Government quickly issues Decree 118/2005/NĐ-CP dated on 15 September 2005 determining to increase the minimum salary from 290,000 VND/month up to 350,000 VND/month applied from 1st October 2005 seemed a sudden step in the road of salary innovation. Although the above increasing level is not sufficient for laborers to have a minimum living with the salary, but this is the greatest exertion of the Government in building a properly salary policy, to contribute to stimulate the production and consumption.
The fact, with the escalation of consumption price in recent times, the standard of living for labores becomes hotter. The Decree 118 cleared away basically about this problems.
Exchange to the reporter of Investment Newspaper, Mr. Hoang Minh Hao, Deputy of Head of Wage – Salary Department (The Ministry of Labor and Social) said, in the theory, to ensure the minimum living standard for the laborers (calculating in the quantity of goods which the minimum salary can buy), when the cost of living increases 10%, the minimum salary will be adjusted. Meanwhile, from the minimum salary in the begin 2003 until now; the cost of living has been up to 20.8%. Therefore, if it based on the theory, the minimum salary shall be adjusted two times.

Moreover, the increasing the countries’ poor standard up to 200,000 VND/ person/ month in the rural areas and 260,000 VND/ person/ month in the urban areas indirectly put the minimum salary down to the similar poor level rural areas. In the Mr. Hao’s analysis, the standard of poor just calculates in the cost of living for a person per month, but the minimum salary is calculated in the cost of living for a laborer and a meal. Therefore, with equal to the standard of poor, the minimum salary shall be 1.5 times of the poor standard. If calculating like this, the simple laborers in the urban areas have the minimum cost of living less than the country’s poor standard.

With the increase of salary, the greatest worry is belonging to the government. Besides, the government must balance for sufficient of wage-fund to ensure the increased minimum salary from 290,000 VND up to 350,000 VND/month (20.7%), the governmental budget must also balance the retirement pension, insurance subsidies, similar unemployment subsidies… in the decrease of business benefit tax due to the increase of the salary. Although the increasing compensates the significant wallet of laborers, the worry of everyday life is still not satisfied. At the present, although there is not the detail numbers about the fluctuation of price after the decision for increasing the minimum salary, the people deem that the price of goods will be increased in the end of the year according to the market rule, at the same time; some essential goods such as electricity, coal, cement… will be increased from the year of 2006 by the Government.
With the worry about the efficient in adjusting the minimum salary, this thing also creates a lot of pressures in the maintenance and improvement of business competitions. For Mr. Nguyen Van Minh, the Manager of the Labor – Salary Department (the Power Electricity Corporation), in the situation in which the input materials has the trend of increasing, the increase wage-fund to pay for the laborers is not interesting for the companies. The minimum salary will be adjusted to increase after 1 year as the government adjusts the average salary coefficient (in October 2004) that increases continuously “hardware” in the total gross income of the laborers in the companies. Obviously, the input cost in accounts of the products cost price also increases, makes the competition of the product decrease. However, the increasing minimum salary is performed strictly to make the laborers income increase if the companies understand the motivation of the salary.
Maybe, approximately over 300,000 the governmental employees who get salary from the budget feel clearly when the minimum salary increases. Besides, with 1.1 million laborers, the increase salary of the government is also a good news, because the source for increasing salary is from 10% savings and 35-40% earnings. However, to ensure the source for increasing salary, these organizations will look for the way of increasing earnings. According to Mr. Nguyen Huu Dung, the Head of Social and Labor Science Institute, the above increasing source will make these income organizations innovate the more effective activities.

(Source: the Investment Newspaper)

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