4 Factors to Consider When Relocating Your Production
By Pritesh Samuel Vietnam is experiencing continued and unprecedented […]MORE
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In addition, salaries that are paid to employees who have had vocational training must be paid at least 7 percent higher than the minimum salary level.
Businesses cannot reduce overtime, night shift or other hardship allowances that are provided to employees when applying the new minimum salaries as per the labor law.
The capped salary for unemployment insurance will, therefore, increase as follows:
Vietnam sets different minimum wage levels for the four regions to reflect the cost of living in each area.
According to a survey released by an employment website, salaries in Vietnam are rising faster than other Asian countries but still remain low. Vietnam’s minimum wage hike of 5.7 is higher than last year’s hike of 5.3 percent but lower than in 2018 and 2017.
The average inflation rate in 2018 was 3.54 percent while the Consumer Price Index (CPI) in the first ten months of 2019 rose by 2.48 percent. The Vietnam General Confederation of Labor (VGCL) has stated that the current minimum wages meet approximately 95 percent of workers’ living costs and hope the new increase would help ease challenges faced by workers facing increased living expenses.
The government will also raise wages for civil servants by 7.3 percent in July 2020.
As Vietnam’s economy continues to grow, rising wages will be an unavoidable feature of doing business in the country. Nevertheless, Vietnam’s improving business environment, free trade agreements and low costs make it an ideal location for foreign investors looking to relocate.
Businesses should plan ahead and prepare their budgets, operational capacity, and costs for the new year when the new wage hike goes into effect.