Factories raise wages amid increasing cost of living

It has come even before a proposal to raise minimum wages has been approved by the government.

More than 1,200 employees of construction materials manufacturer Dai Dung Company at the An Ha Industrial Park in HCMC’s Binh Chanh District will receive a salary increase of 5-10 percent from May 1.

Plant workers will receive an extra VND20,000-50,000 ($0.87-2.18) per day, meaning their salary will increase by VND500,000-1 million per month, to VND8-9 million a month.

Everyone will be paid a minimum base salary of more than VND7 million to ensure that incoming full-time employee can earn at least VND8.5 million.

Trinh Manh Hung, the company’s deputy general director, said production was disrupted because of the Covid outbreak last year and the stay-at-work model increased costs, leaving the company to face enormous challenges while funding has not been easy to come by.

However, with higher cost of living, workers would be “unable to make ends meet if the old salary remains unchanged,” he said.

There was a labor shortage after the government eased restrictions and factories resumed operations, he said.

But many workers assisted the company at a time it needed most, agreeing to live away from their families for three or four months to help the factory meet production deadlines, and Dai Dung acknowledges this and plans to raise wages, he added.

Kurabe Industrial Vietnam’s factory in VSIP 1 Industrial Park in Binh Duong Province has increased the base salary for all employees by 6-8 percent a year.

Nguyen Thanh Ngu, chairman of its trade union, said the outbreak last year caused profits to fall short of expectations, production was disrupted, and the costs of workers living on site were high.

Yet the company decided at the beginning of this year to raise the basic salary by 7 percent and pay an additional of VND150,000 as a way of thanking employees for sticking with the company during difficult times, he said.

With this increase, the factory’s lowest base salary became VND5.5 million. New employees working full-time are able to earn around VND10 million with overtime.

“Enterprises proactively raise wages to help workers feel secure amid higher living costs.”

More than 200 enterprises accounting for more than half of all factories in VSIP 1 and 2 Industrial Parks have increased wages by 3-12 percent since the beginning of the year.

Dang Thi Kim Chi, president of the VSIP Industrial Park’s union, said while labor was somewhat scarce since employees were quitting their jobs to work as freelancers or return to their hometowns, the initiative to raise wages had helped reduce turnover.

Quick salary increases in particular helped prevents strikes, she said.

“The two-year delay in raising the minimum wage has created great difficulties for many workers”.

Though the government did not raise minimum wages last year when the fourth Covid-19 affected many businesses, a fifth of all enterprises hiked wages by an average of 5.3 percent.

Ngo Duy Hieu, deputy chairman of the Labor General Confederation, said while there is still disagreement over when the minimum wages would be adjusted in 2022, employers’ decision to unilaterally raise wages since the start of the year has been a great motivation for workers.

Labor relations at these companies is harmonious and workers feel secure, he added.

The government plans to give a 6 percent increase in minimum wage starting this July, meaning the new minimum salary will range from VND3.25 million to VND4.68 million a month.