The global solution for human resource professionals, combines custom research, strategic white papers, country primers, webinars and OnDemand educational programs, and the expert guidance...
By Lien Hoang
Vietnam will raise wages 6.5 percent in 2018, a record low that illustrates the country's struggle to balance the interests of workers, for whom the ruling Communist Party was founded, and those of a growing economy fueled by foreign manufacturers.
The minimum wage, which will range from 2.8 to 4 million Vietnam dong monthly ($123.20 to $176), is a key draw for companies from Samsung to Gap to source their products from this former war zone. The increase on Jan. 1 will precede a revision of the Labor Code expected to dismantle worker protections such as caps on overtime hours and breaks for nursing mothers.
“This will be a challenge for the Vietnamese workers, who mostly are having to struggle hard to survive with the small income,” said Trinh Khanh Ly, a doctoral candidate at Ghent University in Belgium who researches Vietnam's labor policies.
At the same time, Ly told Bloomberg BNA, the higher costs could deter foreign investors, who already are having second thoughts because the Trans-Pacific Partnership didn't pan out as they'd hoped. She said those investors may be eyeing Asian neighbors with lower monthly pay—$110 in Laos and $80 in Myanmar.
“According to my personal point of view, the Vietnamese government is taking a risky decision to increase minimum regional wages in this context,” Ly said.
Vietnam News, the government wire agency, reported that 6.5 percent is believed to be the smallest pay increase ever in the Southeast Asian country. Minimum incomes rose 12 percent in 2016 and 14 percent in 2015.
Most companies polled by the Vietnam Chamber of Commerce and Industry asked for no pay raise for 2018, according to an Aug. 7 post on the Ministry of Labor, Invalids, and Social Affairs website, which announced the 6.5 percent bump. The businesses argued that payrolls have been rising for years without a commensurate rise in productivity, even as they've faced financial hardship.
In the same post, a union leader said the wage boost would not meet basic living costs. Mai Duc Chinh, vice chair of the country's only labor union, the Vietnam General Confederation of Labor, said his own group's survey showed 51 percent of workers earn just enough to live, while 12 percent cannot cover their expenses.
The 2012 Labor Code requires earnings to be based on the “minimum living needs of the employee and his/her family.”
“Vietnamese law is very pro-employee,” Trung Khuat, an associate at Baker McKenzie in Ho Chi Minh City, told Bloomberg BNA.
The nominally socialist country of 92 million people provides a host of safeguards for workers, from paid maternity leave to union-employer discussions before any firings. Not all those safeguards are predicted to survive Vietnam's modern journey toward capitalism, which began with the Doi Moi era of privatization in the 1980s.
To contact the reporter on this story: Lien Hoang in Ho Chi Minh City at firstname.lastname@example.org
To contact the editor responsible for this story: Rick Vollmar at email@example.com
The Ministry of Labor, Invalids, and Social Affairs post announcing the 2018 minimum wages can be found in Vietnamese here.
For more information on Vietnamese HR law and regulation, see the Vietnam primer.
Copyright © 2017 The Bureau of National Affairs, Inc. All Rights Reserved.
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to firstname.lastname@example.org.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to email@example.com.
Put me on standing order
Notify me when new releases are available (no standing order will be created)