Vietnam Raises Ceiling for Minimum Wage Levels

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By Francesca Grassi

Sept. 27 – On October 5, 2011, new Decree no.70/2011/ND-CP on region-based minimum wage levels will come into force in Vietnam bringing in eloquent changes and a step forward from previous Decree no.107/2010/ND-CP and Decree no.108/2010/ND-CP.

The regulation is effectively structured in order to provide companies with exact information about the applicability and scope of the Decree, the amended minimum wage levels, and their application.

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Decree speaks to labor force of both Vietnamese and foreign companies on same grounds
The government is clearly intended to overcome the previous discrimination between workers committed to “Vietnamese companies, enterprises, cooperatives, cooperative groups, farms, households and individuals and other organizations employing laborers” (from Decree 108/2010/ND-CP) and laborers of “foreign-invested enterprises, foreign agencies and organizations and international organizations and for foreigners in Vietnam” (from Decree 107/2010/ND-CP).

The two distinct ranges of minimum wage thereby established (foreign companies’ employees always being entitled to higher salary) have now been unified so that one unique parameter could eradicate one major inequality in employment regulation of the country (Art. 1 Decree 70/2011/ND-CP).

Minimum wage levels differentiate per geographical areas of Vietnam (Regions I, II, III, IV)
The country has been divided in regions from I to IV each related to a specific wage level that slowly increases from region IV to region I.

According to the new Decree, a minimum wage of VND2,000,000 per month has to be paid in Region I, meaning 29 percent up from same figure in Decree 107/2010/ND-CP (VND1,550,000 per month on foreign-invested companies) and a significant 49 percent more than Decree 108/2010/ND-CP (VND1,350,000 per month on Vietnamese companies).

Region II follows the same ratio with now VND1,780,000 per month against the previous VND1,350,000 per month from Decree 107/2010/ND-CP (up 32 percent) and against an even lower VND1,200,000 per month according to Decree 108/2010/ND-CP (up 48 percent).

Region III keeps a steady pace with VND1,550,000 per month estimated – about 32 percent more than Decree 107/2010/ND-CP (VND1,170,000 per month) and a significant 50 percent raise from Decree 108/2010/ND-CP (VND1,050,000 per month).

Last but not least, significant numbers run over Region IV as well. Earning  VND1,400,000 month today, employees of Vietnamese enterprises experienced salary increases of almost 41 percent over the last year (VND830,000 per month in Decree 108/2010/ND-CP) while workers employed in foreign-invested companies make a slight 27 percent more compared with the past (VND1,100,000 per month as in Decree 107/2010/ND-CP).

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