How much will the minimum wage increase in 2020?
The current minimum wage increase only meets over 95% of the minimum living needs of workers. Therefore, according to the representative of the Vietnam General Confederation of Labor, while there is only one year left for the minimum wage to meet 100% of the minimum living needs, the increase in 2020 will have to be high, expected to be at least 7%.
Having worked with workers for many years and also being a member of the National Wage Council, Mr. Le Dinh Quang, Deputy Head of the Labor Relations Department, Vietnam General Confederation of Labor, said that through monitoring the annual reports of enterprises, it can be seen that most enterprises comply with the regulations on minimum wages for employees. Enterprises that do not make adjustments due to difficult production and business situations are only a few, mainly falling into a number of small or micro enterprises.
In particular, with the 2019 regional minimum wage increase of 5.3%, the lives of workers have been increasingly improved, the number of workers benefiting from the minimum wage increase is very large. Notably, the higher wage group has a lower increase while the lower wage group has a higher increase, which proves that the adjustment level is getting closer to the minimum living needs.
However, in reality, such an increase only meets over 95% of workers' minimum living needs, and the lives of a segment of workers today still face many difficulties.
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| To meet 100% of workers' minimum living needs, the forecasted minimum wage increase in 2020 will be quite high. |
Citing the results of a 2018 union survey, Mr. Quang said that the average basic salary (if working full hours) of workers is currently only about 4.67 million VND. Of which, the level of satisfaction of workers with their income and jobs has not reached 40%.
According to Article 91 of the current Labor Code, the basis for determining minimum wages is based on the minimum living needs of workers and their families, socio-economic conditions, and labor prices on the market. In particular, minimum living needs are one of the most important factors in determining minimum wages, currently based on criteria such as: Food needs; non-food needs and childcare needs.
However, because there is no common calculation formula, according to Mr. Quang, every year during the minimum wage negotiation season, each agency gives different figures on minimum living needs. This has created intense debate between the parties, as well as general difficulties for the National Wage Council during the negotiation process.
"Last year, the technical department of the National Wage Council proposed a different minimum living requirement than the Vietnam General Confederation of Labor, with the two sides' figures differing by about VND300,000. In fact, most of the parameters and calculations of the two sides are the same, but the technical department of the National Wage Council determined that food demand is 48% and non-food demand is 52%. Meanwhile, we proposed that food demand only accounts for 45%, and non-food demand is 55%, with the argument that the more the economy develops, the more food demand must decrease and non-food demand must increase," Mr. Quang gave an example.
Meanwhile, Resolution No. 27/NQ-TW on reforming wage policy clearly stated that by 2020, the minimum wage must meet the minimum living needs of workers, so negotiations this year, according to Mr. Quang, will be more tense. Therefore, if the parties still apply different methods of calculating minimum living needs like last year, then the minimum wage in 2020 will certainly have to increase at a very high level.
"If we follow the old method of calculating the minimum living standard, this year it will have to increase at a very high rate, at least 7% to meet 100% of the minimum living needs of workers," Mr. Quang commented.
However, Mr. Quang also emphasized that the most important thing in negotiating wages this year is not necessarily the increase, but how to determine the minimum living standard of workers. Because, when a common calculation method is agreed upon, the increase will be closer to and harmonize the benefits for both workers and the ability of businesses to pay.
Also to prepare for the negotiation of the minimum wage in 2020, Mr. Ngo Duy Hieu, Vice President of the Vietnam General Confederation of Labor, added that the trade union organization has collected opinions from both businesses and workers on the situation of income, wages and living standards, to grasp the current minimum living needs of workers.
"We are also interested in preparing technical factors to participate in negotiations at the National Wage Council. At the same time, we will consult with many parties as well as study the opinions of socio-economic experts, taking into account the economic growth process to propose a suitable increase, harmonizing the interests of all parties," said Mr. Hieu.
