Proposal to increase regional minimum wage by an average of 7.3% from January 1, 2017

The Ministry of Labor, Invalids and Social Affairs proposed to increase the regional minimum wage from VND180,000 - VND250,000, an average of 7.3% from January 1, 2017.

The Ministry of Labor, War Invalids and Social Affairs (MOLISA) has just released a draft Decree regulating the regional minimum wage for employees working in enterprises, cooperative unions, cooperatives, cooperative groups, farms, households, individuals and agencies and organizations that employ workers under labor contracts. Accordingly, the Ministry proposes to increase the regional minimum wage from VND180,000 to VND250,000.

According to the draft Decree: Regarding the regional minimum wage, there are 4 levels: Level 3.75 million VND, applied to region I; level 3.32 million VND, applied to region II; level 2.9 million VND, applied to region III and level 2.58 million VND/month applied to region IV.

According to the Ministry of Labor, Invalids and Social Affairs: The above minimum wage (increased from VND 180,000 - VND 250,000 compared to the current level in 2016, corresponding to a percentage increase of 7.1 - 7.5% depending on the region, the average increase is 7.3%) is calculated based on the basis of fully compensating for the 2016 cost of living inflation of about 4.5% - 5% to ensure real wages for workers; improve according to the increase in social labor productivity of about 2% - 2.5% to implement the adjustment roadmap to ensure the minimum needs of workers.

If implemented according to the above plan, it will meet about 94% of the minimum living needs of workers and their families depending on the region.

The above adjustment plan also takes into account the impacts on employment, unemployment, production and business conditions of enterprises which are still difficult, especially in the context of 2016 implementing the Law on Social Insurance, paying social insurance, health insurance, unemployment insurance for employees on both salary and salary allowances (instead of only paying on salary as at present), the level of impact on production costs of enterprises (expected to increase by an average of about 0.3 - 0.5%, in which the textile, garment and footwear industry will increase by about 1.7 - 2.7%, while gradually ensuring the minimum living needs of employees (expected to ensure about 94% of the minimum living needs of employees) and in accordance with the recommendations of the National Wage Council.

On the other hand, this plan also takes into account the fact that 2016 was adjusted at a high level (2016 adjusted up 12.4% compared to 2015, in which the expected CPI was 5-5.5% but in reality it was only 0.63%).

Regarding the applicable areas, the 4 regions and the list of areas in the 4 regions are basically kept unchanged according to the provisions of Decree No. 122/2015/ND-CP dated November 14, 2015 of the Government; but there are considerations, adjustments, and additions to a number of applicable areas at the request of the People's Committees of provinces and centrally-run cities.

Specifically: Adjusting the zoning from region II to region I for Tan Thanh district of Ba Ria - Vung Tau province; from region III to region II, including: Hoi An city, Tam Ky of Quang Nam province, Tra Vinh city of Tra Vinh province; from region IV to region III, including: Que Son district, Thang Binh of Quang Nam province, Duyen Hai town of Tra Vinh province and adjusting from region III to region IV for Giang Thanh district of Kien Giang province.

Regarding the time of application, it will be implemented from January 1, 2017./.

According to VOV