Minimum Wages in Vietnam - Frequently Asked Questions
Is there separate minimum wage legislation in Vietnam?
There is no separate legislation on minimum wages in Vietnam rather there is a general Labour Code, 2012 Labour Code (Law No: 10/2012/QH13, effective from 05.01.2013) contains provisions on minimum wage in Article 91. Accordingly, 'the minimal salary rate is the lowest rate that is paid to the employee who performs the simplest work in the normal working conditions and that must ensure the minimal living needs of the employees and their families'. However, at the request of the Government, the Vietnam National Assembly XIII will consider and adopt the draft of the minimum wage law within the laws and ordinances construction program for the 2011-2016 terms.
Do one or more minimum wage/s, exists in Vietnam?
Yes there exists more than one minimum wages in Vietnam. Article 91 of the Labour Code 2012 states: “The minimal salary rate is determined by month, day, and hour and shall be established by region and sector’. The minimum wage is based on the basis of ' Based on the minimal living needs of the employees and their families, the social and economic conditions and the salary wage on the labour market' (Paragraph 1, Article 91, and Labour Law 2012). The Government shall announce the regional minimal wage on the basis of the recommendations of the National Wages Council. (Paragraph 2, Article 91 of the Labour Code). Besides, the sectoral minimum wage ' is determined through the sector collective negotiation and specified in the sector collective labour agreement but is not lower than the minimal salary rate announced by the Government" (Paragraph 3, Article 91 of the Labour Code).
At what level are minimum wages determined?
Minimum wages are determined at Regional and Sectoral level. The government announced the regional minimum wages, and the sectoral minimum wage 'are determined through the sector collective negotiation and specified in the sector collective labour agreement but is not lower than the minimal salary rate announced by the Government' (Article 91 of the Labour Code 2012).
On what basis is/are minimum wage/s declared?
The minimum wages are declared by the month, day and hour (Paragraph 1, Article 91 of the Labour Code 2012). The government announced the minimum monthly salary, on the basis of recommendations of the National Wages Council and based on the minimal living needs of the employees and their families, the social and economic conditions and the salary wage on the labour market (Paragraph 2, Article 91 of the Labour Code 2012). Labour Code is silent on this. Employers, however, have the right to pay wages - weekly, piece rate but it should be in agreement with the employees.
In case of daily/weekly/monthly minimum wage, are number of working hours considered while fixing minimum wage?
The number of working hours is not considered when the minimum wage stipulated by the Government, the Government only announces the minimum wage by region and month. However, the Labour Code 2012 states that 'the normal working hours shall not exceed 10 hours/1 day, but not exceed 48 hours/1 week' (Paragraph 1, Article 104).
Who all are involved in setting minimum wage?
The National Wages Council which includes representatives of three parties (employer’s representatives, trade union representative and government agency representatives). This is the advisory body to the Government on the adjustment, announced the minimum wages and the wages level in the labour market. The Council is responsible for: analyzing economical - social situations, the living standards to identify and forecast the subsistence needs of workers and their families; evaluating the implementation of the minimum wages and wage levels in the labour market and the affordability of the enterprises; developing and recommending to the Government the plans of the minimum wages each year and each period. The National Wages Council's functions, tasks and organizational structure are specified by the Government (Article 92, Labour Code 2012). In fact, the National Wages Council has officially launched and operated from the beginning of August 2013. It consists of 15 members representing the Ministry of Labour - Invalids and Social Affairs (MOLISA), the Vietnam General Confederation of Labour, the Association of Small and Medium Enterprises in Vietnam, The Professional associations at national level which have big number of workers.
How are upratings (adjustments) of minimum wage/S decided upon?
Upratings of minimum wages are decided jointly by government, employer and trade union representatives. Representatives of the three parties will meet, each party themselves will propose their expected wages as a reference data for the discussion. Based on the ability of the enterprise, CPI index and minimum standard of living of workers, the parties will discuss and agree on a reasonable plan to guarantee the harmony of interests of both the employees and the employers and submit to the Government for their decision.
Which are the components of minimum wage in your country?
The components of minimum wage in Vietnam include the subsistence needs of workers and their families, economical - social growth, CPI index and wage levels in the market.
How frequently is the fixed component of minimum wage updated?
The minimum wages will be adjusted to apply from 01/01 to 31/12 each year. Every year, in July or August, the technical subcommittees of the National Wages Council will discuss and select the minimum wage schemes, propose to the Ministry of Labour, Invalid and Social Affairs (MOLISA). On that basis, the MOLISA will collect the opinions of the relevant ministries, and then submit to the Prime Minister in September. The Prime Minister will sign and announce the new minimum wage rates from the 1st October, 3 months ahead in order to help the enterprises well prepared.
