Recently, the Vietnam Chamber of Commerce and Industry (VCCI), Ho Chi Minh City branch, co-operated with the Ministry of Labour, War Invalid and Social Affairs to organise a seminar to gather inputs and comments from foreign direct investment (FDI) enterprises about the increase of minimum wage of their workers and staff members. It is a really urgent issue as the minimum wage set in the previous years seems outdated in comparison with the increase in the prices of goods.
The Ministry of Labour, War Invalid and Social Affairs has drafted a wage adjustment for the sector. Accordingly, using the first method, the minimum wage will be adjusted in correspondence with wages paid in three regions: VND 870,000 per month for workers of FDI enterprises in Hanoi, Ho Chi Minh City, Dong Nai and Binh Duong; VND 790,000 per month for workers of FDI enterprises in Haiphong, Ha Long, Da Nang, Nha Trang, Vung Tau and Can Tho; and VND 710,000 per month in the remaining provinces and cities. Using the second method, the minimum wage will be adjusted in correspondence with the CPI with VND 790,000, VND 710,000 and VND 630,000 per month for these major cities and localities, respectively.
According to the International Labour Organisation (ILO), the minimum wage is put at US$45 in Cambodia, between US$63 and 70 in China, between US$70 and 100 in Thailand, US$100 in the Philippines. The minimum wage in Vietnam is lowest in the region, around US$40 per month. Since 1989, the Vietnamese Government has stipulated a minimum wage of between US$45 and 50 per month for workers in FDI enterprises. After a reduction adjustment, wages still have three levels: US$35, US$40 and US$45 according to investment regions. In 1999, the Ministry of Labour, War Invalid and Social Affairs decided to change the minimum wage for workers in FDI enterprises from US dollar into Vietnam dong with the highest level of VND 626,000 per month. So far, the minimum wage still stands at the same level despite an increase of US dollar-Vietnam dong to VND 16,000 per US dollar. According to the statistics of the Ministry of Labour, War Invalids and Social Affairs, over the past five years, productivity of workers has increased by 56.69 per cent while most enterprises still use the minimum wage to sign contracts with their workers.
Mai Duc Chinh, vice president of the Ho Chi Minh City Labour Federation, said that nominal and effective wage of workers in the FDI sector has fallen much more than the reality of daily life. Apart from wage increase, enterprises have to register their payrolls. Nguyen Thi Thanh Mai, head of the Management Office of Workers with Foreign Countries, the Ho Chi Minh City Department of Labour, War Invalid and Social Affairs, said: “According to the regulation, if the CPI increases by ten per cent, the State will have to increase the minimum wage. However, over the past six years, the CPI has increased by 25 per cent with prices of food and foodstuff rising by 40 per cent and price of labour in the market increasing between 30 and 50 per cent, but the minimum wage remains at a standstill.”
Nguyen Phung Trung, deputy director of the Binh Duong Department of Labour, War Invalid and Social Affairs, said that the minimum wage of workers in FDI enterprises should increase to between US$60 and 65 per month. Representatives from the services of labour, war invalid and social affairs of Binh Duong and Dong Nai provinces, agreed to select the first way to adjust the minimum wage of workers in FDI enterprises. Chinh added that the Ministry of Labour, War Invalids and Social Affairs should develop a minimum wage for each sector, instead of regions as at present.
Most FDI enterprises pay their workers a higher rate than the minimum wage. However, many FDI enterprises want a gradual adjustment of salary for their workers instead of a sudden increase. This is because wage payment relates to social and medical insurance costs, and payment for newly recruited staff members. An enterprise, on behalf of the Republic of Korea Textile and Garment Association, said that labour costs account for 37 per cent of enterprises’ overall costs. With the application of new wage, the company’s overall costs will increase sharply as the company is expected to recruit 2,000 more workers. There is a conflict of interest as enterprises want to reduce production costs to increase their competitiveness but they have to pay high wage to their workers in order to keep them. Labour shortage is a big problem at present, mainly due to low payment and lack of welfare. Enterprises should consider an increase in their minimum wage for their workers.
Vietnamese
