The forthcoming spikes in the region-based minimum
wages are expected to improve workers’ incomes but
production costs in labour-intensive industries will
certainly pick up.
The Ministry of Labour, has proposed a wage increase of 6.5%, or
VND 180,000-230,000 a month, which would go into force
early next year. This is also what the National Wage Council, and
representatives of employers and employees have agreed upon
after three rounds of negotiations. The current inflation rate of
4-4.5% is taken into account to guarantee a real wage rise for
workers and labor productivity growth of 2-2.5% in a bid to meet
92-96% of their minimum living needs, according to the ministry.
Given the 6.5% rise, production costs might move up
0.55-0.6% but the increase could be 1.15-1.2% in labour-intensive
industries like textile-garment and leather-footwear.
In addition, the Government has proposed the National
Assembly Standing Committee lower the rate of the
unemployment insurance fund for employees by 0.5%.
According to Vietnam Textile and Apparel Association the 6.5%
pay raise would make life more difficult for companies in the sector.
They would be compelled to cut production costs, improve
productivity, and invest in new technologies to use less labour.