Statutory minimum wages in Vietnam

The statutory minimum wage has a direct impact on the salaries of cadres, civil servants, public employees, and the armed forces, as well as one-time maternity benefits for female employees giving birth and male employees whose wives have given birth. Besides, some beneficiaries are freelance workers, whose income is not based on the statutory minimum wage. In the article below, Viet An Law Firm will provide you with the necessary information about the statutory minimum wages in Vietnam.

Legal basis

• Resolution 69/2022/QH15 on state budget estimates for 2023 issued by the National Assembly;
• Labor Code 2019;
• Decree 24/2023/ND-CP prescribing statutory pay rate for officials, public employees, and armed forces.
• Decree 38/2022/ND-CP prescribing statutory minimum wages paid to employees working under employment contracts.
• Decree 145/2020/ND-CP guiding the Labor Code on working conditions and labor relations, as amended and supplemented by Decree 35/2022/ND-CP.

What is the statutory minimum wage?

The statutory minimum wage, or base salary, is the minimum wage of workers who do the simplest jobs in normal working conditions that are sufficient to ensure a minimum standard of living for themselves and their families, and appropriate for socio-economic development (Article 91 of the 2019 Labor Code).

Adjustment principles

The principle of adjusting the minimum wage is based on the minimum living standard of workers and their families; correlating between minimum wage and market wage; consumer price index, economic growth rate; labor supply and demand relationships; employment and unemployment; labor productivity; enterprise’s ability to pay.

The assessment, review, and recommendations are carried out by the National Salary Council, established by the Prime Minister, including members who are representatives of the Ministry of Labor, Invalids and Social Affairs, and Vietnam General Confederation of Labor, some central employer representative organizations, and independent experts. The National Salary Council operates according to the tasks, functions, and structure specified in Decree 145/2020/ND-CP.

The role of the minimum wage

The minimum wage according to the Government’s regulations is regulated by two regulations for two main groups of subjects: civil servants, public employees, and workers working under contracts.

Based on the recommendations of the National Salary Council, the Government stipulates the statutory minimum wages for officials, civil servants, public employees, and the armed forces, the statutory minimum wages in Decree 24/2023/ND-CP. Accordingly, the statutory minimum wage is the basis for:

• Calculate salaries in salary tables, and allowance levels and implement other regimes according to the provisions of law for officers, civil servants, public employees, and the armed forces;
• Calculate operating fees and living expenses according to the provisions of law;
• Calculate deductions and benefits based on statutory minimum wages.

For the group of employees working under contracts, the minimum wage is the basis for agreement and payment for employees applying the form of monthly or hourly salary, or weekly/daily salary corresponding to conversion level. Accordingly, the agreed salary that employees receive according to each working region (area) must not be lower than the minimum level prescribed by the Government. This is the basis to ensure workers’ right to receive salary covered the minimum living standard according to the law.

Statutory minimum wages in Vietnam

Spirit of Resolution No. 27/NQ-TW dated May 21, 2018, of the Party Central Committee regulating salary policy reform for cadres, civil servants, public employees, people’s armed forces, and people employees in the enterprise is to continue to adjust the statutory minimum wages increase, not adding new types of allowances according to occupation to gradually shorten the gap between the salaries of officials, civil servants, public employees and employees in the enterprise, ensuring income for officials, civil servants and public employees, as stipulated:

“From July 1, 2023, increase the statutory minimum wages for officials, civil servants, and public employees to 1.8 million VND/month; 12.5% increase in pensions and social insurance benefits for subjects guaranteed by the state budget and additional support for people who retired before 1995 with low benefits; Increase the standard level of benefits for people with meritorious services to ensure it is not lower than the poverty line in urban areas and increase 20.8% of spending on social security policies that are linked to the statutory minimum wages.”

Thus, the roadmap for changes in statutory minimum wages in the past 5 years is shown as follows:

• From July 1, 2018: Statutory minimum wage is 1.39 million VND/month (according to Decree 72/2018/ND-CP).
• From July 1, 2019: Statutory minimum wage increases to 1.49 million VND/month (according to Decree 38/2019/ND-CP).
• From July 1, 2023: Statutory minimum wage increases to 1.8 million VND/month (according to Decree 24/2023/ND-CP).

Accordingly, in 2023, the statutory minimum wage is divided into two stages with two applicable levels as follows:

Regional statutory minimum wage

For employees working under contracts, the statutory minimum wages according to Decree 24/2023/ND-CP will not apply, but instead, the salary is calculated based on the regional minimum wage. Accordingly, when negotiating and paying salaries with employees, the Vietnamese employer must ensure that the agreed salary is not lower than the minimum wage in the area where the employee is working.

According to the provisions of Decree No. 38/2022/ND-CP (effective from July 1, 2022) replacing Decree 90/2019/ND-CP regulating regional minimum wages, the regional minimum wage by month is determined as follows:

Compared to previous regulations, the average recorded increase is about 6%. The new Decree also further stipulates the minimum hourly wage for employees to suit the current part-time and hourly working needs of employees. This level is specified as follows:

The list of areas belonging to regions is specified in the Appendix to Decree 38/2022/ND-CP, according to several urban districts of Hanoi, Ho Chi Minh City, and cities of affiliated provinces and cities. The central government will belong to Region I, and the remaining districts will belong to Regions II, III, and IV.

This article is about the statutory minimum wages in Vietnam as Viet An Law Firm informed Clients. If you need labor law advice please contact Viet An Law Firm for the fastest support!