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Right balance found in wage increase

Released at: 19:05, 03/09/2015

Right balance found in wage increase

Mr. Phillip Hazelton, ILO Vietnam's Chief Technical Advisor on Industrial Relations, shares his thoughts on the workings of the National Wage Council in deciding to increase the minimum wage by 12.4 per cent in 2016.

by Ly Ha - Nguyen Quynh

After three meetings of Vietnam’s National Wage Council, do you notice any differences in the process compared to other countries? 

The ILO congratulates the National Wage Council on a very open debate and process and a real move towards consensus by representatives over the three meetings. The ILO believes there has been very good development in Vietnam since the 2012 Labor Code, bringing both employers and trade unions to the table with the government through the National Wage Council to make recommendations on minimum wage adjustments. Many other countries have a similar process, some allowing a longer time to reach agreement.

Employers, unions, and the government entered the negotiations, each representing their different constituents. As in many other countries, it is not uncommon to see a difference between the initial negotiating positions of trade unions and employers when it comes to revising the minimum wage. This is because both represent their own members’ interests.

The gap in their positions initially this year can be partly understood in the context of Vietnam achieving a minimum wage level that covers the minimum living needs of workers, as outlined in the Labor Code. Employers and trade unions have different timeframes to reach this goal, which affects their bargaining positions.

■ In the ILO’s experience, if employers and workers do not change their positions what should the Council do? Is there any way to bring the positions of the two parties closer together?

The National Wage Council brings the key constituents together to present and debate their positions, review key social and economic factors, listen to each other’s arguments, and try to reach a closer position or consensus. This dialogue process is very important but it is not easy for any Council to find the balance between all these factors. We have seen since 2013, when the Council was established, that employers and workers have come closer together each year from their opening positions to the final level agreed. This is very positive and shows the strength of the process. The government plays an important role in facilitating that process.

What are your thoughts on the minimum wage increasing by 12.4 per cent on average?

The ILO does not comment on specific levels of minimum wage increases recommended by the Council. We support the move to cover the minimum living needs of workers over time and the process of dialogue and representation the Council has adopted. We also note the very effective and open debate and dialogue over the three meetings, which achieved a high level of consensus.

What is your comment on the minimum wage fixing criteria and reasoning in Vietnam? Many people say the workers’ side should be preferred because they are weaker. What do you think about this argument?

The ILO believes that minimum wages should be adjusted regularly, taking into account a number of social and economic factors. These include the cost of living as well as the needs of workers and their families. They also include the ability of companies to pay the minimum wage, levels of productivity, the minimum wage relative to the average wage, and the desirability of attaining and maintaining employment.

All of these key factors were heard in the debates and presentations at the Council this year.

It is important that all sides of the debate be considered and that both the workers’ side and employers’ side have strong representation on the Council, so their voices can be heard in finding the right balance.

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