Low wages disempower Vietnamese workers

Surveys performed by trade unions over a number of years reveal around a third of Vietnamese workers are destitute, have debts, and even acquire "shark loans" using social insurance and identity cards as collateral.

Vu Minh Tien, director of the Institute of Workers and Trade Union, told a seminar on minimum wages Thursday that out of 2,000 people polled in March, 12% borrow money on a regular basis for basic living expenses, 35.5% do so three to four times per month, and 34.8%, once or twice a year.

"I've never seen any worker who borrowed money to purchase real estate. They borrow just to cover their immediate living expenses," Tien said. "If a worker does not work overtime and his or her child is sick or their parents are hospitalized, they will undoubtedly fail to pay rent in time the following month, and eventually resort to loans."

Tien noted how, despite the fact that the regional minimum wage will be raised by 6% from July 1, the constant surge in fuel costs has led to rising prices, plunging workers into more financial woes.

Ha Phuong Anh, chairwoman of the trade union at joint venture Plummy Garment Company, said if an employee saves and has a monthly standby fund, the minimum wage of VND4.68 million ($204) could be considered sufficient if imposed two years ago.

"However, given increasing costs due to the rocketing gasoline prices, workers must tighten their belts to make ends meet. That's not talking about additional expenses like childen falling sick and spending to attend funerals or wedding parties."

Plummy Garment employs 700 people with women accounting for 93%. Its average salary payment is now VND5.68 million.

A total VND4.68 million is the new minimum salary for Region 1, which includes urban Hanoi and Ho Chi Minh City. The figure is even lower for other regions, especially in rural areas.

Nguyen Lan Huong, former director of the Institute of Labor Science and Social Affairs, remarked that Vietnam's approach to minimum monthly wages is mostly based on labor contracts.

"This is not suitable because the percentage of workers on contracts is quite low, at around 60%. Regulations requiring workers with a one-month or longer contract to pay social insurance have unintentionally left many people out of the social security net," she added.

Huong argued that adjustment to the regional minimum salary should be done every year to offset rising prices and ensure workers are accommodated in the country's social security net.

According to a report by Vietnamese workforce solutions website vieclamtot.com, more than 60% of over 1,300 workers polled stated they wish to change occupations and look for employment in other fields including online, from home, sales, as drivers, or in delivery post pandemic.

Approximately 70% of people in different labor groups want to work in other major cities or different locations, the report noted.

General Statistics Office data in 2021 shows that out of a total of more than 28.2 million people negatively impacted by the Covid-19 pandemic, 4.7 million people, accounting for 16.5%, lost their jobs. Up to 12 million people or 42.7% had their working hours cut, got furloughed or were forced to work on rotational shifts, while 18.9 million workers had their income reduced, accounting for 65.6%.

Vietnamese wages on an international level are still low, at a few hundred U.S. dollars per month, according to the World Bank’s Vietnam poverty and equity assessment for 2022.

“Low-cost labor was one of the main reasons behind increasing FDI and primarily in manufacturing. Wages in Vietnam doubled from 2010 to 2020, from $400 per month to over $800. Average monthly earnings are higher than in the Philippines but still trails upper-middle income neighbors like Thailand and Malaysia," the bank noted.

The government on Sunday approved the labor ministry's proposal to raise the country’s region-based minimum wage starting July.

With an average 6% increase, the new minimum wages for regions 1, 2, 3, and 4 will be VND4.68 million ($204), VND4.16 million, VND3.64 million, and VND3.25 million per month, respectively.