National Wage Council’s meeting: Is salary hike 2020 'reachable'?

Hanoi (VNA) - Resolution No.27-NQ / TW 2018 states that by 2020,the minimum wage must ensure minimum living standard of employees. Will the results of the National Wage Council’s meeting make this goal reachable?

The National Wage Council convenes the first meeting, discussing regional minimum salary hike 2020 (Photo: VietnamPlus) 

On June 14, the National Wage Council will convene its first 2019 meeting to discuss raising the minimum wage.

7-8 percent wage hike proposal

Talking with reporters at the beginning of the meeting, deputy head of the Vietnam General Confederation of Labour (VGCL)’s Department of Labour Relations Le Dinh Quang said the 2018 minimum wage negotiations helped raise 2019’s minimum wage, meeting about 95 percent of the minimum living standard for employees.

“The economic landscape for 2019 is favourable for a minimum wage hike by 2020. 'Filling' the gap between the minimum wage and the minimum living standard is VGCL’s expectation at the negotiating season for minimum wage for 2020,”Quang said.

According to him, a crucial point in the talks is determining the rate of food and non-food demand in employees’ minimum "living standard basket". The VGCL now has two calculations different from that of technical staff at the National Wage Council.

"The first option is determining the rate of food/non-food demand at 48/52, corresponding to the proposed regional minimum wage increase of 7.06% by 2020.The second option is the rate at 46.5/53.5, equivalent to an 8 percent rise,” he said.

A VGCL representative suggests raising regional minimum wage by 7-8 percent by 2020 (Photo: VietnamPlus) 

Vice Chairman of the Vietnam Chamber of Commerce and Industry (VCCI) Hoang Quang Phong expressed caution when it comes to increasing minimum salary by 2020.

He said the consumer price index is below 4 percent while labour output remains the same as in 2018. Despite economic recovery, there is still a hidden risk affecting the "health" of businesses.

"More than 20 business associations,domestic and foreign alike,have asked the VCCI to not raise the regional minimum wage by 2020," said Phong.

He said that basically, businesses paid higher than the proposed 2019 regional minimum wage increase of 5.3 percent. Specifically, 72.5% of the firms adjusted salaries up by 6 percent and 2.1% offered a 5.9 percent rise.

“A minimum wage hike raises business costs while many costs have to be cut to compete with others. In the first five months of this year, among the 54,000 newly-established enterprises, more than 20,000'escaped' the market, of which 7,000 have completed dissolution procedures,” he said.

Negotiations never easy

Speaking at the opening session, Doan Mau Diep, Chairman of the National Wage Council, who is also Deputy Minister of Labour, War Invalids and Social Affairs, said the meeting of the council is expected to conclude in July.

"The National Assembly convened a session and reviewed socio-economic performance in the first half of this year. The parties concerned are ready to comment during the council’s meeting,”Diep said.

He said determining minimum wage requires careful discussions because it relates to goods basket, prices and expense rate in the context of low income. In the first meeting, the council will hear reports from the technical department, representatives of the State, workforce and firms to collect data and devise plans to reach consensus on minimum wage.

“Every year, parties representing employers and workers will present different plans. Therefore, the differences are normal.The council needs to discuss and negotiate to reach a certain level to submit to the government,” he said.

Quang predicted that negotiations will be tough because all parties have different opinions.

"For many years, it has never been easy to reach a compromise during negotiations,"Quang said.

In particular, Resolution No.27-NQ / TW 2018 on wage policy reform clearly states that by 2020, the minimum wage must meet the minimum living standards of workers and their families. Therefore, the pressure to adjust the regional minimum wage in 2020 will be greater than in previous years.-VNA