Labourers receive their salary (Illustrative photo: VNA)
Hanoi (VNA) – The Vietnam General Confederation of Labour (VGCL) revealed options for the regional minimum wage increase in 2020 ahead of the second round of negotiations,which is set to take place in Hanoi on July 11.
The VGCL has proposed three options on the regional minimum wage hike between 6 and 8 percent.
The figure was put forward during a seminar on minimum living standards, labourers’ income and options for the regional minimum salary in 2020 hosted by the VGCL in Hanoi on July 10.
Why an increase of 6-8 percent?
Explaining the expansion of 6 and 8 percent proposed by the VGCL, deputy head of the Department of Labour Relations under the confederation Le Dinh Quang said the proposal was based on real-life data.
The growth of the country’s gross domestic product stood at 7 percent, consumer price index at 4 percent and labour productivity at more than 5 percent. Those were macroeconomic indicators which have a positive influence on the regional minimum wage adjustment in 2020.
Meanwhile, exporters have recorded increasing orders, especially in sectors recruiting a large number of workers. This illustrates that businesses’ financial capacity will remain stable. In addition, the number of newly-established firms rose compared to that of the previous year, Quang noted.
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Furthermore, Quang said the VGCL had looked at the ratio of food products to non-food products in other countries which share similar living standards to Vietnam. The result indicated that in Cambodia, Sri Lanka, the Philippines, India, and Mongolia, the ratios are higher than in Vietnam.
Based on the ratio of food and non-food products in some countries with similar living standards to Vietnam, the VGCL put forward three options for the regional minimum wage hike.
First option: The rate stands at 46.5 percent, higher than that of Cambodia (46.2 percent), rising by 8.18 percent, equivalent to 180,000-380,000 VND.
| Regions | Wage in 2019 | Proposals of the Technical Department under the National Wage Council | Proposals of the VGCL | ||||
| Wage | Increase by | Percent | Wage | Increase by | Percent | ||
| IV | 2,920,000 | 2,981,000 | 61,000 | 2.1 | 3,100,000 | 180,000 | 6.16 |
| III | 3,250,000 | 3,452,000 | 202,000 | 6.2 | 3,530,000 | 280,000 | 8.61 |
| II | 3,710,000 | 3,944,000 | 234,000 | 6.3 | 4,040,000 | 330,000 | 8.89 |
| I | 4,180,000 | 4,436,000 | 256,000 | 6.1 | 4,560,000 | 380,000 | 9.09 |
| 5.2 | 8.18 | ||||||
Second option: The rate stands at 47 percent, similar to that of the Philippines (47.1 percent), rising by 7.06 percent, equivalent to 160,000-330,000 VND.
| Regions | Wage in 2019 | Proposals of the Technical Department under the National Wage Council | Proposals of the VGCL | ||||
| Wage | Increase by | Percent | Wage | Increase by | Percent | ||
| IV | 2,920,000 | 2,981,000 | 61,000 | 2.1 | 3,080,000 | 160,000 | 5.47 |
| III | 3,250,000 | 3,452,000 | 202,000 | 6.2 | 3,480,000 | 230,000 | 7.07 |
| II | 3,710,000 | 3,944,000 | 234,000 | 6.3 | 4,000,000 | 290,000 | 7.81 |
| I | 4,180,000 | 4,436,000 | 256,000 | 6.1 | 4,510,000 | 330,000 | 7.89 |
| 5.2 | 7.06 | ||||||
Third option: The rate stands at 47.5 percent, higher than that of Sri Lanka (47.6 percent), rising by 7.06 percent, equivalent to 120,000-320,000 VND.
| Regions | Wage in 2019 | Proposals of the Technical Department under the National Wage Council | Proposals of the VGCL | ||||
| Wage | Increase by | Percent | Wage | Increase by | Percent | ||
| IV | 2,920,000 | 2,981,000 | 61,000 | 2.1 | 3,040,000 | 120,000 | 5.00 |
| III | 3,250,000 | 3,452,000 | 202,000 | 6.2 | 3,460,000 | 210,000 | 6.46 |
| II | 3,710,000 | 3,944,000 | 234,000 | 6.3 | 3,970,000 | 260,000 | 7.00 |
| I | 4,180,000 | 4,436,000 | 256,000 | 6.1 | 4,500,000 | 320,000 | 7.65 |
| 5.2 | 6.52 | ||||||
Wage hike enhances firms’ competitiveness
At the first meeting of the 2019 National Wage Council to discuss minimum wage hike held in late June, while the VGCL suggested a rise of more than 8 percent, the Vietnam Chamber of Commerce and Industry (VCCI) proposed 3 percent.
Quang said the rise proposed by the VCCI may not be appropriate, because increasing minimum wage also improves firms’ competitiveness in meeting orders.
He added that minimum wage at a subsistence level will be a competitive factor of businesses when the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and the EU-Vietnam Free Trade Agreement (EVFTA) take effect. Many global brands have pledged to pay substantial wages and asked businesses to do the same for their workers.
The wage hike proposals of the VGCL and the VCCI have a 5 percentage point difference (Illustrative photo: VNA)
Quang pointed out that Resolution 27 of the 12th Party Central Committee on wage policy reform affirms that by 2020, minimum wage should ensure adequate standard of living of workers and their families. It serves as an orientation for the meeting on minimum wage in 2020. The 3-percent rise cannot fulfil the target, he stated.
At the first round of negotiations on regional minimum wage in 2020, the sides delivered their proposals which show a 5 percentage point difference (the 8 percent rise proposed by the VGCL and the 3 percent expansion by the VCCI). The second round of negotiations will take place on July 11 and the sides will join talks to reach a consensus on a suitable hike. -VNA
