Wage hike will be less sharp in coming years

Wage hike will be less sharp in coming years

Thuy Dung

HANOI – The recent spikes in the region-based minimum wages have put great pressure on employers. However, the coming rises will be less sharp as the current wages almost meet workers’ minimum living needs.

Tong Thi Minh, head of the Department of Industrial Relations and Wage under the Ministry of Labor, War Invalids and Social Affairs, told the Daily on the sidelines of a press conference on the minimum wage hike for 2018 in Hanoi on August 7 that the past increases of the region-based minimum wages were quite strong, except for this year.

The 2017 pay raise is lower than in previous years, at 7.3%, while the figure for next year is expected at 6.5%. As such, the minimum wage can now meet 92-96% of the minimum living needs of workers.

“Wage rises in coming years will not be as sharp as in previous years,” Minh noted.

However, she admitted, the newly proposed 6.5% pay raise would put huge pressure on small and medium enterprises, especially those in labor-intensive industries like textile-garment, leather-footwear, seafood, and electronics. They might resort to layoffs to scale down their payrolls.

Pay checks account for 8-10% of total costs at local enterprises. They will have to cut costs to cope with the upcoming wage rise, according to the National Wage Council.

Given the proposed hike in minimum wages, Minh said, the gross salary for employees may rise at low levels, but their payments for social, healthcare, and unemployment insurance premiums may be much higher than the current levels.

She said the minimum wages are intended to help employees meet their minimum living needs and reinvest in their energy, and protect vulnerable workers.

However, the average salary which plays a more important role in workers’ lives depends on negotiations between them and their employers; their labor productivity, and employers’ ability for wage payment, and employment demand.

Therefore, the Government is striving to raise the average salary in a bid to improve the living conditions of workers.

She said the minimum wage is expected to make up 57-58% of the average level next year, higher than in other countries.

The labor ministry intends to promote the national salary policy which aims to boost productivity, thereby raising the average salary in line with investment, growth, consumer price and employment indexes.

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