Wage increase boosts motivation for laborers

Under Government Decree No.74/2024/ND-CP, effective July 1, 2024, regional minimum wage has been raised by 6 percent.

Non Son Company workers work at the factory.

In Ho Chi Minh City, several businesses have started increasing wages for their employees, despite most already paying wages above the regional minimum wage.

Tran Van Thang, a maintenance worker at a company in Tan Thuan Export Processing Zone in District 7, felt a surge of excitement upon hearing the company's announcement of a wage increase effective from July 1. Earlier in 2024, the company had already raised wages, with new employees starting at over VND6.3 million per month. Initially unsure if they would benefit from the new regional minimum wage increase of 6 percent, Thang and his colleagues were delighted when the company's union informed them of the decision by the Board of Directors to raise wages.

According to the company's union representative, the wage adjustment aims to make employees rest assured and strengthen their commitment during the current challenging labor market conditions.

Despite the happiness over the wage increase starting from July 1, many workers are also worried about the rising living costs. Nguyen Thi Hong Hanh, a garment worker in District 12, expressed her concerns, "A few days ago, gasoline prices increased, and the prices of essential goods have been gradually rising since Tet. Some items have already seen price hikes since early July. Recently, our landlord has been asking, 'It seems like your wages are increasing, right?' This adds to our pressure."

Many workers paid based on productivity feel that the regional minimum wage increase primarily serves as a basis for companies to calculate insurance contributions (such as social, health, and unemployment insurance) and overtime pay. While this is a long-term benefit for employees, they also worry because each wage hike is accompanied by significant increases in living costs, posing challenges for those with low incomes.

Mr. Luu Kim Hong, Chairman of the Trade Union at Nidec Company, mentioned that in recent days, union officials have received many questions from employees about the wage increase.

"Usually, when the Government's Decree is issued, company leadership meets with the union executive committee to discuss the wage increase for employees. Once consensus is reached, an announcement is made to the employees. If the wage increase is approved after the Decree takes effect, the company will make additional payments to the employees," Hong explained.

The representatives of Nissei Electric Vietnam in Linh Trung I Industrial Park, Thu Duc City, revealed that the company's current basic wages already exceed the regulatory requirement by 30 percent. The company recently implemented a wage hike at the beginning of 2024, so they are currently awaiting consensus from the factories and leadership regarding the latest regional minimum wage increase.

Meanwhile, at Juki Vietnam Co., Ltd. in Tan Thuan Export Processing Zone, District 7, basic wages are above VND5 million. The company carries out annual wage increases, with the highest increment reaching 8 percent. Besides basic wages, there are additional allowances and overtime pay. Therefore, during this current round of regional minimum wage adjustments, the company is still in the process of calculation and consideration.

From July 1, alongside a 30 percent increase in basic wages, pensions and allowances are adjusted to rise by 15 percent. The regional minimum wage for employees within business zones increases on average by 6 percent, ranging from VND200,000 to VND280,000 per month, depending on the region. According to regulations, businesses must increase their minimum wages when the government raises the regional minimum wage; failure to do so may result in penalties.

According to Mr. Tran Van Trieu, Director of the Legal Consultation Center at the HCMC Federation of Labor, the 6 percent wage increase for workers holds significant importance. However, to ensure the regional minimum wage increase has a meaningful impact, it is crucial to control the prices of essential goods and prevent wage inflation. In reality, basic salaries in most businesses in HCMC already exceed the regional minimum wage. Therefore, it is imperative for trade unions, especially at the grassroots level, to devise strategies for negotiating and engaging in dialogue with businesses to secure additional income benefits for workers.

Mr. Trieu stressed that the primary challenge is how to increase productivity effectively to boost both business revenue and employee incomes. Only through increased labor productivity and higher business revenues can workers' livelihoods truly stabilize.

Currently, many businesses are struggling with recruitment. According to the HCMC Job Service Center, during the first six months of 2024, the center received requests from enterprises to fill 48,837 job positions. However, statistics indicate that only about 9,000 individuals registered for job placement services at the center. Therefore, to retain workers, businesses need proactive measures such as better welfare benefits and complying with regulations on wage increases for employees.

Following the issuance of Government Decree No.74/2024/ND-CP, the HCMC Federation of Labor promptly devised a plan to guide and oversee the adjustment of minimum wages for contract workers. Under this plan, the HCMC Federation of Labor has urged the Federation of Labor in Thu Duc City, districts, sectoral unions, departments, and higher-level bodies, as well as grassroots unions under the HCMC Federation of Labor, to publicly disclose adjustments in monthly and hourly minimum wages for contract workers. Additionally, they will monitor the implementation of these adjustments along with other allowances and benefits by businesses.

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