Salaries in Vietnam are still too low!

According to the ILO, wages in Vietnam remain significantly lower than in developed economies, lagging behind even many neighboring countries.

The International Labour Organization (ILO) Global Wage Report 2014-2015, published on December 5th, shows that global wage growth in 2013 slowed to 2%, compared to 2.2% in 2012, and has yet to catch up to the 3% level of the pre-crisis period. This modest growth rate is mainly driven by emerging G20 economies, which saw wage increases of 6.7% in 2012 and 5.9% in 2013. In contrast, in developed economies, average wage growth fluctuated at around 1% per year from 2006, then gradually declined to just 0.1% in 2012 and 0.2% in 2013.

Sandra Polaski, Deputy Director-General for Policy at the ILO, stated: “Wage growth has slowed to near zero in developed countries over the past two years, with some even experiencing wage declines. This is impacting the overall economic situation, leading to a slowdown in household consumption in most economies and increasing the risk of deflation in the Eurozone.”

Vietnamese workers' wages are among the lowest in the region.

The report also highlights significant disparities in wage growth rates among developing countries across different regional groups. For example, in 2013, wages increased by 6% in Asia and 5.8% in Eastern Europe and Central Asia, but only 0.8% in Latin America and the Caribbean. In the Middle East, wages increased by 3.9%, but in Africa, the rate of increase was only 0.9%, although data for these regions are not fully available.

It increases inequality.

Wages are the primary source of income for households in developed, emerging, and developing countries, particularly among middle-class families. Meanwhile, the top 10% and bottom 10% of income-earning households rely more heavily on other sources of income. In developed economies, wages typically account for 70 to 80% of the income of households with at least one working-age member.

In emerging and developing economies, where self-employment is more common, the contribution of wages to household income is typically smaller. Wages account for approximately 50% to 60% of household income in Mexico, Russia, Argentina, Brazil, and Chile, and around 40% in Peru, or 30% in Vietnam.

"In many countries, inequality stems from the labor market, particularly in the distribution of wages and employment," said Rosalia Vazquez-Alvarez, an expert on economic statistics and wages at the ILO and an author of the report.

Recent trends in inequality are mixed, but in most countries where inequality is increasing, such as the United States or Spain, changes in wages and employment are the primary drivers. Conversely, in countries where inequality has narrowed, such as Brazil, Argentina, or Russia, wages and increased employment are driving improvements in inequality.

Salaries in Vietnam: A long way to go.

Over the past two years, despite overall positive changes, wages in Vietnam have remained significantly lower than those in developed economies and even lagged behind many neighboring countries. Among ASEAN nations, Vietnam's average monthly salary in 2012 (3.8 million VND, or 181 USD) was only higher than that of Laos (119 USD), Cambodia (121 USD), and Indonesia (174 USD). Meanwhile, it was only about half that of Thailand (357 USD), less than one-third of Malaysia (609 USD), and only about one-twentieth of Singapore (3,547 USD).

According to the 2013 Labor and Employment Survey, the highest-paying sector was "finance, banking, and insurance" with an average monthly salary of 7.23 million VND. Professional, scientific, and technological activities averaged 6.53 million VND, and "real estate business" averaged 6.4 million VND. Meanwhile, "domestic work" had the lowest monthly salary at 2.35 million VND, followed by the "agriculture, forestry, and fisheries" sector with an average salary of 2.63 million VND.

Gyorgy Sziraczki, Director of the ILO in Vietnam, stated: “The large wage gap between ASEAN countries reflects significant differences in many areas, including labor productivity. Countries that adopt new technologies, invest in infrastructure, encourage structural reforms, and improve human resource skills are also the countries that create a foundation for businesses to operate more efficiently – and shift towards higher value-added activities.”

According to the ILO, although salaried workers currently account for only 34.8% of the total employed workforce in Vietnam, much lower than the world average of over 50%, this percentage is expected to increase rapidly in the coming decades.

According to VOV.VN