Vietnam to Hike Minimum Wage by 6% in 2024
Vietnam is set to raise its minimum wage by 6 percent next year, pending government approval.
The National Wage Council voted unanimously on Wednesday to raise the Southeast Asian nation’s monthly floor to between 3.45 million-4.96 million dong ($141.80-$203.86), depending on the region, beginning in July. Workers currently receive 3.25 million-4.68 million dong ($133.58-$192.36).
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Le Van Thanh, chairman of the council and vice minister of labor, told reporters that the hike guarantees “harmonious” benefits for workers and businesses. The figure is a compromise: The Vietnam General Confederation of Labor, the country’s sole national trade union center, had proposed an increase of 6.5-7.3 percent, citing inflationary pressures that have jacked up the cost of food, housing and medicine. The Vietnam Chamber of Commerce and Industry, which represents corporations, on the other hand, suggested that a 4.5-5 percent jump would be fairer for business, since factories continue to struggle with wobbly demand from the United States and Europe.
Last month, the Vietnam Textile and Apparel Association (VITAS) said that textile and apparel exports to date have added up to roughly $40 billion, or 9 percent less than in 2022. Vu Duc Giang, the trade group’s chairman, characterized this as a win amid challenging economic conditions and a surfeit of inventory due to weaker consumer sentiment. He also expected revenue from textile and apparel exports to reach $44 billion in 2024 after orders rallied in the final quarter.
VITAS said that Vietnam’s largest importers of fabric and garments are the United States, with a turnover of $11 billion, Japan with $3 billion, the Republic of Korea with $2.43 billion and the European Union with $2.9 billion. But the world’s third-largest exporter of clothing after China and Bangladesh also expanded its export markets to 104 new countries and territories in 2023, diversifying its income streams.
Still, the wage increase comes as Vietnam contended with a 4.27 percent uptick in inflation in the first 11 months of the year. A survey of workers and their families by the Vietnam General Confederation of Labor found that the cost of living had risen by an average of 19 percent from 2022. Falling orders have also had a knock-on effect, resulting in garment manufacturers laying off some 70,000 workers in the first five months of 2023 alone, according to the labor ministry.
Among those who had to let thousands of employees go was Garmex Saigon, which saw a nearly 97 percent hit in income in the first nine months. “The company will lose a lot, so the company has reorganized its apparatus, continued to cut labor and temporarily stopped production to minimize losses,” the technical outerwear specialist wrote in an earnings update to the Ho Chi Minh City Stock Exchange in November.
In August, Taiwan-based Pou Chen, whose clientele includes high-rollers like Adidas and Nike cut 1,200 permanent positions at its Pouyuen Vietnam Co. plant in Ho Chi Minh City. This was its third round of layoffs following the loss of 2,300 jobs in February and 5,700 in May. “Pouyuen Vietnam said the job cuts are due to no recovery in terms of orders,” VnExpress reported. “Only a few clients made orders.”
Rival hub Bangladesh has gone through its own minimum-wage adjustment process, albeit one that was and continues to be contentious because of strains between workers, suppliers and buyers about who is ultimately responsible for employees’ salaries. And despite calls for a review, the government’s gazette notification on Thursday appears to have settled the matter: The new monthly minimum wage will stay at 12,500 Bangladeshi taka ($113.95), just over half of the 23,000 taka ($209.66) that unions, workers and some U.S. lawmakers were asking to put millions of workers above the poverty line.
