Regional minimum wage in 2018: How much is enough?

It needs to provide an accurate figure of minimum living standards of workers. Picture: Bui Nu.

Still difference

After 2 sessions of the National Wage Council, the minimum wage increase in 2018 has been not finalized yet because the proposal among the representatives is still different so much. Specifically, at the second meeting, if the representatives of the workers - Vietnam General Confederation of Labor proposed an increase of 13.3%, then accepted the proposed increase to 10% and finally to 8%, the representatives of the employer – Vietnam Chamber of Commerce and Industry (VCCI) only proposed 5%.

Explaining the reasons for the proposed increase by 5%, Mr. Hoang Quang Phong, Vice President of VCCI, said: "The decision to increase the minimum wage at the level is based on actual labor productivity, the CPI, and quality of work, the affordability of the enterprises. Under the current conditions, the ability of enterprises has improved but most of them are difficult. Especially, labor-intensive enterprises in the textile and garment, footwear, fishery and electronic assembly...” In particular, it is also necessary to reserve geographical balance for the employers to negotiate with the workers through tools such as bonuses, allowances, which also motivate to increase labor productivity.

Talking about the downside of raising minimum wages too high, Mr. Phong said that if the minimum salary is too high that will make the balance in the payroll business shrink. The minimum wage increase too high that will cause businesses to reduce production, the risk of layoffs. At the same time, it will lead to higher prices for services and indirectly affect the informal worker groups.

According to Mr. Doan Mau Diep, Deputy Minister of Labor, Invalids and Social Affairs, Chairman of the National Wage Council, compared to the first meeting (June 27, 2017), the representatives of workers and employers were more goodwill in finding ways to narrow the proposed minimum wage increase during the second session. Last time, the gap was over 8%. But in this meeting, the gap has been reduced to 3% and the final proposal will be available at the next meeting on August 7, 2017.

Mr. Doan Mau Diep adds that there are only two options that the parties recommend to study together in a week to increase 5% or 8%. During this time, the representatives of Vietnam General Confederation of Labor and VCCI can discuss together to find the most reasonable plan. Expected on August 7, 2017, the National Wage Council will hold a third session to determine the regional minimum wage in 2018.

For enterprises or for employees?

This is the question of many people before the final session to finalize the minimum wage increase for 2018 on August 7. According to Mr. Mai Duc Chinh, Vice Chairman of the Vietnam General Confederation of Labor, survey results of the unit in 17 provinces and cities show that only 51.3% of workers have enough income to cover their living expenses; 20.6% said to spend frugally; 12% cannot afford to live and only 16.1% of workers are able to accumulate from income.

Commenting on the increase of 5% of the representative of the employer - VCCI, Mr. Chinh said that the increase of 5% is considered as not increase, it only offsets the price. All socio-economic figures for the first six months are brighter than in 2016, so there is no reason to expect the regional minimum wage increase to be lower than 2017. "And if the minimum wage schedule meets the minimum living level in 2018, the increase must be at 13.3%; If longer, it is lower than 10%. “It is important that the National Wage Council should determine when the minimum wage roadmap meets the minimum needs; If one side determines but the other does not, it will surely bounce off, "- Mr. Mai Duc Chinh stressed.

Talking to reporters on the sidelines of the second meeting, Mr. Hoang Quang Phong said that from the employers' point of view, the minimum wage has not met the minimum living needs, but at least have maintained labor. If the current minimum wage is approaching the average wage level, there is still a geographical balance left over for employers to increase employee incomes through compensation, allowance... And if the minimum wage is too high then the balance will be exhausted.

In addition, enterprises will have to restructure their machinery and that will have a part of workers lose their jobs. A part of the working population is likely to become unemployed. This is a social corollary. So we do not want that to happen. It needs to adjust to the level that enterprises still grow. Because the employee and the employer are standing on the same boat, striving for the development of the enterprises. Enterprises develop sustainably to achieve the ultimate goal of improving labor productivity, competitiveness...

"We also agree with the view of the Vietnam General Confederation of Labor that the current minimum wage does not meet the minimum living standard. This can also be seen as a struggle, and businesses are eager to strive for higher affordability, meeting the minimum wage requirements of workers. However, the business side proposes an increase of 5% for enterprises to adjust, restructure their production, improve management capacity and especially improve competitiveness and increase labor productivity.

According to Mr. Pham Minh Huan, former chairman of the National Wage Council, the minimum wage in 2018 should only increase 5%. This increase is not as high as in 2017, but it also partly guarantees the real wage for workers as the price slippage in 2018 and especially the endurance of enterprises. Therefore, we should focus on the enterprises to create the momentum in 2018 and the minimum wage will only increase by 5%.

As the State Administration, Deputy Minister of Labor, Invalids and Social Affairs and Chairman of the National Wage Council Doan Me Diep said: The mechanism of the National Council of Salary is to dialogue to find the balance. The minimum wage increase for 2018 will ensure the harmony between workers and employers.