APPAREL FIRMS WORRY ABOUT 2017 WAGE HIKE PLAN

Under the council’s plan which will be submitted to the Government for approval, the minimum monthly wage for region one would be adjusted up by VND250,000 next year to VND3.75 million. Meanwhile, the rises for regions two, three and four would be VND220,000, VND200,000 and VND180,000 respectively, taking the minimum wages for these regions up to VND3.32 million, VND2.9 million and VND2.58 million per month.

Asked by the Daily about the pay raise plan, Nguyen Dinh Ngo, director of Can Tho City-based Viet Thanh Garment Export Co Ltd, said textile-garment enterprises are grappling with a host of difficulties and desperately finding ways to cut costs.

The 2016 minimum wage spike of 12.4% has hit Tay Do Garment Company hard as the firm’s wage fund has fallen short of VND6 billion.

“The salary hike for next year would definitely make life more difficult for the company,” said deputy general director Nguyen Hau Giang.

According to Giang, while minimum wages go up, labor productivity does not. In other words, the performance of workers has not improved in line with wage hikes, and his company has to set aside an additional VND1 billion a month for the salary spike.

Giang noted that insurance payment and labor union fees would increase proportionally. As a result, though sales may inch up slightly, profit would skid.

Tay Do paid VND1.6 billion in monthly insurance premiums last year and the figure has risen to VND1.8 billion this year. The amount will be higher next year if the council’s final plan is approved, he said.

Meanwhile, Ngo of Viet Thanh said workers at his company would not benefit from the 2017 wage rise as their wages are already higher than the minimum levels. “But the point is the financial burden would be heavier for us,” Ngo said.

Nguyen Thai Hung, president of the Song Hau Textile-Garment Sub-Association, shared the point, saying the minimum wages by region for 2017 should not be revised up to help enterprises focus on stabilizing their production and improving competitiveness.

Outsourcing fees have remained unchanged, according to Hung.

In a document issued on July 22, the Vietnam Textile and Apparel Association (VITAS) said the 2016 minimum wage hike already placed great impact on enterprises, especially in terms of labor cost.

Therefore, the association proposed no minimum wage hike next year, suggesting that the salary adjustment should be made once every two or three years.

According to Deputy Minister of Labor, Invalids and Social Affairs Pham Minh Huan, a technical team of the National Wage Council had prepared two reports assessing the minimum wage hike’s impacts and inspected actual conditions of laborers.

Huan said with the 7.3% rise, minimum wages can meet 90% of workers’ minimum living costs.

However, the Vietnam General Confederation of Labor was not pleased with the increase and would face higher pressure from laborers, the confederation’s vice president Mai Duc Chinh said.

Source: The Saigon Times