The Ministry of Labour, Invalids and Social Affairs (MoLISA) is joining relevant ministries and sectors in drafting decrees on minimum salary levels for submission to the Government in November. Adjustment in the minimum salary range applicable to businesses of different types relies on the following elements: target for socio-economic development (annual GDP growth rate of 8.5-9 percent), social and labour productivity (up 13 percent), the consumer price index (CPI), wage levels on the market, requirements for the application of a unified minimum salary scale for businesses under the NA resolution, the roadmap of State-owned enterprises (SoEs) equitisation under the Enterprise Law issued in 2005 and the implementation of Vietnam’s international commitments in the wake of the country’s entry to the World Trade Organisation (WTO).

Minimum salary scale for businesses should be unified

According to the MoLISA, the adjustment will be made as of January 1, 2008. Minimum salary levels will be applicable to domestic and foreign-invested enterprises with increases of between 20-38 percent for domestic enterprise and between 13-15 percent for foreign-invested enterprises.

However, the minimum salary scale will be based on the difference in salary levels between regions with a view to ensuring the consumption power of minimum wage-earners, sharpening competitiveness and attracting highly-skilled employees.

Head of the Salary and Wage Department Pham Minh Huan said that the adjustment will help gradually reduce the difference in minimum salary levels between domestic and foreign-invested enterprises.

In the last quarter of the year, relevant agencies often consider the economic growth rate, the CPI and supply and demand on the market in order to adjust salary levels for the next year and announce the adjustment in advance to enterprises so that they can calculate the regular payment for employees. The adjustment in minimum salary levels for both domestic and foreign-invested enterprises aims to move towards a unified minimum salary scale between the two sectors by 2012.

A rise in minimum salary does not mean higher income

Nguyen Manh Cuong, director in charge of labour relations under the MoLISA, said a rise in minimum salary does not mean higher income. Mr Cuong said minimum salary is the lowest level of the salary scale which will be used for salary negotiations between employers and employees.

In the last minimum salary increase in October 2006, some workers blamed their bosses for not raising their salary levels according to the government decision. However, the fact is that most enterprises have paid workers more than the minimum salary level permit. Therefore, managers may feel unnecessary to raise salary levels for their staff. Only State employees will be paid higher as their minimum salary will be raised by coefficient.

Pham Minh Huan added that the draft is just a regulation of minimum salary levels for enterprises, thereby it will not affect the State budget. For enterprises, a rise in minimum salary means that they will have to pay more social insurance for employees.

Increasing role of trade unions

Nguyen Xuan Nga, an official from the Vietnam General Confederation of Labour, said minimum salary is not the real income of an employee. Apart from salary, employees will enjoy some other social benefits such as social insurance, health insurance and even social allowance. Therefore, a minimum pay rise needs to go along with the insurance of other social benefits

In addition, Nguyen Manh Cuong emphasized the need to promote the role of trade unions to protect the interests of employees. In case employees fail to negotiate with employers, trade unions will intervene. Therefore, in the near future, it is necessary to streamline and perfect the network of trade unions in enterprises, as well as trade unions in groups of enterprises and industries.