Minimum wage to increase by 6% from July 2024

The second session of the National Wage Council resumed on the morning of December 20, four months after the first round of negotiations in August. All 16/16 Council members voted unanimously to adjust the minimum wage by 6%.

With an average increase of VND238,000 (6%), the minimum wage in each region has been adjusted by VND200,000-280,000. Specifically, the salary in region 1 has increased to VND4.96 million; region 2 to VND4.41 million; region 3 to VND3.86 million and region 4 to VND3.45 million. The current salary in each region is fluctuating between VND3.25-4.68 million.

The hourly minimum wage will also increase by 6% from mid-2024. Specifically, region 1 will increase to VND23,800; region 2 to VND21,200; region 3 to VND18,600; and region 4 to VND16,600.

Deputy Minister of Labor, War Invalids and Social Affairs Le Van Thanh, Chairman of the National Wage Council, assessed that 6% is a harmonious increase, sharing the difficulties of both workers and business owners.

The negotiations took place in the context of core inflation increasing by 4.27%, the average CPI in 11 months of 2023 increased by 3.22% compared to the same period last year. The minimum wage adjustment in 2024 faces many challenges due to the wave of labor cuts that has lasted since the end of 2022, and is forecast to continue until early next year.

The Vietnam General Confederation of Labor has proposed two increases of 6.48% or 7.3%, from July 1, 2024, at the same time as the state-sector wage reform. The increase is based on the economic recovery and business orders increasing again.

Representatives of employers, the Vietnam Federation of Commerce and Industry (VCCI), proposed an increase of 4.5-5%, because the health of businesses must be taken into account. When new orders return, keeping jobs for workers is more important.

For more than 10 years, the minimum wage has been adjusted every January 1st. However, due to the impact of the pandemic, economic crisis, and layoffs, the next minimum wage adjustment will be in July within four years.

According to statistics from the International Labor Organization (ILO) in Vietnam, in the period 2015-2022, the Government adjusted the minimum wage on an upward trajectory, from 119 USD in December 2015 to 168 USD in December 2022. However, rising inflation has not increased the real value of the minimum wage much. In the period 2015-2019, the nominal minimum wage increased by 42.7%, but inflation caused the real wage to increase by only 20.1%. In the period 2020-2022, the minimum wage was adjusted by over 6%, but the real wage increased by only 0.7%.

The ILO believes that minimum wage adjustments should be based on accurate data on inflation, economic growth, employment, business affordability and productivity. At the same time, the adjustment level must keep up with inflation to maintain the real value of wage increases for workers, measuring their needs and those of their families.

The Vietnam General Confederation of Labor's survey on working life in the first half of 2023 showed that the average income of workers reached 7.88 million VND, while their family's monthly spending was 11.7 million VND. Income only met about 70% of the spending of the surveyed people. Workers' spending also increased by 19% compared to 2022, mainly due to high prices and electricity and water bills.