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Vietnam to raise minimum wage by up to $18.9 per month in early 2015

The Vietnamese Government has issued a new decree to increase the minimum wage by up to US$18.9 from January 1, 2015.

The Vietnamese Government has issued a new decree to increase the minimum wage by up to US$18.9 from January 1, 2015.
The Vietnamese Government has issued a new decree to increase the minimum wage by up to US$18.9 from January 1, 2015.

The Government’s office on Monday released a notice saying that the Government has issued a new decree to raise the minimum wages by VND250,000 – VND400,000 ($11.8-$18.9) per month for laborers in all four of the country’s wage zones.

In September this year, the National Wage Council met and agreed that on January 1, 2015, the minimum wage will be increased by 14.5-15 percent from the current rates for all four zones.

However, when submitting its plan on budget expenditure allocation for 2015 to the NA recently, the Government cited difficulties in balancing the budget and asked the NA to delay the wage increase.

But after receiving feedback asking for a minimum wage increase to be made on schedule, the government has decided to issue a new decree to replace Decree 182/2013 dated November 14, 2013.

Accordingly, the new monthly minimum wages will be VND3.1 million ($146.3) for Zone 1, VND 2.75 million ($129.7) for Zone 2, VND2.4 million ($113.2) for Zone 3, and VND2.15 million ($101.4) for Zone 4.

Based on these minimum wage rates, employers can negotiate with their employees over actual monthly salaries, the new decree said.

Zone 1 covers urban Hanoi and Ho Chi Minh City; Zone 2 is applicable to rural Hanoi and Ho Chi Minh City along with urban Can Tho City, Da Nang City and Hai Phong City; Zone 3 comprises provincial cities and the districts of Bac Ninh Province, Bac Giang Province, Hai Duong Province, and Vinh Phuc Province; and Zone 4 consists of the remaining localities.

Currently, the monthly minimum wages for Zones 1, 2, 3 and 4 are VND2.7 million ($126.9), VND2.4 million ($112.8), VND2.1 million ($98.7) and VND1.9 million ($89.3), respectively, according to Decree 182.

Meanwhile, a survey conducted recently by the Institute for Workers and Trade Unions, under the Vietnam General Confederation of Labor (VGCL), shows that the minimum monthly living costs in Zones 1, 2, 3 and 4 are VND3,996,000 ($188.3), VND3,423,000 ($161.3), VND3,050,000 ($143.7), and VND2,695,000 ($127.5).

That means the current minimum wages in all four zones only meet 67-70 percent of the respective minimum living costs, said Dang Ngoc Tung, the VGCL President.

This also means even when the new minimum rates are applied early next year, they will still not match the actual cost of living.