The minimum montly wage will rise VND100,000 (US$4.60) to VND830,000 ($39.50) starting the beginning of May, pursuant to Government Decree No 22/2011/ND-CP issued on Monday.
HA NOI —
The increase will be applied at all State agencies, people's armed forces, socio-political organisations, and State-owned one-member limited companies.
The wage level would be used as a basis for the calculation of allowances and other subsidies for workers.
Under the decree, State agencies would be able to use 10 per cent of their regular savings for the wage increase. Agencies under the health sector would
have to use at least 35 per cent of their revenues after deducting fees for medicine, blood, chemicals and other materials.
In addition, they would be able to use 50 per cent of last year's local budget surpluses to pay for the salary increase.
The State budget would ensure additional funding to implement the minimum wage increase in case that ministries, central agencies, provinces and cities lack the necessary funding.
The same day, the Government also issued a decree to regulate that pensions, social insurance allowances and monthly allowances would be increased by 13.7 per cent.
Calculations from the Ministry of Finance showed that the annual State budget would total about VND725.6 trillion ($33.7 billion). Of the total, investment and development expenditure would be VND152 trillion ($7 billion), an increase of VND26.5 trillion ($1.2 billion) over last year.
VND27 trillion ($1.25 billion) from the State budget would be used for the monthly minimum wage increase from VND730,000 to 830,000.
After fluctuations in exchange rates, electricity, gas and oil prices, concerns were raised over the pay rise, triggering another round of inflationary price hikes.
Dao Phuong Mai, a lecturer from the University of Trade worried that the increase could make prices higher, especially after the recent hike in prices of electricity and petrol.
"We've faced difficulties as the prices of everything have rapidly risen while our salaries hardly cover rent, transport and daily living," Mai said.
She added that prices of many consumer goods began to rise even before the hike in the minimum wage.
However, economists said it could be hard to forecast whether the wage increase could affect prices.
Deputy head of the Central Institute for Economic Management Vo Tri Thanh said the hike was necessary for workers, although it could have some impact on prices.
"The increase would affect some workers at the State agencies but not all people," he said.
He added that if Government Resolution No 11 aimed at curbing inflation was implemented strictly, inflation would be reduced.
Sharing this point of view, deputy head of the Ministry of Labour, Invalids and Social Affairs' Labour and Salary Department Hoang Minh Hao said the wage adjustment could make the trend towards a high CPI extend until the end of the second quarter.
"Previous minimum wage rises showed that the increase had little impact on the price index for the following months as several different factors affect price increases," Hao said.
"Inflation in the period from now until the end of the year will be affected by pressure from world markets in combination with the domestic situation," he added.
He said the State had to adjust wages based on economic growth, labour supply and demand to ensure salaries continue to improve people's living conditions.
"The adjustment was necessary to avoid an attack on people's living standards as prices always increase before salaries."
The Government issued Decrees No 107/2010/ND-CP and 108/2010/ND-CP to increase the minimum wage for workers in businesses from the beginning of this year.
The previous rise was in May last year. — VNS