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Pay rises question nation’s labour competitive edge
Doubts have been cast over Vietnam’s labour cost competitive edge in the face of Vietnamese government moves to raise local blue-collar workers’ minimum salaries from next year.
Government decrees 97/2009/ND-CP and 98/2009/ND-CP, which were inked last week, introduce 12-22 per cent increases to state-run and domestic private enterprise employees’ minimum salaries and 9-11 per cent rises in foreign-invested enterprises’ wages.
It is the third time the Vietnamese government has lifted local blue-collar workers’ minimum pay rates in line with its salary reform strategy during 2008-2012.
Under the government’s roadmap to introduce common minimum pay levels for state-run, domestic and foreign-invested enterprises in 2012, the rises in state-run and domestic private workers’ minimum salaries will be 20-38 per cent per year and 13-15 per cent for foreign-invested enterprise employees.
From January 1, 2010, state-run and domestic private workers will enjoy VND980,000 ($54.5), VND880,000 ($48.8), VND810,000 ($45) and VND730,000 ($40.5) per month instead of VND800,000 ($44.4), VND740,000 ($41.1), VND690,000 ($38.3) and VND650,000 ($36.1) currently applicable to four different zones.
Meanwhile, workers’ minimum salaries at foreign-invested enterprises will rise to VND1.34 million ($74.4), VND1.19 million ($66.1), VND1.04 ($57.7) and VND1.0 million ($55.5) from VND1.2 million ($66.6), VND1.08 million ($60), VND950,000 ($52.7) and VND920,000 ($51.1), depending on the firms’ locations.
Sachio Kageyama, general director of Canon Vietnam, said it was not the right time to raise minimum salaries as the economic crisis had driven down prices and stunted exports.
“With a labour force of 17,000 people, the projected minimum pay rises will have a great impact on our business,” Kageyama said, adding that the pay rises would be immediately followed by rises in consumer prices and raw materials that would make made-in-Vietnam products become less competitive.
“During the financial crisis, we recommended that the government continued giving priority to policies to stimulate the economy and rein in inflation, which were a great boost to the business community,” said Kageyama.
Likewise, Sai Gon Garment No.3 Company general director and acting Vietnam Garment and Textile Association vice president Pham Xuan Hong said the pay rises would affect labour-intensive enterprises like the textile and garment sector, which was struggling to stay afloat.
“For example, an enterprise with 1,500 employees will have to pay an extra VND2 billion ($111,111) covering pay rises, social insurance and other allowances for workers. Frankly speaking, the sum is really impossible for enterprises in the current time of economic downturn,” Hong said.
“The government should first help apparel enterprises restore business growth before asking them to raise workers’ pay,” he added.
vietnamnet, vir
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