Experts call emergency salary increase too small

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Labor experts are urging the government to raise the minimum wage ahead of schedule, to help mitigate the affects of rising inflation.

"The government is weighing the merits of a basic salary increase  in October --instead of next January, as planned--due to rising inflation," Tuoi Tre quoted Deputy Minister of Labor, War Invalids and Social Affairs Pham Minh Huan as saying.

According to the ministry proposal, the minimum monthly wage will increase from between VND830,000 (US$40) and VND1.55 million to between VND1.4 million and VND1.9 million.

The minimum monthly wage varies, in Vietnam, from region to region.

Meanwhile, the Central Labor Union proposed a higher increase: between VND1.6 million and VND2.2 million.

At a meeting held by the labor ministry, on July 8, to discuss the issue, several businesses objected to the proposal citing financial difficulties.

Some foreign enterprises even threatened to move their operations out of the country.

A representative from the Vietnam Chamber of Commerce and Industry's southern office also said that the early salary increase would lead to difficulties, especially for garment and shoe manufacturing firms who have already inked their annual export contracts and can't negotiate higher prices owing to rising input costs.

Experts say that Vietnam's minimum wage is the lowest in the region and no business can blame high wages for its financial difficulties.

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"There is no real evidence that the increase will affect investment," said Ho Xuan Lam, the head of the labor management division at the HCMC Export Processing and Industrial Zone Authority. "Increase the basic salary and see if they move or not. I don't think they can move anywhere else because our basic salary is the lowest in the region."

Lam said no foreign investor will avoid Vietnam based on its salary levels. What's more, he indicated that low salaries could lead to labor disputes.

"There have been disputes at some Taiwanese-owned factories in Tan Thuan Industrial Park," he said. "We advised the owners to pay higher salaries but they said they couldn't because their foreign partners are aware of Vietnam's low minimum wages and are demanding low prices."

Huynh Van Tinh, vice director of the Dong Nai Provincial Labor Union, also said that many of the proposal's detractors have made good profits.

"This expedited minimum wage increase is totally necessary," he said.

Experts have even said that the proposed salary increase is too low and does not cover the basic cost of living.

Tong Minh Phuong, director of the labor ministry's Salary Department, said the increase would cover just a part of the recent inflation and is not enough to satisfy the basic demands of a worker.

Many experts were concerned that labor disputes would arise in spite of the minor salary bump.

"Prior to the previous increase, we warned that the raise was too low and labor disputes would surely follow," Lam said. "Listen to the workers or we will face escalating labor disputes."

A representative from the Long An Provincial Labor Department said that most local companies already pay a minimum wage of of roughly VND1.6 million VND2.2 million but there have been many labor disputes.

"There were 40 labor disputes in July due to low salaries," he said. "The new plan for a meager salary increase indicates that the labor ministry hasn't properly evaluated the situation."

In his closing remarks, Deputy Minister Huan agreed that the proposed increase would not satisfy the basic needs of the workers. He said the ministry proposed the increase based on several criteria, including demands of both employers and employees.

During an interview with Tuoi Tre, Huan charged that the salary increase was based on negotiations between the company and the workers.

He said the Labor Union could've helped the workers to demand higher wages but it acted ineffectively.

"Businesses know that if they pay low salaries, they can survive the damages caused by strikes," he said. "On the other hand, if they receive good wages, the workers may work harder to increase productivity."

The government has increased the minimum wage four times since 2008, when the basic monthly salary was between VND450,000 and VND620,000.

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