Minimum salary to increase up to US$60

Deputy Minister of Labour, War Invalids and Social Affairs Huynh Thi Nhan

As of January 1, 2008, workers in all enterprises will see their minimum salary increase, said Deputy Minister of Labour, War Invalids and Social Affairs Huynh Thi Nhan Monday.

At a press conference held in Hanoi on October 22, the Deputy Minister said that the Ministry of Labour, War Invalids and Social Affairs (MoLISA) submitted to the government the scheme on increasing minimum salary for workers.

Under this scheme, as of January 1, 2008, minimum salary for workers in both domestic and foreign-invested companies will rise. The adjustment of minimum salary for both kinds of enterprises will be based on the region where they are located.

There are three regions: the first includes urban districts of Hanoi, HCM City; the second comprises suburban districts of Hanoi, HCM City, urban districts of Hai Phong, Ha Long City in Quang Ninh province, Bien Hoa city in Dong Nai province, Vung Tau city in Ba Ria Vung Tau province, Thu Dau Mot town and the districts of Thuan An, Di An, Ben Cat and Tan Uyen of Binh Duong province; the third region includes the remaining areas.

For local companies, the minimum salary of workers in the region 1 is planned to be VND620,000 (US$38) per month, up by 38%; VND580,000 ($36) for region 2; and VND540 ($33) for region 3.

For foreign-invested enterprises, the increase is planned to be 13-15% more than the current level, to VND1 million ($62) for region 1, VND900,000 ($56) for region 2 and VND800,000 ($50) for region 3.

Pham Minh Huan, Head of the Salary and Wage Agency under MoLISA, explained that the higher increase of minimum salary for workers in the foreign-invested sector slower than that of the local sector is to reach the same level for all enterprises, following Vietnams WTO commitments (non-discrimination between forms of business). It is expected that by 2012 as the deadline, Vietnam will have a common minimum salary for all enterprises.

For that purpose, by every fourth quarter, based on economic growth, consumer price index and labour supply and demand in the market, the MoLISA will define the adjustment of minimum salary for the next year, which will be announced in advance.

According to Huan, increasing minimum salary doesnt mean that all workers enjoy salary increase because that is the lowest level that employers must pay to a worker in the normal condition. The specific salary is negotiated between employers and employees.

He said that actually, most companies pay salary for their workers at the higher level than the minimum salary to attract qualified human resources so the adjustment of minimum salary this time will make expenditures for social insurance and health insurance higher only. Thus the total input expenditure of an enterprise may rise by 0.25 to 0.5%.

The official added that footwear, garment and processing companies will be under pressure from this change. Around 6 million workers will benefit from this change, including 1 million in foreign-invested, 2 million in state-owned and around 3 million in private companies.

Officials of the MoLISA didnt mention the increase of minimum salary for state employees who work in administrative agencies and the armed forces. However, according to the salary reform scheme for 2008-2010, the minimum salary for labourers in these sectors will be higher.

Since October 1, 2006, the minimum salary applied for workers of domestic companies, administrative agencies and the armed forces is VND450,000/month ($28).

(Source: VNN)