy fails to meet the market economy and to motivate economic growth.
The pay for civil servants is lower than in business fields. As salary is not enough for daily needs, many commit bribery and corruption, especially in administrative agencies.
Dr Tran Dinh Thien, Director of the Vietnam Economics Institute, said a good wage policy must promote the creativity, capacity and performance of the workforce, especially high-level experts and talents. The wage policy must be placed in harmony with incomes in other sectors and motivate economic restructuring and development. In particular, a satisfactory income policy also helps reduce conflicts of interest and strikes, and increases the attractiveness of the investment and business environment.
Mr Phong suggested that the State be more active in collaboration with trade unions and professional and social associations, and be more flexible in minimum wage regulations to meet the demand of labourers.
In addition, the wage mechanism at enterprises should be unified. The State should encourage the formation of wage negotiation mechanism and unified payroll. High salary is encouraged to ensure savings for workers to minimise labour disputes and industrial actions.
The wage policy in State-funded administrative agencies and State-owned enterprises must fully monetise wages as the main source of income that ensures good living standards for labourers. High pay is encouraged for talented staff.
Mr Thien concluded, we need a real wage reshuffle, rather than continuing a “marathon chase” between salary and price.
B.T
Vietnamese
