Employers want low minimum wage increase in Vietnam

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Vietnam's garment industry is expected to affected the most by minimum wage increase. Photo: Diep Duc Minh Vietnam's garment industry is expected to affected the most by minimum wage increase. Photo: Diep Duc Minh

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Employers’ organizations have asked that minimum wage increase be kept below 12 percent in 2015 or halted altogether to ensure sustainable employment in Vietnam.
“We expect 2015 to be another difficult year and many companies will tighten recruitment and business expansion if there is a high increase in minimum wage,” Phung Quang Huy, director of Employers’ Bureau at the Vietnam Chamber of Commerce and Industry.
According to National Wage Council regulations, plans involving minimum wage adjustments have to be based on an agreement between representatives of employers, employees and the government.
The minimum wage is currently between VND1.9-2.7 million (US$90-128) a month, depending on the locations. 
At a recent meeting the on minimum wage held by the Vietnam Chamber of Commerce and Industry (VCCI) and the International Labor Organization in Vietnam, many representatives from employers’ organizations recommended that minimum wages increase in 2015 in accordance with the growth of the Gross Domestic Product and inflation.
In Vietnam, regional minimum wages grew on average by 9.9 percent in 2010, 30.1 percent in 2012 and 15.2 percent this year.
According to the VCCI, the growth rate of regional minimum wages was equivalent to that of Consumer Price Index (CPI) in 2010-2011 but has been three times higher than CPI growth since 2012.
“The increase in minimum wages for 2015 should ensure both the actual salaries of workers and the production of enterprises,” Huy said.
According to VCCI, minimum wage adjustments will mostly affects garment, footwear and fishery industries. The garment sector currently employs more than 2.5 million workers; more than 80 percent are female workers.
“Increasing minimum wages by 10 percent could increase enterprises’ costs for salaries by over 17 percent due to increased allowances and other social benefits,” said VCCI Employers’ Bureau deputy director Vi Thi Hong Minh.
Representing employers’ organizations at the National Wage Council are the VCCI, the Vietnam Association of Small and Medium-sized Enterprises, the Vietnam Leather and Footwear Association, and the Vietnam Textile and Garment Association.
Phillip Hazelton, chief technical advisor on industrial relations of the International Labor Organization (ILO) Vietnam, said that it is important to encourage joint evidence-based discussions with key employers’ groups on the minimum wage adjustment.
The ILO encouraged a stronger coordinating role for VCCI in working with other employer’s organizations on the National Wage Council and different associations to cooperate more closely on joint studies and joint activities on the issue.
“We urge minimum wage adjustment proposals of employers’ organizations and the trade union side to be based on the use of reliable statistics and sound data analysis, taking into consideration both social and economic criteria,” Hazelton added.
The ILO suggests that the negotiations should look into the needs of workers and balance them against economic factors such as competitiveness.
Gary Rynhart, ILO's senior specialist on employers’ activities, advised Vietnam to avoid tying minimum wages to CPI because CPI measures shifts in prices without providing information on incomes and does not cover all household expenditures.
“Minimum wage has limitations and it should not be used to address all poverty issues,” he said .

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