Minimum wage Vietnam: 6% increase from 1 July 2024

The Vietnamese Ministry of Labour, War Invalids and Social Affairs (MOLISA) is drafting a decree regulating the minimum wage for contracted employees. MOLISA is proposing an increase of 6% compared to the current level, applicable from 1 July 2024. The Ecovis experts explain the details.

Currently, the minimum wage for contracted employees is set out in Decree No. 38/2022/ND-CP (Decree 38) which took effect on 1 July 2022. However, new issues have arisen which require the adjustment of minimum wage levels.

Company performance has improved

First and foremost, there have been improvements in socio-economic development, the labour market and in business capabilities. The macro economy is stable with a GDP growth rate of 5.05%. In addition, the labour market is continuing to recover, while production and profitability have improved and workers’ incomes have increased. However, the real value of the minimum wages stipulated in Decree 38 has fallen due to an increase in the consumer price index (CPI). With the CPI predicted to increase by 4-4.5% in 2024, these minimum wages will no longer ensure minimum living standards for workers and their families in the second half of 2024.

The current minimum wages are defined by zones, but these have become unworkable because of changes in administrative boundaries (name changes, new establishments, merger or dissolution) or changes in infrastructure conditions, labour markets, investment attraction policies, etc.

Moreover, from 1 July 2024, salary policies will be comprehensively reformed according to Resolution No. 27-NQ/TW of 21 May 2018, leading to an increase in public sector salaries. Therefore, minimum salaries in the private sector must be adjusted to ensure general correlation.

With the increase in minimum wages, MOLISA is following the recommendation of the National Wage Council agreed unanimously at its session on 12 January 2024.

If you have any further questions about the implementation of the new minimum wage, please feel free to contact us.

Nghia Tran, Partner, ECOVIS AFA VIETNAM, Da Nang City, Vietnam

Monthly minimum wages

The proposed new monthly minimum wages are as follows (100,000 Vietnamese Dong, VND, are equivalent to approximately EUR 3.66 or USD 3.93):

• VND 4.96 million for Zone I
• VND 4.41 million for Zone II
• VND 3.86 million for Zone III
• VND 3.45 million for Zone IV

According to MOLISA, minimum wages are expected to increase by VND 200,000 -280,000 a month compared with current levels, an average of 6%. The minimum wage adjustment is about 2% higher than necessary to improve workers’ minimum living standards until the end of 2024. It is also expected to ensure minimum living standards in 2025. This level of adjustment balances the interests of workers and businesses, ensuring that workers’ living standards are improved, while also enabling the continued recovery and development of businesses.

Hourly minimum wages

The proposed new hourly minimum wages are as follows:

• VND 23,800 for Zone I
• VND 21,200 for Zone II
• VND 18,600 for Zone III
• VND 16,600 for Zone IV

MOLISA explains that the hourly minimum wage continues to be determined based on an equivalent conversion from the monthly minimum wage and standard working time according to the provisions of the Labour Code. This is the method recommended by International Labour Organization (ILO) experts in 2022.

For further information please contact:

Nghia Tran, Partner, ECOVIS AFA VIETNAM, Da Nang City, Vietnam
Email: Nghia.Tran@ecovis.com.vn