In order to combat rising inflation rates as well as consequences of the Russia-Ukraine war such as supercharged gas prices, the Vietnamese government has issued Decree 38/2022/ND-CP for statutory minimum wage adjustments.
The Prime Minister, working alongside the Ministry of Labor, War Invalids and Social Affairs, has just announced this change during a dialogue program with workers in Bac Giang Province on June 12.
The Decree is to come into effect on July 1, 2022 and will be strictly enforced, said PM Pham Minh Chinh. All businesses are to prepare for and update their employees on the change.
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Increases to monthly and hourly minimum wage will be implemented across the four types of regions and provinces of Vietnam (categorized by level of urbanization).
Overall, monthly minimum wage across regions will see a 6% increase starting July. More specifically, minimum wage in Region I (urban Hanoi & Ho Chi Minh City) will go from VND 4,420,000 to VND 4,680,000; Region II (Da Nang, rural Hanoi & Ho Chi Minh City) will go from VND 3,920,000 to VND 4,160,000; Region III (provincial cities, districts of Bac Ninh, Bac Giang, Hai Duong, Phu Tho, Binh Phuc & other provinces not listed in Region I and II) will go from VND 3,430,000 to VND 3,640,000; and Region IV (remaining localities) will go from VND 3,070,000 to VND 3,250,000.
Hourly rates will be calculated according to monthly wages detailed above, ranging from VND 22,500 to VND 15,600 for Region I-IV respectively (26 days a month, eight hours a day).
This update is said to be part of an overhaul to the interest of the workforce, alongside future adjustments to the social insurance and pension policies.
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This proposal has been in the works since April 2022, as members of the National Salary Council claiming that the wage increase is long overdue. COVID-19’s impact on the economy meant that regulations on minimum wage have not been updated since the start of 2020. Previously, statutory minimum wage adjustments were carried out at the beginning of each year, however waiting until January 2023 might be too little, too late.
PM Pham Minh Chinh and Dao Ngoc Dung, Minister of Labor, War Invalids and Social Affairs both agree that there is plenty of room for improvement in workers’ current living conditions as well as quality of life.
Businesses and enterprises operating in Vietnam must make sure to make arrangements for and accommodate these changes as well as continuous fluctuations in HR regulations as Vietnam’s quickly expanding economy relies heavily on its workforce.
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