On August 07, 2017, the National Wage Council agreed that the minimum regional salary of 2018 will increase by 6.5% (lower than the rate of 7.3% in 2017). Based on the recommendations of the National Wage Council, MOLISA also carried out a draft Decree providing the minimum regional salary rate of employees working under labor contracts, which is expected to take effect from January 01, 2018 (the “Draft on Minimum Regional Salary”). Accordingly, the minimum regional salary rate of 2018 shall be:
– Region I: VND3,980,000 (increased by VND230,000 compared to that of 2017);
– Region II: VND3,530,000 (increased by VND210,000 compared to that of 2017);
– Region III: VND3,090,000 (increased by VND190,000 compared to that of 2017); and
– Region IV: VND2,760,000 (increased by VND180,000 compared to that of 2017).
Although the increase rate of minimum regional salary of 2018 was decided by the National Wage Council, such increase rate still does not satisfy both the employers and the employees. In the meetings about the increase of the minimum regional salary rates of 2018, the Vietnam Chamber of Commerce and Industry (“VCCI”) – representing the employers, expressed its point of view that the salary increase for the employees should be decided upon the labor productivity, the employees’ dedication and the socio-economic development, the employees should not solely rely on the increase of the minimum regional salary to have a better income. Therefore, VCCI initially proposed not to continually increase the minimum regional salary. In contrast, the Vietnam General Confederation of Labor – representing the employees, had a view that the current minimum regional salary rates still have not met the minimum living standard of the employees. Therefore, the Vietnam General Confederation of Labor initially proposed the increase rate of 13.3% of the minimum regional salary of 2018. In the 2nd and 3rd meetings, the parties adjusted their proposals regarding the increase rate of the minimum regional salary; specifically, VCCI’s proposals were 5% (in the 2nd meeting) and 6% (in the 3rd meeting); and the Vietnam General Confederation of Labor’s proposals were 8% (in the 2nd meeting) and 7% (in the 3rd meeting).
Increasing the minimum regional salary rates shall add more financial burden on the employers, especially for small and medium enterprises. However, standing on the consistent view of the Vietnamese Government on protecting the employees, increasing the minimum regional salary is an understandable option. Collecting public’s comments on the Draft on Regional Minimum Salary lasts until October 23, 2017, so the employers can still give comments on such Draft on Regional Minimum Salary.
Author: Stephen Le
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