Decree on Regional Minimum Wage Officially Issued in May 2024, Right? What is the Current Regional Minimum Wage?
Decree on Regional Minimum Wage Officially Issued in May 2024, Right? What is the Current Regional Minimum Wage?
The Government of Vietnam has just issued Resolution 01/NQ-CP on major tasks and solutions for implementing the socio-economic development plan and state budget estimates for 2024, which includes important directives related to wage reform.
According to Appendix IV issued together with Resolution 01/NQ-CP, the Government of Vietnam instructed the Ministry of Labor, Invalids and Social Affairs to take the lead in completing the Decree stipulating minimum wages for employees working under labor contracts by May 2024.
Regarding the issue of increasing regional minimum wages, on the morning of December 20, the National Wage Council met and agreed on the proposed regional minimum wage increase for 2024.
At the end of the meeting, with the majority of votes in agreement, the National Wage Council agreed on a regional minimum wage increase of 6%, effective from July 1, 2024.
If approved, the monthly regional minimum wage is expected to increase as follows:
- Region I increases from 4.68 million VND/month to approximately 4.96 million VND/month (an increase of 280,000 VND);- Region II increases from 4.16 million VND/month to approximately 4.41 million VND/month (an increase of 250,000 VND);- Region III increases from 3.64 million VND/month to approximately 3.86 million VND/month (an increase of 220,000 VND);- Region IV increases from 3.25 million VND/month to approximately 3.45 million VND/month (an increase of 200,000 VND).
For hourly regional minimum wages, the National Wage Council also agreed on a 6% increase from July 1, 2024, specifically as follows:
- Region I increases from 22,500 VND/hour to approximately 23,800 VND/hour;- Region II increases from 20,000 VND/hour to approximately 21,000 VND/hour;- Region III increases from 17,500 VND/hour to approximately 18,600 VND/hour;- Region IV increases from 15,600 VND/hour to approximately 16,600 VND/hour.
Thus, according to the proposal agreed upon by the National Wage Council, regional minimum wages will increase by 6% from July 1, 2024. According to the latest directive in Resolution 01/NQ-CP, the Decree stipulating minimum wages for employees working under labor contracts will be completed in May 2024. However, the exact time of the Decree's issuance and effective date will only be known once the Decree is officially completed.
Decree on Regional Minimum Wage Officially Issued in May 2024, Right?
What is the Current Regional Minimum Wage? How is the Current Regional Minimum Wage Applied?
Currently, the regional minimum wages are stipulated in Article 3 of Decree 38/2022/ND-CP with the following amounts:
| Region | Monthly Minimum Wage
(Unit: VND/month) | Hourly Minimum Wage
(Unit: VND/hour) || --- | --- | --- || Region I | 4,680,000 | 22,500 || Region II | 4,160,000 | 20,000 || Region III | 3,640,000 | 17,500 || Region IV | 3,250,000 | 15,600 |
The list of regions I, II, III, and IV is specified in the list of regions applying minimum wages from July 1, 2022, in the Annex issued together with Decree 38/2022/ND-CP.
Based on the regulations in Article 4 of Decree 38/2022/ND-CP, the regional minimum wages are applied as follows:
- The monthly minimum wage is the lowest wage used as a basis for negotiating and paying wages for employees under monthly wage agreements, ensuring that the wage corresponding to the job or position of the employee working the full standard working hours in a month and completing agreed labor norms or tasks is not lower than the monthly minimum wage.
- The hourly minimum wage is the lowest wage used as a basis for negotiating and paying wages for employees under hourly wage agreements, ensuring that the wage corresponding to the job or position of the employee working for one hour and completing agreed labor norms or tasks is not lower than the hourly minimum wage.
- For employees paid on a weekly, daily, product, or task basis, the wages under these payment methods, if converted to monthly or hourly wages, must not be lower than the monthly minimum wage or the hourly minimum wage. The wage conversion to monthly or hourly wages is based on the standard working hours selected by the employer as per labor law as follows:
+ The wage converted to a monthly wage equals the weekly wage multiplied by 52 weeks divided by 12 months; or the daily wage multiplied by the number of normal working days in a month; or the product, task wage performed within the standard working hours in a month.
+ The wage converted to an hourly wage equals the weekly, daily wage divided by the normal working hours per week, day; or the product, task wage divided by the working hours within the standard working hours to produce the product or perform the task.
How is the Regional Minimum Wage Applied according to the 2024 Wage Reform?
According to the provisions in Section II of Resolution 27-NQ/TW 2018, the 2024 wage reform's regional minimum wage is specified as follows:
- Continue to improve the policy on regional minimum wages by month.- Adjust the regional minimum wages to ensure the minimum living standards of employees and their families, based on factors such as labor market conditions, economic and social development (labor supply-demand, economic growth rate, consumer price index, labor productivity, employment, unemployment, and the enterprises' ability to pay).- Strengthen the functions, tasks, and organizational structure of the National Wage Council and include independent experts in the Council.
Additionally, the wage and income management mechanism in the private sector is guided as follows:
- Enterprises (including 100% state-owned enterprises) are free to decide their wage policies (including wage scales, wage tables, and labor norms) and pay wages not lower than the minimum wages announced by the State, based on collective labor agreements suitable for production organization, labor organization, enterprises’ capacity, and publicize them at the workplace.- The State announces the regional minimum wages by month and by hour, the average market wages for various occupations, and supports the provision of labor market information, without directly intervening in enterprises' wage policies.- Enterprises and employees negotiate, agree on wages, sign labor contracts, and pay wages linked to productivity and work results.- Enterprises and labor unions negotiate and agree on wages, bonuses, and other incentive policies in collective labor agreements or the enterprises' regulations.- Enhance the role and capacity of trade union organizations and the inspection and supervision of state management agencies.
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