Vietnam Business Forum stands with Vietnam Chamber of Commerce and Industry on cautiously increasing the minimum wage.
Ms. Virginia Foote, Chairwoman of the Vietnam Business Forum (VBF), has said she sent a letter to the Prime Minister in support of an increase to the minimum wage of 9-10 per cent, as proposed by the Vietnam Chamber of Commerce and Industry (VCCI), rather than the 16.8 per cent increase proposed by the Vietnam General Confederation of Labor (VGCL).
The letter is also being sent to the Ministry of Planning and Investment, the Ministry of Labor, and the Chairmen of VCCI and VGCL.
Ms. Foote wrote that the VBF fully agrees with the VCCI proposal to cautiously increase the minimum wage.
Her reasoning is that Vietnam’s inflation rate has been managed at around 2.5 per cent in 2015 so an increase to the minimum wage higher than the inflation rate is unnecessary. Moreover, the objective of increasing employment opportunities would suffer as foreign enterprises may reconsider their decisions to relocate their operations to Vietnam.
A significant increase, she added, would push inflation upwards and reduce employment.
Vietnam’s competitiveness in attracting foreign investment would also be impacted, especially given that China has been cutting investment costs and other regional countries have barely increased the minimum wages in recent times.
She said that enterprises are facing increasing labor costs, such as higher contributions to social security. Other factors influencing labor costs should be considered rather than simply looking at the minimum wage, in particular the proposal to increase social insurance to 18 per cent.