Ministry of Labor, Invalids and Social Affairs: Salary increase only meets 90% of minimum needs

According to the Ministry of Labor, War Invalids and Social Affairs, if the salary increase is 12.4% in 2016, the minimum wage will only meet about 87% - 90% of the minimum living needs of workers and their families, depending on the region.

The Ministry of Labor, War Invalids and Social Affairs is seeking comments on a draft Decree regulating regional minimum wages for employees working in enterprises, cooperatives, cooperative groups, farms, households, individuals and agencies and organizations that hire employees under labor contracts.

According to the draft recently issued by the Ministry to solicit opinions from relevant units, the regional minimum wage applicable from January 1, 2016 includes 4 levels: 3.5 million VND applied to region 1; 3.1 million VND applied to region 2; 2.7 million VND applied to region 3 and 2.4 million VND applied to region 4.

According to the Ministry of Labor, War Invalids and Social Affairs, even if wages increased by 12.4% in 2016, the minimum wage would only meet 90% of people's minimum living needs. (Illustration photo)

The above minimum wage increases from 250,000 - 400,000 VND compared to 2015, equivalent to 11.6 - 12.9% depending on the region. This increase is calculated based on: Compensating for the cost of living in 2015, estimated at about 4% - 5% to ensure real wages for workers; improving according to the increase in social labor productivity of about 3% - 3.5% and adjusting to increase at a moderate level (about 4 - 5%) to implement the adjustment roadmap to ensure the minimum needs of workers.

According to the Ministry of Labor, War Invalids and Social Affairs, if implemented according to the draft plan, the minimum wage will meet about 87% - 90% of the minimum living needs of workers and their families depending on the region. This regional minimum wage coincides with the recommendation of the National Wage Council agreed upon on September 3.

On the other hand, the above plan is assessed to not have too great an impact on the production and business activities of enterprises, because the lowest salary that enterprises are actually paying to employees is generally higher than the regional minimum wage in 2015: region 1 is 3.5 million VND, region 2 is 3.39 million VND, region 3 is 3.14 million VND and region 4 is 2.85 million VND.

Enterprises will mainly have to increase their social insurance contributions. The average production cost of enterprises is forecast to increase by about 0.46%, of which the textile and garment industry will increase by about 2.77% and the footwear industry will increase by about 2.71%. This regional minimum wage coincides with the recommendation of the National Wage Council agreed on September 3.

Regarding the applicable areas, the Ministry of Labor, War Invalids and Social Affairs proposes to basically maintain the 4 regions and the list of areas in the 4 regions as prescribed in Decree No. 103/2014/ND-CP of the Government; at the same time, there will be adjustments and zoning from region 4 to region 3 according to the requests of the localities: Quang Yen town of Quang Ninh province, Gia Rai town of Bac Lieu province, Cai Lay town and Cho Gao district of Tien Giang province, Vinh Chau town and Nga Nam town of Soc Trang province.

“The People's Committee of An Giang province proposes to merge the areas applying the regional minimum wage according to the current 4 regions into 3 regions and adjust all areas in the province to 1 region. The Ministry of Labor, War Invalids and Social Affairs finds that, in the production and business conditions of enterprises, it is expected that they will continue to face difficulties due to the impact of the integration process and changes in State policies, so to avoid sudden increases in business costs, it is proposed to keep the areas applying the regional minimum wage of An Giang province in 2016,” said the Ministry of Labor, War Invalids and Social Affairs.

The draft is currently being consulted with relevant units until November 4, 2015 to be submitted to the Government for promulgation and application from January 1, 2016.

The Ministry of Labor, War Invalids and Social Affairs said that according to the 2015 survey data, the lowest salary actually paid in enterprises in 4 regions in 2015: region 1 is 3.5 million VND/month, region 2 is 3.39 million VND/month, region 3 is 3.14 million VND/month and region 4 is 2.85 million VND/month, higher than the regional minimum wage prescribed by the Government in 2015.

On the other hand, through synthesizing opinions of ministries, branches and localities, it shows that the adjustment of the above regional minimum wage is suitable for the production and business conditions of enterprises, does not cause sudden increases in costs of enterprises and gradually approaches the minimum living needs of workers and their families, contributing to ensuring the lives of workers. The division into 4 regions to apply the minimum wage is basically suitable for the reality of socio-economic development and labor market of localities.

According to Iponet.vn