How should regional minimum wages be applied when district level is removed?

Decree 74/2024 stipulates that the minimum wage for employees working under labor contracts is applied in 4 regions, linked to district-level administrative units. Previously in February, the Ministry of Labor, War Invalids and Social Affairs requested localities to review the areas where the minimum wage is applied, evaluate and propose zoning adjustments. This is the basis for the National Wage Council to discuss the 2025 wage increase plan before submitting it to the Government.

According to the plan, the Project to merge provincial-level administrative units and abolish the district level will be approved by the National Assembly before June 30. While waiting for new instructions, businesses can apply Decree 74/2024, because this document stipulates that businesses operating in areas with a change in name or separation of administrative units will temporarily apply the minimum wage before the change. Businesses operating in areas newly established from one or more areas with different minimum wages will apply the highest level.

Former Deputy Minister of Labor, War Invalids and Social Affairs Pham Minh Huan said that after removing the district level, leaving only the provincial and communal levels, the minimum wage zones should be updated according to the commune and ward boundaries. The authorities need to carefully review the socio-economic conditions and living standards of each locality before updating the zoning, because the merger can affect which wage zone a locality is classified into, especially in the "border" areas between two wage zones.

Updating the salary zones according to the new administrative boundaries should be prioritized before discussing the increase and the time of salary increase. This helps businesses proactively adjust salary payments, ensuring the best benefits for employees.

Mr. Huan noted that the current division of 4 wage zones aims to ensure that the wage level paid to employees is not lower than the minimum wage. Enterprises operating in areas applying the minimum wage of zone 2 (4.41 million VND/month) can move up to zone 1 (4.96 million VND/month) or vice versa.

The former Deputy Minister of Labor, War Invalids and Social Affairs predicted that the minimum wage adjustment in 2025 may not be implemented on July 1 but will be postponed to January 1, 2026. The beginning of the year is usually consistent with the production and business plans of enterprises and has been applied for many previous adjustments. The increase rate may be equal to or higher than 6% due to good economic growth, enterprises expanding production and the old increase rate has been applied since July 1, 2024.

Mr. Le Dinh Quang, Deputy Head of the Department of Legal Policy and Labor Relations, Vietnam General Confederation of Labor, also agreed with the viewpoint of adjusting the minimum wage zone based on the commune-level administrative basis after the merger. The National Wage Council is expected to meet to discuss the plan to increase the minimum wage next July.

The proposed increase could be implemented in early 2026. A research unit on the minimum living standard has just been established with the participation of representatives of statistical agencies, trade unions, etc., to survey the cost of living and living conditions of workers, thereby providing more data as a basis for the wage increase plan.

The current monthly minimum wage in region I is 4.96 million VND; region 2 is 4.41 million VND; region 3 is 3.86 million VND and region 4 is 3.45 million VND. The hourly minimum wage in the 4 regions is 23,800 VND, 21,200 VND, 18,600 VND and 16,600 VND respectively. In 2024, the areas of some regions will be updated due to changes in administrative boundaries or infrastructure conditions and the labor market. Many localities will be adjusted to higher wage areas to help attract workers, creating a balance in labor prices with neighboring areas.

According to the administrative unit arrangement plan, 63 provinces and cities will be reduced by half; 10,035 commune-level administrative units will be reduced by 60 - 70%.