Rising incomes fail to lift perceived living standards in Vietnam

Average worker income in Vietnam rose 8.5% year-on-year in Q1, while the share of households reporting higher or unchanged income fell compared with the previous quarter and the same period last year.

Nguyen Thanh Mai, acting head of the population and labor statistics department at the General Statistics Office (GSO), said the 8.5% increase in workers’ income outpaced the Q1 inflation of 3.51%, helping improve real incomes and living standards.

In Q1, average worker income reached VND9 million ($341.69) per month, up VND329,000 ($12.49) or 3.8% from the previous quarter and up VND706,000 ($26.8) or 8.5% year-on-year.

Average monthly income was VND10.1 million ($383.45) for male workers, VND7.7 million ($292.33) for female workers, VND10.7 million ($406.23) for urban workers, and VND7.9 million (299.93) for rural workers.

However, Mai noted that household sentiment remained less positive, with 95.8% of households reporting that their income was “equal to or higher than before,” a slight decline from both the previous quarter and the same period last year.

Mai said this was due to uneven income growth. The gap between different groups of workers and between urban and rural areas remains relatively clear. Urban incomes rose by about 5.7%, lower than the 7.9% increase in rural areas, leading to a less positive perception of improved living standards in urban areas.

Moreover, she added, the share of informal employment remains large. Currently, 62.2% of workers are still in the informal sector - a group characterized by low, unstable incomes. Although income growth in this group may be faster in percentage terms, the low base means absolute gains remain limited, affecting overall perceptions.

Mai further explained that cost-of-living pressures have increased. Prices of some essential goods and services rose faster than the average, including food and catering services, which increased by 4.55%, and housing, electricity, water, fuel and construction materials, which rose by 5.69%.

These are all essential spending items that account for a large share of household budgets, eroding the gains from income growth, said Mai.

She also noted that, to significantly improve workers’ living standards, it is necessary to continue promoting sustainable job creation, expand the formal sector, and better control essential living costs.

Statistics show that in Q1, 31.6% of households were affected by rising prices of goods and services; 8.6% by natural disasters and climate change; 3.9% by outbreaks affecting livestock and crops; 2.8% by diseases; 2.2% by serious illness, injury or death of household members; and 0.5% by fires and explosions.

The labor market remained broadly stable in Q1, while the size of the labor force and the number of employed workers declined from the previous quarter but rose from a year earlier, in line with typical seasonal patterns in Q1 of each year, according to the General Statistics Office (GSO).

The unemployment rate and underemployment rate were kept under control, while the share of informal employment declined compared with the same period last year.