Vietnam: Regional minimum wage hike takes effect in July

VIETNAM: After almost two and a half years following the pandemic, Vietnam will raise regional minimum salaries by around 6% starting July 1, 2022. Given the short notice, businesses are expected to plan their budgets and include in the additional HR expenditures.

The wage hike, which is based on the region's living expenditures, ranges from US$140 to US$202. Deputy Prime Minister Pham Binh Minh signed Decree No 38/2022/ND-CP after sealing an agreement with key government agencies and labour leaders.


The Decree also establishes minimum hourly pay rates in the affected districts. They are as follows:

  • Region I – VND 22,500 (US$0.97)

  • Region II – VND 20,000 (US$0.86)

  • Region III – VND 17,500 (US$0.75)

  • Region IV – VND 15,600 (US$0.67)

When translated to monthly or hourly rates, salaries that are paid daily or weekly must not be less than the minimum wage. The new rates are applicable to employees hired via labor contracts under the labor code, which covers corporations, organizations, cooperatives, homes, and individuals.


The decree comes as Vietnam faces inflationary pressures as a result of rising gasoline prices and the Russia-Ukraine crisis.


The consumer price index in Vietnam grew 2.86 percent in May, up from 2.64 percent in April. The labour ministry has also indicated that raising the minimum wage will safeguard workers' livelihoods while laborers have requested hikes of up to 8%.


However, businesses have warned that pay rises will raise costs and upset company plans for the year.


Representatives of VCCI stated that they expected increases from January 2023 rather than 2022. Smaller businesses and SMEs have also expressed concern that the wage rise will add up to HR expenses and constitute an additional strain owing to decreased income caused by the epidemic.


Employers have claimed that their labor expenses will rise by at least 10%. They have also added that, while it is not obligatory to boost minimum pay for workers paid over the minimum wage, failure to do so may result in worker dissatisfaction. This may lead to job switching during a period when it is difficult to recruit due to a labor shortage.

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