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Regional minimum wage in 2018: It is difficult to rise as expected by workers

Sun, 30 Jul 2017 01:42:13 AM GMT + 7    Print   Email   Share:

(TBTCVN) - In the past 10 years, the minimum wage has increased steadily and on average increased by less than 12%. Enterprises (DN) said that if 2018 the minimum wage increase too high, it shall exceed abilities to pay, even some enterprises use many labors recommended that not raise wage this year.

 

Most enterprises, especially enterprises use lots of labors such as textiles, footwear and electronics recommended that not raise wage.

Around the regional minimum salary increase in 2018, with many comments that still not agree together, a correspondent of Vietnam Finance Times had a talk with Mr. Hoang Quang Phong, Vice President of Vietnam Chamber of Commerce and Industry (VCCI) about this issue.

The correspondent: Dear Sir, at the first meeting of the National Council of Salary, the Vietnam General Confederation of Labor (VGCL) proposed a 13.3% increase. However, many enterprises think that this increase is too high and recommended that not increase salary in 2018 and keep the level of social insurance (social insurance). What are the opinions of VCCI, which is the employer's representative body about this issue?


Mr. Hoang Quang Phong: From January 1st 2018, the level of social insurance shall be calculated on the floor of all closing rates, not only the current salary, it means based on the total income of the enjoyed enterprises to get percentage of social insurance contributions. This shall raise costs of enterprises  a very high and exceed abilities to pay. Therefore, most enterprises, especially enterprises with many workers such as textiles, footwear and electronics suggest that this year shall not increase in salary.

In the past 10 years, the minimum wage has increased steadily and on average increased by less than 12%. The basis for wage increases is labor productivity, consumer price index (CPI), employment quality and GDP growth. Thus, with annual average GDP growth of 3-5% and similar labor productivity growth, the CPI is just around 3%, the annual salary increase is unreasonable.

 

 

We agree that the current minimum wage only meets less than 90% of the minimum living standard. As a rule, the minimum wage should have enough space for collective bargaining, such as negotiation of labor productivity, technical improvements ... If the minimum wage is as high as last time, this balance shall no longer. In this regard, we have exchanged with 30 business associations, including 16 foreign business associations and received such requests. On that basis, we will synthesize NFA reports for analysis. Our point of view is based on the analysis of the National Council of Salary and the recommendations of enterprises to propose a suitable level, how to meet the solvency of enterprises and real competitiveness of the economy.

The correspondent: Responding to the recommendations of enterprises on the proposal of no increase in salary recently, National Council of Salary said that the regional minimum wage increase needs to harmonize the national interests in terms of employment, solvency of enterprises and labor demands. What do your comments on this issue?

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Mr. Hoang Quang Phong

Mr. Hoang Quang Phong: In Resolution 35 / NQ-CP, it is necessary to consider adjustment of the minimum wage increase to match the level of labor productivity increase, competitiveness capacities and ability of enterprises. In times of intense competition, enterprises are under a lot of pressure on market, technology, spending ... so every year increase minimum wage shall lead to more difficult situations. In the first six months of 2017, over 61,000 of new enterprises were established but 43,300 enterprises have left the market and nearly 15,000 enterprises tend to reopen. It means, for every 3 enterprises, there are 2 of them have to close.

If the minimum wage increases much, enterprises must restructure production, focus on some core business sectors and reduce labors. So invisible, when some workers get a raise, others lose their jobs. As a result, unemployment shall increase, even many of them have been eliminated by the training costs are wasted. Because of that, enterprises expect that in the past 10 years minimum wage level has increased steadily, this year can keep and not increase.
The correspondent: Enterprises always said that the salary increase must be coupled with increased labor productivity, but the point of view of the Vietnam General Federation of Labor is that in case do not improve the minimum living standards, it can not discuss the issue of productivity. In the opinion of the representative body on behalf of such workers, according to you, is it satisfied?


Mr. Hoang Quang Phong: Enterprises must always increase competitiveness capacities, so the labor productivity must be taken into account. This is also a factor in the negotiation of compensation for workers. Therefore, in addition to salary, workers can negotiate with enterprises to enjoy other than the minimum wage, to fill the gap to ensure life and peace of mind with jobs in enterprises.

I think at present the number of workers who are affected by the minimum wage in the total number of workers are not a big number, because there are some enterprises that have paid salaries far beyond the minimum wage, even though they are mainly used by the high technology sector, or not use lots of labors. This is so that employees are aware of their responsibilities to enterprises and vice versa. If the company can afford to pay and do not increase wages for workers, then I think it is irresponsible. But if workers understand that their enterprises are insufficient to pay and still require higher wages, this is also irresponsible.

The Correspondent: So in terms of representing the employers, in your view, which wage level should increase this year for workers to achieve the reasonable harmony between the parties?

Mr. Hoang Quang Phong: We will thoroughly study the proposal of the General Statistics Office, as well as exchange with enterprises, business associations, especially enterprises have many workers to adjust with the appropriate level. However, this level can not be as high as the tentative proposal proposed by the agencies. The specific level we are considering and shall be announced in the next session. We have to consider in many aspects, as this is a problem that this increase may positively or negatively affect enterprises.

I affirm that, ever enterprises care workers as present. Because whenever they care workers, workers are able to work safely in enterprises, meet the requirements of increasing labor productivity and solving orders. You can imagine that if orders have been signed and there are not any workers to do, it will be most harmful to enterprises, then it shall not be able to afford and increase salaries for workers, so both enterprises and workers are disadvantaged.

Therefore, we need the sympathy, sharing of workers. On the other hand, enterprises also need to have plans to upgrade the level of management, management capacity, apply scientific and technological progress to increase productivity, maintain product quality. Then, increase competitive capacities, contributing to sustainable growth to improve payment capacity. Only by doing these, we shall be able to meet the requirements of raising workers' wages in the desired path.


The correspondent: Thank you for your answers

  • By : Mai Dan/ Translator: HaiYen-Bizic

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