FILE PHOTO: Women work at Hung Viet garment export factory in Hung Yen province, Vietnam December 30, 2020. - Reuters
HANOI: The Ministry of Home Affairs has proposed a 7.2 per cent increase in the monthly minimum wage, equivalent to an extra VND250,000–350,000 (US$9,48 - 13.28) compared with current rates, under a draft decree on minimum wages.
Under the proposal, the new monthly minimum wages for each region would be: Region I at VNd5.31 million, Region II at VNd4.73 million, Region III at VNd4.14 million and Region IV at VNd3.7 million.
According to the Ministry’s impact assessment, this increase would put the minimum monthly wage about 0.6 per cent above the estimated minimum living standard up to the end of 2026. It also factors in part of the projected 2026 Consumer Price Index (CPI) so that workers benefit from the adjustment at the start of the year.
The plan takes into account the broader economic and social context as well as business costs. On average, production costs are expected to rise by 0.5–0.6 per cent, with higher increases in labour-intensive industries such as textiles and footwear (around 1.1–1.2 per cent).
The Ministry emphasises that the adjustment aims to balance the interests of both workers and businesses. Most companies are already paying above the proposed minimum wage, so the main impact would be higher contributions to compulsory insurance. For low-paid workers currently earning below the new threshold, salaries would need to be raised accordingly.
Vietnam first introduced an hourly minimum wage in 2022, calculated by converting the monthly minimum wage into an hourly rate based on standard working hours set out in the Labour Code.
If the Government approves the 7.2 per cent monthly wage increase from 2026, the hourly minimum wage would also be revised. The Ministry has suggested the following hourly rates: Region I at VNd25,500, Region II at VNd22,700, Region III at VNd20,000 and Region IV at VNd17,800.
The hourly minimum is intended only as the lowest base rate for negotiating pay per hour. At present, these figures roughly match the lowest wages already being paid for part-time or casual work. Since most businesses are paying at or above these rates, the adjustment should not significantly affect their costs or their ability to hire.
Applying the revised hourly minimum is expected to help workers improve their living standards and provide stronger protection for those in flexible or part-time jobs. Because the hourly rate is derived from the monthly minimum wage, it should not disrupt existing employment contracts or encourage a shift from monthly to hourly pay, or vice versa.
Currently, the regional breakdown of minimum wages covers 3,321 localities, with Region I applied in 439 areas (13.2 per cent), Region II in 428 areas (12.9 per cent), Region III in 806 areas (24.3 per cent) and Region IV in 1,648 areas (49.6 per cent). — Vietnam News/ANN
