Vietnam Hikes Minimum Wages by 5.3 Percent in 2019

Vietnam’s National Wage Council has increased the minimum wage by an average of 5.3 percent in 2019. The hike, which is the lowest compared to previous years, will increase the minimum wage in the four regions by US$7-9 per month. In 2018, the increase was 6.5 percent, while in 2017 the minimum wage was hiked by 7.3 percent.

Representing the employees, the Vietnam General Confederation of Labor (VGCL) proposed an increase of at least 6.1 percent, while the Vietnam Chamber of Commerce and Industry (VCCI) which represents the employers, proposed an increase of 5.1 percent. After discussions with the National Wage Council, all parties agreed on 5.3 percent.

Minimum wage increase

In 2018, minimum wages were increased by 6.5 percent and ranged from VND 2.76 million (US$118) to VND 3.98 million (US$171). In 2019, the new minimum wages will range from VND 2.92 million (US$126) to VND 4.18 million (US$180).

• Region I covers urban Hanoi and Ho Chi Minh City;
• Region II covers rural Hanoi and Ho Chi Minh City along with urban Can Tho, Da Nang, and Hai Phong;
• Region III includes provincial cities and the districts of Bac Ninh, Bac Giang, Hai Duong, and Vinh Phuc provinces; and
• Region IV covers the remaining localities.

Cost of living

VGCL which represents the employees conducted a survey in 2018 which included 3,000 laborers in 150 different businesses in Vietnam.

According to the survey results, 26.5 percent of the laborers said that they were “barely getting by”, while 12.5 percent said their wages were not enough to support their family. Around 44 percent of the surveyed employees work overtime for an average of 28 hours to make ends meet.

The survey concluded that an average worker’s minimum monthly spending is VND 6.5 million (US$ 280), while the average base salary is only around VND 4.6 million (US$ 197.8), which forces laborers to work overtime.

In 2017, consumer prices increased by 3.53 percent, while in 2018, it increased by 3.54 percent. As there is a strong correlation between inflation and wages, the rise in inflation will impact wage growth.

The 5.3 percent hike in 2019 minimum wages which is just slightly higher than the rise in consumer prices in 2018, will compel the government to increase the minimum wages by a much higher rate in 2020 to maintain the purchasing power.