What are the yardsticks on which minimum wage revisions are based?
The adjustment of the minimum wages is based on the macroeconomic situation, the ability of the enterprises, CPI index and minimum standard of living of workers. In fact, Vietnam is conducting minimum wage adjustments according to 2 factors: on the one hand, try to gradually raise the ground up to meet the minimum needs; on the other hand, try to ensure real wages. The roadmap to adjust the minimum wage is first to meet essential living needs of the employees, then the minimum wages will be adjusted according to CPI index (CPI).
What is the national poverty line? (In national currency)
The national poverty line is defined: of rural poverty households are households with an average income of 400,000 VND / person / month (from 4,800,000 VND / person / year) or less. Urban poverty households are households with an average income of 500,000 VND / person / month (from 6,000,000 VND / person / year) or less. (According to Decision No. 09/2011/QD-TTg dated 30.01.2011 of the Prime Minister, Promulgating the poverty line, poor households applied for the period 2011-2015).
How often is poverty line updated?
In recent times, the poverty standards in Vietnam are updated every 5 years, i.e. 2006-2010, 2011-2015, and after 2015 will have new updated poverty line.
When was poverty line last updated? (Specify YYYY/MM)
The poverty line was most recently updated on 30.01.2011, effective from 1/1/2011 (Decision 09/2011/QD-TTg promulgating the poverty line, households closed to poverty line, apply for the period 2011-2015).
What is the percentage of minimum wage relative to the current poverty line?
The minimum wages in Vietnam varies from 1,900,000 VND to 2,700,000 VND. The average poverty rate is VND 450,000 = (500,000 + 400,000) / 2. So the percentage of minimum wages compared with the poverty rate varies from 422% to 600%.
Who all regulate minimum wage compliance?
Ministry of Labour - Invalids and Social Affairs, in collaboration with Confederation of Labour, the Vietnam Chamber of Commerce and Industry, The Vietnam Cooperative Alliance, The Association of Small and Medium Enterprises in Vietnam, other relevant Ministries, agencies and People's Committees of provinces and cities directly under the central government propaganda, disseminate the regulations of minimum wages to the employee, the employer; inspect and supervise the implementation of the minimum wage provisions according to Decree 182/2013/ND-CP November 14, 2013 stipulates the region-based minimum wage levels applied to labourers working for enterprises, cooperatives, cooperative groups, farms, households and individuals and agencies, organizations employing labourers.
Which legal sanctions can be applied if compliance is lacking?
In case of non Compliance Fines, 'depending on the nature and seriousness of their violations, they shall be disciplined, and administratively sanctioned or prosecuted for criminal liability; if causing damage they must make compensation as prescribed by law' (Article 239 of Labour Code 2012).
Are sanctions often being applied?
Sanctions are applied but not for all the cases and not strict enough. The sanctions are not powerful enough to prohibit the violence against the Law.
Are employer and/or trade union representatives involved in compliance procedures?
Yes employer and/or trade union representatives are involved in compliance procedures. This is stipulated in Article 6, Responsibility in implementing Decree 182/2013/ND-CP November 14, 2013 (stipulates the region-based minimum wage levels applied to labourers working for enterprises, cooperatives, cooperative groups, farms, households and individuals and agencies, organizations employing labourers). Article 14 of the Trade Union Law 2012 also stipulates the functions, tasks and participation of Trade Union in Vietnam in inspecting, supervising, monitoring the activities of agencies, organizations and enterprises, including the implementation of regimes and policies for the employees, such as the compliance with the provisions of minimum wages.
To whom/where can individuals complain, if they think they are earning less than minimum wage?
In case of non compliance, firstly the employer and employee must directly negotiate in order to 'settle the harmonious interests of the two parties, stabilize the production and business and to ensure the social order and safety'. The settlement of labour disputes by the agencies, organizations and individuals having the competence to settle the labour disputes is conducted after either party files a requesting application due to the refusal of negotiation by either party, negotiation done but failed or successful negotiation but either party fails to perform the agreement. (Article 194 of the Labour Code 2012). The State management agencies on labour shall be responsible for coordinating with the trade union organization, the representative organization of the employer to make guidance and support and assist the parties in the settlement of labour disputes (Article 195 of the Ministry of Labour law). Depending on different level of the labour disputes (individual or collective disputes, about rights or benefits...) that the Labour Code regulates different bodies to receive complaints on minimum wages.