Based on the experience gained in the 2008-2011 period and economic theories, the 30-percent base salary increase this July is unlikely to cause significant price increases that might lead to an inflation rise.
There are four reasons for this. Firstly, in the public sector, wages are paid from budget surpluses, while in the private sector, wages are already higher than the minimum wage, even with the new increase. Therefore, significant disruptions are unlikely in either sector.
Secondly, the Government is effectively managing the macroeconomy, controlling public spending. Meanwhile, local governments are well-prepared to implement market control measures to prevent excessive and illogical price increases due to this base salary rise.
Thirdly, in large cities like HCMC, controlling market prices is relatively easy thanks to the ample supply of essential goods and effective price stabilization policies implemented by the municipal authorities.
Finally, this significant wage increase will compensate for the decline in purchasing power experienced in recent times, leading to a balanced supply and demand and making inflation less likely.
However, HCMC is still prepared for various scenarios to achieve its growth target of 7.5 percent in 2024 and then the goal of 8-8.5 percent in the following year. This includes strengthening price stabilization and social welfare programs to address potential illogical price increases and ensure social stability to all groups of city dwellers.
One of the advantages that the city can make use of is its digital transformation. When e-commerce becomes growingly popular in HCMC, it is necessary to enhance sub-schemes of the price stability program here in both online and offline trading platforms.
This can be done via the control of the HCMC Industry and Trade Department as well as the city’s Businesses Association for smooth and sensible commodities supply. Along with that are the organizations of meaningful campaigns like ‘The Vietnamese Prioritize Made-in-Vietnam Merchandise’, ‘Premium Made-in-Vietnam Goods’.
Another measure is to promote affordable social housing options for workers and civil servants. This aims at offering city dwellers stable accommodation and meals. In particular, HCMC is piloting its program of renting houses to members of the Trade Union in the 2024-2025 period.
In addition, HCMC is implementing Decree No.97/2023/ND-CP by the Government to continue reducing school fee so that this year’s fee is the same the one in the 2021-2022 academic year, which is a remarkable drop compared to that of the 2023-2024 academic year. From this year, kindergarten learners are eligible for school fee exemption, while junior high school students can enjoy this from next year.
By addressing essential needs such as stable prices, affordable housing, better medical care, employer-employee connection establishments, and accessible education, HCMC wants to improve the quality of life for its citizens and maintain social stability during the last half of 2024.
