Instead of keeping wages unchanged, Vietnam's legislators on Saturday approved a plan by the finance ministry to raise minimum wage by nearly 10 percent, or VND100,000 (US$4.8) a month, starting in July of next year.
The minimum wage for state employees, will be increased from the current VND1.05 million a month, as was suggested by the Finance Ministry on October 31.
Earlier the ministry had proposed keeping the current wage unchanged throughout next year, citing the low budget that did not achieve its targets in terms of alleviating poverty or reducing unemployment.
But many legislators objected, arguing that wage increase would boost consumption and save the economy.
Previously, Vietnam had planned to raise minimum wage to VND1.3 million in May 2013.
To even afford the more modest increase, the assembly on Saturday called on the government to impose standards of strict frugality in terms of spending and to vigorously control corruption.
It asked the government to save money on festivals, conferences, car purchases and travel trips for officials.
Deputies at the session also asked the government to maintain current prices on consumer goods and that raising them would render the wage increase neglible.
Increasing the minimum wage will drain the state budget of VND20.7 trillion ($993 million), of which local authorities will have to contribute VND3.3 trillion.
Approximately 8.3 million employees and retirees of state agencies stand to receive a boost in salary.
The Labor Ministry has said wages in the business sector will be increased by between 25 and 36 percent in May, from the current VND1.4-2 million depending on region.
The government is less concerned about the wage increase within the business sector because that burden will fall largely on enterprises.
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