Vietnam announced on Thursday that it will increase minimum wages by an average of 5.7 percent starting January 1, 2020. The news is celebrated by workers but business owners have been urged to adjust their budgets accordingly.
According to the Vietnam Briefing, aside from the minimum wage hike, employers will be required to increase the pay of staffers who completed vocational training by at least seven percent more than the minimum pay.
In line with the news of minimum wage hikes next year, the Vietnam General Confederation of Labor (VGCL) noted that the existing minimum pay meets an estimated 95 percent of the living costs of workers.
While wages have been increasing over the past few years in the Vietnamese workforce, some industry experts noted that the increases are still low compared to other countries in the Southeast Asian region.
The government urged employers and companies in the country to adjust their salary budget accordingly to help ease the burdens of increased pay for laborers and workers alike.
Economists have also been largely positive of the Vietnamese market over the past few months, with some analysts noting that the business the environment in the country is improving along with investment sentiment stabilizing.
Earlier this month, the annual Salary Trends Report by international data and research agency ECA International placed Vietnam second among top countries in the world for salary increases in 2020.
According to VN Express, Vietnam bested Indonesia, Cambodia, Thailand, and Ukraine in the top five spots to claim the second slot just below India. India's estimated real-salary increase for next year was forecasted at 5.4 percent.
The Salary Trends Report projected Vietnam's minimum wage hike to be at around 5.1 percent, but Thursday's announcement makes a clear the contrast in the country's goal of providing its workforce with better chances of supporting their living needs.
In July, the Vietnamese National Wage Council announced that the increase would reach 5.5. percent next year. At that time, the decision was agreed on by business leaders and labor representatives.
With the minimum wage hike announced this week at an estimated 5.7 percent, the percentage is closer to the VGCL's demands in June for the increase to play around 6.52 percent to 8.18 percent.
Analysts pointed out that it appears the agreements were made with less arguments or debates from the National Wage Council and the VGCL. This is the first time that the two parties reached an amicable agreement after two meetings to discuss next year's salary increases.
Vietnam's minimum is currently fixed at four different levels and the location will be the basis for the four categories for increases.
