From July 1, 2022, regional minimum wage may increase by 6%

According to the Ministry of Labor, Invalids and Social Affairs, based on the provisions of the Labor Code and the recommendations of the National Wage Council, the Government issued Decree No. 90/2019/ND-CP stipulating the monthly regional minimum wage for employees working under labor contracts, effective from January 1, 2020.

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Proposed 6% increase

The Ministry of Labor, Invalids and Social Affairs proposed minimum monthly wages for four regions, specifically, region I is 4,680,000 VND/month, region II is 4,160,000 VND/month, region III is 3,640,000 VND/month, and region IV is 3,250,000 VND/month.

The above minimum wage increases by an average of 6% (equivalent to an increase of 180,000 VND - 260,000 VND) compared to the current minimum wage. The determination of the above minimum wage adjustment is based on a 5.3% increase to ensure a minimum living standard for workers and their families and an additional 0.7% increase to further improve wages for workers.

This adjustment level shares and harmonizes the interests of workers and businesses, paying attention to improving the lives of workers while ensuring the maintenance, recovery and development of business production. 100% of the members of the National Wage Council agree and recommend the Government to adjust according to this level.

The implementation time of the regional minimum wage is from July 1, 2022 as recommended by the National Wage Council to the Government.

The Ministry of Labor, Invalids and Social Affairs calculated that the above minimum wage plan has taken into account the impacts on employment, unemployment, production and business conditions of enterprises, and the level of impact on production costs of enterprises. Most enterprises have paid their employees higher than the expected minimum wage, when implementing the new minimum wage, it will mainly only increase the cost of paying compulsory insurance. For the group of employees currently receiving low wages, it must be adjusted to ensure that it is not lower than the new minimum wage.

Minimum wage adjustment needed soon to improve workers' lives

Normally, the regional minimum wage is reviewed and adjusted after 1 year of implementation. However, the Ministry of Labor, Invalids and Social Affairs believes that since the beginning of 2020, the Covid-19 pandemic has negatively impacted the economy, society, production, business, employment and workers' lives, so the Government has maintained the regional minimum wage stipulated in Decree No. 90/2019/ND-CP until now (over 2 years) according to the Recommendation of the National Wage Council. Currently, this regional minimum wage no longer ensures the minimum living standard of workers and their families as prescribed by the Labor Code. According to calculations by the Technical Department of the National Wage Council, the current minimum wage is about 1.3% lower than the minimum living standard of workers and their families in 2022.

The Ministry of Labor, Invalids and Social Affairs also assessed that the Covid-19 epidemic has been basically controlled, Vietnam's socio-economic situation has been improving, production and business of enterprises have gradually recovered and developed. However, in this context, the lives of many workers are still being seriously affected by the impact of the Covid-19 epidemic, a part of workers are falling into very difficult circumstances due to having to stop working, lose their jobs, take unpaid leave for a long time, and their income has decreased while the prices of goods and services are increasing.

The labor market is in a state of supply-demand imbalance, labor shortage in many industries and localities. Many workers have had to quit their jobs and return to their hometowns due to the Covid-19 pandemic and are currently lacking motivation to return to work. The current labor relations situation in enterprises is tending to re-establish working conditions between employees and employers, thereby harboring potential conflicts and complications that can arise into disputes. Most workers today want employers to adjust wages, salary allowances and improve other benefits to suit the context of economic recovery. Many strikes that have occurred since the beginning of the year have stemmed from this desire of workers.

For employers, in order to restore production and build harmonious and stable labor relations, some enterprises have proactively adjusted wages and benefits for employees. However, many enterprises, despite having the conditions, are still waiting for the Government to adjust the minimum wage as a basis for negotiating and adjusting the policies for employees.

Based on the above reality, according to the Ministry of Labor, Invalids and Social Affairs, the Government's early issuance of a Decree adjusting the monthly minimum wage and regulating the hourly minimum wage according to the provisions of the 2019 Labor Code to contribute to improving the lives of workers, actively supporting the recovery of the labor market, creating favorable conditions for businesses to soon recover, stabilize and develop production and business, and maintain harmonious, stable and progressive labor relations is very necessary at present./.