Vietnam’s garment industry reaches consensus on wage increase by .%

Vietnam’s textile and garment industry has requested a minimum wage increase. A consensus has been reached on a 12.4% increase and it will take effect from January 2016.
According to the International Labor Organization (ILO), at the third meeting of the Vietnam National Wage Committee held on September 3 this year (2015), employers, trade unions and the government unanimously decided to increase the increase by 250,000 to 400,000 VND ( 11-17.5 US dollars), which varies across the country depending on the region.
This action continues months of negotiations in which the new minimum wage was raised with 14 out of 15 votes in favor. The current monthly minimum wage ranges from VND 2.15 million to VND 3.1 million (USD 96-138).
An ILO spokesperson in Vietnam said that this wage standard will be submitted to the Vietnamese Prime Minister, chamber of commerce and industry for signature.
However, Vietnam’s textile and garment industry also expressed concern about the agreement’s increase rate. The Vietnam Textile and Garment Association required a lower 6-7% increase rate in view of the industry’s “labor intensity” to give the industry 2.5 million employees.
The industry’s export turnover reached approximately US$24 billion in 2014 and is expected to grow to US$27.5 billion in fiscal year 2015.
The association believes that a 10% increase in the minimum wage will increase total labor costs by more than $23.2 million, while insurance premiums will increase by $8.7 million, union fees will reach $530 million, and corporate profits will decrease.
Figures show that from 2010 to now, the minimum wage standard for foreign direct investment has increased from 2.15 times to 2.3 times; in 2014, domestic enterprises increased from 2.95 times in 2010 to 3.16 times; employer insurance increased from 18% in 2010 to 2014 22%.
The association has written to the Prime Minister of Vietnam, suggesting that the government reduce the proportion of insurance premiums and reduce union funds by 10%, giving companies more energy to take care of workers, such as housing assistance and child care services.
Several textile associations expressed support for the Textile and Garment Association. Tran Phuong, president of the PhuTho Textile and Garment Association, said that wage growth should be “voluntary” and companies should not lose their competitiveness and ability to reinvest.