To enhance competitiveness and enter the WTO, the Ministry of Labor, Invalids and Sociable Affairs, has issued the decision adjusting the minimum wage scale in favor of the employees. This is a good measure to help narrow the wage gap between domestic and foreign invested enterprises. However, how much will this decision impact the performance of businesses?
To eliminate the gap between the minimum wage scale among businesses; the restriction on wage and the status of a civil servant in state owned enterprises, the Ministry of labor, invalids and Sociable Affairs plans to carry out the policy of the general wage rise in 2010.
According to Mr Nguyen Huu Dung, head of the institute of Science, Labor and Social Affairs when joining the WTO, Vietnam must guarantee equality among enterprises and business entities .Wages are also market oriented and determined by the living standard, the labor supply –demand relationship, and the labor agreement.
In fact, Vietnam has minimum wage scales applied to three types of businesses: state owned businesses with the minimum of VND 350,000 a month, private businesses with the minimum of VND 350,000 a month, and foreign invested businesses with the minimum of VND 710,000 a month. This situation represents the treatment discrimination and will be unsuitable when Vietnam enters the WTO.
While employees are happy with the pay rise, domestic enterprises are taking pains in finding a way out to compensate the deficit. Mr Luong Xuan Vinh, director of Vietnam SIS Software Company says pay rise will raise the cost of input. This is a complicated problem as it is difficult to apply this decision at the same time to all enterprises, especially most of which are small and medium sized.
The common problem that every enterprise is encountering is the crisis in labor force A recent FDI study of the Institute of State Economy Management, shows that during period 2001-2003, labor rotation among foreign enterprises reached 43 per cent. The highest percentage was in textile and footwear industry .Forty two percent of the changing jobs require skills. The shortage of labor contributes to the fact that enterprises have to pay more for skilled workers and pay less for unskilled workers .According to the calculation of the Plan and Investment Ministry, FID enterprises pay averagely between US$75 and UD$80 for unskilled workers, between US$220 and US$250 for engineers and US$ 500 for officers .It is very difficult to be able to employ a well qualified manager with the salary of US$ 1,000 .
However, some private enterprises are willing to pay more for their employees, even the highest wage to the best of their financial ability. If they offer lower wages, they will have to pay less for the input, however, more for taxes. Accordingly, only the state benefits while enterprises while their employees earn nothing .Hence, the decision on pay rise is welcomed by private enterprises.
Presently, there exist three popular wage scales: the nationwide minimum wage scale, the minimum wage scale on different branches, and the regional minimum wage scale .The government should play its role in establishing the reasonable wage system and policies for State businesses .It is urgent to narrow the wage gap among enterprises: state owned, private and FDI enterprises before WTO entry.
Thi Van
Vietnamese
