Associations propose postponing minimum wage rise

Eight domestic and foreign associations have called on the Vietnamese Government to postpone the regional minimum wage increase until January 1, 2023, instead of July 1, 2022, as stipulated in the latest decision of the National Wage Council.         

Laborers expect to increase the regional minimum wage soon. Photo: ILO

The associations included the Japan Business Association in Vietnam, the Vietnam Association of Seafood Exporters and Producers, the Vietnam Textile and Apparel Association, the Vietnam Electronic Industries Association, the Food and Foodstuff Association of Ho Chi Minh City, the Vietnam Timber and Forest Products Association, Vietnam Plastics Association, and the Vietnam Association of Motorcycle Manufacturers.

In a request sent to Prime Minister Pham Minh Chinh, these associations said that the pandemic outbreak during the 2020-2021 period had seriously affected businesses, draining their resources. The delay will give them time to better prepare for the wage raise.

The associations also believed that the pandemic has not been over yet, workers acquiring the coronavirus are detected every day and their production is still at risk of being affected by the new virus strains.   

If the wage increase becomes effective right in July, it would alter their production, financial, and order plans built late last year while it is almost impossible for them to increase selling prices to offset the rising wage costs. In addition, some have already increased salary in early 2021 and 2022.

“Many businesses will have to cancel contracts because of uncertain costs, cutting payroll, suspending production, or narrowing scale,” the request noted.

Previously, at the second meeting on April 12, the National Wage Council proposed that the minimum wage increase by 6% from July 1, or VND180,000-260,000 (US$7.8-11.3), which varies between regions. If approved by the Government, monthly minimum wages in Region 1 will be VND4.68 million ($202.9), VND4.16 million ($180.3) in Region 2, those in Region 3 would receive VND3.64 million ($157.8), and VND3.25 million ($141.2) in Region 4.

According to the Technical Department of the National Wage Council, with such an increase level, production costs of enterprises are expected to increase by 0.5-0.6% on average. Expenses of textiles, garments, and footwear businesses will increase by 1.1-1.2%.

In this meeting, the Vietnam Chamber of Commerce and Industry (VCCI), representing employers, agreed with the pay rise but said it should be implemented in early 2023. 

The minimum wage in Vietnam has been raised 18 times since 2009.