On November 16th, 2018, the Government issued Decree No. 157/2018/ND-CP regulating on the regional minimum wage for an employee working under labor contracts. This Decree takes effect from January 1st,2019.
Accordingly, the subjects of application include: Employee; Enterprises, Cooperatives, Cooperative unions, Cooperative groups, farms, households, individuals and other Vietnamese organizations that hire employee under labor contracts; Foreign Agencies, International Organizations and Foreign Individuals in Vietnam employing laborers under labor contracts (except for international treaties to which the Socialist Republic of Vietnam is Members have different provisions from the provisions of this Decree).
The region-based minimum wage level applicable to an employee working at enterprises from January 1th, 2019 is as follows: Region I: VND 4,180,000/month; Region II: VND 3,710,000/month; Region III: VND 3,250,000/month; Region IV: VND 2,920,000/month. Thus, the new regional minimum wage is higher than the current wage of about VND 160,000-200,000/month.
In addition, the Decree also stated that the regional minimum wage is applied following the business address of enterprises. In cases of enterprises having branches operating in different regions with different regional minimum wages, the regional minimum wage is applied following the business address of branches. Enterprises operating in Industrial Parks and Export Processing Zones located in areas with different regional minimum wage shall apply the highest regional minimum wage of religion’s that wage.
The above-mentioned minimum wage level is the lowest level serving as a basis for employer and employee to negotiate for salary. The wage level is paid for employee working under normal conditions, full time in a month and finishing work must be ensured: Not lower than the regional minimum wage for employees doing simple jobs; It is at least 7% higher than the regional minimum wage for employees who work in jobs requiring vocational training as prescribed.
It can be seen that the increase in the regional minimum wage is a suitable step of the Government, impacting on the wage of employee and regulation of enterprise directly. Increasing in the minimum wage can help improve the income of the majority of workers, thereby pushing domestic consumption up and contributing to a higher GDP and country economic growth.