Deputy Director of the Institute of Workers and Trade Unions (Vietnam General Confederation of Labor) Pham Thu Lan gave the above opinion when answering an interview with a reporter of Kinh te & Do thi Newspaper about increasing the minimum wage from July 1, 2024.

The basic minimum wage meets the minimum standard of living

Madam, the Ministry of Labor, Invalids and Social Affairs has submitted to the Government a draft Decree regulating the minimum wage for employees working under labor contracts, proposing an average increase of 6% compared to the current level, effective from July 1, 2024. In your opinion, when the minimum wage increases on July 1, 2024, will the lives of workers be improved in many aspects?

- Every time the minimum wage increases, the workers' lives are improved. The increase in the minimum wage means that the workers' social insurance contributions will increase; when they retire, they will have a high pension and a more secure future.

If workers have improved wages, their family and children's lives will be better. Workers may consider reducing overtime hours to spend more time taking care of their families. That is our wish, but in reality, wages are not so high that workers think they do not need to work overtime because their wages are enough to live on.

There is one thing I really want to say, that is the current minimum wage only ensures a minimum standard of living under normal conditions (no life events occur). But no one can predict what events or incidents will happen in their life, so it is necessary to have a reserve fund; while the current minimum wage does not take these things into account. Not to mention that workers work for that salary when they are still healthy; later in life, their productivity and income will decrease.

Therefore, in order for workers to have a living wage, not have to work overtime, and have savings, we need to aim to implement a reasonable minimum wage.

Can you be more specific about what a fair minimum wage is and how it differs from the current minimum wage?

- According to Vietnamese law, the minimum wage is to ensure a minimum standard of living for workers and their families. The current increase in the minimum wage is also to achieve that goal.

But the minimum living standard is different in each period. We adjust the minimum wage based on the view of the minimum living standard of more than ten years ago, the minimum wage is only to escape poverty, not to mention savings and risk reserves in life. During the Covid-19 pandemic, many workers had to leave the city to return to their hometowns because they spent all their salary during the working hours, with no surplus.

We need to change towards implementing a satisfactory minimum wage, with a calculation method updated with market prices, new standards of the current period (basket of goods prices, housing quality, education quality, healthcare, savings for emergencies, buying a house, planning for the future...).

Currently, Vietnam does not have a method to calculate a satisfactory minimum wage. However, according to calculations by international organizations, the current minimum wage is equivalent to about 60% of the satisfactory minimum wage. To implement a satisfactory minimum wage, we need to make gradual efforts, but the important thing is to have consensus and exchange among relevant parties (between Trade Unions, Enterprises and the Government) to unify viewpoints and implementation roadmap.

Solving the problem of increasing wages associated with increasing labor productivity

Returning to the story of adjusting the minimum wage from July 1, 2024 with an average increase of 6%, is that a great effort from businesses and sharing from workers?

- The 6% wage increase for workers in the context of the Covid-19 pandemic, when businesses are facing difficulties with orders, is a great effort. Other countries have much lower minimum wage increases than Vietnam.

The problem is how to increase productivity to increase revenue for businesses and income for workers. There are many factors to increase productivity, which are workers, energy, land, equipment, machinery, and capital.

On the part of the workers, they have been working very hard and making every effort for their jobs and companies. Of course, workers can still increase their productivity, but they need to be motivated by salary, bonuses, and good working conditions. Other factors to increase labor productivity such as capital, technology, management skills, and effective use of resources, etc., belong to the enterprise. The question is whether the enterprise is willing to invest in technological innovation, new production processes, and intellectual investment to improve processes, improve technology, and improve products. When enterprises invest, they must accept the initial difficulties and reduced profits.

The reality is that many businesses have paid their workers higher than the regional minimum wage, so they said that they will not increase wages from July 1st to focus on production and business. What is your opinion on this?

- According to the provisions of the labor law, these enterprises are not wrong. However, the problem here is how the enterprise evaluates the employees and how much they want to stimulate them to work. If the enterprise only wants the employees to work normally like this, then they will not increase their salary. But for the employees, if they do not get a salary increase, they will not be encouraged to work, so the efficiency is not high. And, the employees may think about changing jobs to other companies that are willing to pay higher salaries.

Such enterprises find it difficult to stimulate workers to increase productivity because they cannot retain talented people. Those who stay may be old and unskilled. Therefore, enterprises need to think about attracting, retaining and motivating workers by increasing their salaries. When their salaries are increased, workers will be more committed to the company and want to work more every day to share with the enterprise.

The minimum wage will be adjusted on July 1, 2024. What advice do you have for businesses and especially workers to help them work more effectively, increase labor productivity to contribute to businesses as well as increase income?

- We hope that businesses will try to increase wages for employees in accordance with State regulations. And businesses can even pay higher minimum wages to employees, depending on the conditions and payment capacity of the business. Businesses should also create conditions for employees to be trained, retrained, and improved in vocational skills to meet job requirements.

Increasing the minimum wage is also an encouragement for workers. Now the trend of digital transformation, the 4.0 industrial revolution, machines are gradually replacing humans in some jobs. Therefore, workers need to improve their professional qualifications, knowledge, and skills so that they can be retained by the company to work and pay high salaries. Therefore, we hope that workers will try to do their jobs better, stick with and share with the company for mutual benefit.

Thank you!