The Labor Code 2019 of Vietnam has stipulated several new points about the region-based minimum wage. According to this Law, from January 01, 2021, employees and enterprises need to know 04 following new points about the region-based minimum wage in 2021.
Article table of contents
1. It is expected that the region-based minimum wage in 2021 will remain the same as in 2020
At the end of August, the National Salary Council had a draft recommendation to the Government on the region-based minimum wage plan applied to employees in enterprises in 2021 in the direction of continuing to implement the region-based minimum wage by month until the end of 2021 (no adjustment in 2021). Thus, it is expected that the region-based minimum wage in 2021 will remain unchanged compared to 2020 according to the provisions of Decree No. 90/2019/NĐ-CP of Vietnam’s Government.
Therefore, if the Government approves the region-based minimum wage plan applied to employees in enterprises in 2021 in the direction of continuing to implement the region-based minimum wage by month until the end of 2021, the region-based minimum wage in 2021 applicable to employees working in enterprises is as follows:
- For enterprises located in region I: VND 4,420,000/month.
- For enterprises located in region II: VND 3,920,000/month.
- For enterprises located in region III: VND 3,430,000/month.
- For enterprises located in region IV: VND 3,070,000/month.
2. Statutory minimum wages per month or per hour vary according to regions
According to Article 91 of the Labor Code 2019 of Vietnam, statutory minimum wages are minimum wages of workers who do the simplest jobs in normal working conditions that are sufficient to support themselves and their families, and appropriate for socio-economic development. Statutory minimum wages per month or per hour vary according to regions.
In comparison, according to Article 91 of the Labor Code 2012 of Vietnam, the minimum wage must be determined on a monthly, daily and hourly basis by region or sector.
Thus, it can be seen that from January 01, 2021, when the Labor Code 2019 of Vietnam takes effect, statutory minimum wages per month or per hour vary according to regions instead of being determined on a monthly, daily and hourly basis by region or sector.
3. Annulling provision on sectoral minimum wage
Currently, according to Clause 3 Article 91 of the Labor Code 2012 of Vietnam, the sectoral minimum wage must be determined through collective bargaining within the sector and recorded in the sectoral-level collective labor agreement but must not be lower than the regional minimum wage announced by the Government.
However, the Labor Code 2019 of Vietnam annulled the provision on sectoral minimum wage to be determined through collective bargaining within the sector and recorded in the sectoral-level collective labor agreement but must not be lower than the regional minimum wage specified in the Labor Code 2012 of Vietnam.
Thus, from January 01, 2021, there will no longer be the sectoral minimum wage and instead, the minimum wage is set by region, set by month and hour.
4. Supplementing criteria for adjusting statutory minimum wages in 2021
The Labor Code 2019 of Vietnam specifies criteria for adjusting statutory minimum wages as follows:
- Minimum living standards of workers and their families;
- The relation between statutory minimum wages and usual salaries;
- Consumer price index, economy growth rate;
- Labor supply and demand;
- Employment and unemployment;
- Productivity;
- Financial capacity of enterprises.
In comparison with current regulation, according to Clause 2 Article 91 of the Labor Code 2012 of Vietnam, based on the minimum living needs of an employee and his/her family, the social and economic conditions and wage level in the labor market, the Government shall announce the regional minimum wage based on the recommendations of the National Wage Council.
Thus, the Labor Code 2019 of Vietnam has supplemented several criteria on adjustment to the statutory minimum wages such as consumer price index, economy growth rate, labor supply and demand, productivity and financial capacity of enterprises.
>>> View more: Region-based minimum wage in 2021 of 63 provinces and cities in Vietnam (estimated)
Ty Na
