January 31st, 2017
Vietnam’s National Wage Council has implemented a 7.3 percent average increase in monthly minimum wages across Vietnam for 2017 Workers must be compensated between minimums of VND (Vietnamese Dong) 2.58 million (US $113) to VND 3.75 million (US $165). This is a compromise between the employers’ proposed increase of 5 percent and that of workers that pushed for an 11 percent increase. According to Vietnam Briefing, the decision also seems to be in response to competition from fellow manufacturing powerhouses in the region and an effort to maintain its appeal to foreign investors and businesses.
Employers should understand plan for the increase in the Minimum Regional Wage for 2017 budget planning for salaries, along with updating payroll calculations in terms of Unemployment Insurance contributed by employers and employees. Given these proposed annual changes in Minimum Regional Wage, it is important that companies incorporate these into their budgeting process, and ensure that the salaries in labor contracts remain in compliance with the changes for the specific region. Payroll calculations will need to be updated in line with new changes, to properly reflect the maximum caps for Unemployment Insurance contribution calculations.
Unemployment Insurance is mandatory for all employees at all companies and applies to all contracts including seasonal contracts that are greater than 3 consecutive months. Employee contribution is 1% of gross salary and employer contribution is 1% of gross salary. The maximum unemployment Insurance is now capped at 20 times the Minimum Regional Wage depending on the specific government designated region. So from January 1, 2017 if an employee in Region 1 earns greater than 20 x 3,750,000 VND, their unemployment insurance is capped at 750,000 (1% x 75,000,000) for both the employer and employee contribution. For example, Region 1 covers urban areas in Hanoi, Ho Chi Minh City and Hai Phong, along with certain industrial areas of Binh Duong and Dong Nai.
|Vietnam||7.3% Minimum Wage Levels|
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