Proposal to increase regional minimum wage from July 1, 2024

The minimum wage has been adjusted upwards by 6%.

The Ministry of Labour, Invalids and Social Affairs announced that Decree No. 38/2022/ND-CP dated June 12, 2022, stipulates the minimum wage for employees working under labor contracts, effective from July 1, 2022, in which: (i) The monthly minimum wage is adjusted to increase by an average of 6% compared to 2020, with the following rates: Region I is 4,680,000 VND, Region II is 4,160,000 VND, Region III is 3,640,000 VND, Region IV is 3,250,000 VND; (ii) The minimum hourly wage is issued for the first time, with the following rates: Region I is 22,500 VND/hour, Region II is 20,000 VND/hour, Region III is 17,500 VND/hour, Region IV is 15,600 VND/hour.

However, according to the Ministry of Labour, Invalids and Social Affairs, several issues have arisen that require consideration regarding the adjustment of the minimum wage stipulated in Decree No. 38/2022/ND-CP.

Specifically, socio-economic factors, the labor market, and the capabilities of businesses in 2023 showed more positive changes compared to 2022: Macroeconomics continued to be stable, with economic growth (GDP) reaching 5.05%; the labor market continued its recovery; business production tended to improve; wages and income of workers continued to be stable and increased, with each subsequent quarter higher than the previous one.

The real value of the minimum wage set in Decree No. 38/2022/ND-CP is gradually diminishing over time due to the increase in the consumer price index (CPI). With the CPI projected to increase by 4% - 4.5% in 2024, the aforementioned minimum wage will no longer guarantee a minimum standard of living for workers and their families in the second half of 2024 (approximately 4% lower).

The minimum wage is currently set regionally and linked to the administrative boundaries of districts. However, the minimum wage in some areas is no longer appropriate due to changes in administrative boundaries (name changes, new establishment, mergers, dissolution) after reorganization according to resolutions of the National Assembly Standing Committee; or changes in infrastructure, labor market conditions, investment attraction policies, etc., and needs to be reviewed and updated.

On January 12, 2024, the National Wage Council submitted report No. 02/BC-HĐTLQG to the Government recommending an average increase of 6% in the minimum wage, effective from July 1, 2024.

From July 1st, 2024, the wage policy will undergo a comprehensive reform in accordance with Resolution No. 27-NQ/TW dated May 21st, 2018, of the Seventh Plenum of the Central Committee of the 12th Party Congress. Salaries in the public sector will increase, and accordingly, the minimum wage in the business sector needs to be adjusted to ensure overall consistency.

Based on the above reality, according to the Ministry of Labour, Invalids and Social Affairs, the development of a Decree stipulating the minimum wage to be applied in 2024 is essential to ensure the minimum living standard of workers, increase workers' wages in line with labor productivity, economic growth, and the competitiveness of businesses as stipulated in Article 91 of the 2019 Labour Code; and update and adjust the geographical zones for applying the minimum wage to suit the actual situation.

In the draft Decree stipulating the minimum wage for employees working under labor contracts, the Ministry of Labor, War Invalids and Social Affairs proposes adjusting the minimum wage upwards by 6% compared to the current level, to be applied from July 1, 2024.

Regarding the minimum wage, the Ministry of Labour, Invalids and Social Affairs proposes regulating monthly minimum wage levels according to four regions: Region I at 4,960,000 VND/month, Region II at 4,410,000 VND/month, Region III at 3,860,000 VND/month, and Region IV at 3,450,000 VND/month.

According to the Ministry of Labour, Invalids and Social Affairs, the aforementioned minimum wage will increase by 200,000 to 280,000 VND (corresponding to an average increase of 6%) compared to the current minimum wage. This adjustment is approximately 2% higher than the minimum living standard for workers until the end of 2024 to improve the living conditions of workers; it is expected to basically ensure the minimum living standard for 2025 (partially incorporating the 2025 CPI into the minimum living standard so that workers can benefit from it starting in mid-2024). This adjustment aims to share and harmonize the interests of both workers and businesses, focusing on improving the lives of workers while ensuring the maintenance, recovery, and development of business production. 100% of the members of the National Wage Council unanimously agreed and recommended to the Government to adjust the wage to this level.

minimum hourly wage

The Ministry of Labour, Invalids and Social Affairs has proposed regulations on minimum hourly wages according to four regions: Region I at 23,800 VND/hour, Region II at 21,200 VND/hour, Region III at 18,600 VND/hour, and Region IV at 16,600 VND/hour.

According to the Ministry of Labour, Invalids and Social Affairs, the hourly minimum wage continues to be determined based on the equivalent conversion method from the monthly minimum wage and standard working hours as stipulated in the Labour Code. This is the method recommended by ILO experts for Vietnam to choose and used when calculating the hourly minimum wage in 2022. 100% of the members of the National Wage Council unanimously agreed and recommended to the Government to adjust according to this method.