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Vietnam Minimum Wage Could Increase 7.3%

Just one week after factories proposed a wage freeze for garment workers in Vietnam, labor unions and businesses have agreed to a wage hike.

If the government approves it, Vietnamese workers will see a 7.3% increase to the minimum wage starting in 2017, Thanhnien News reported.

The increase amounts to 180,000-250,000 Vietnamese dong ($8-$11) more a month depending on the region. The current average monthly wage ranges from 2.4 million to 3.5 million dong ($108-$157), which, according to local labor unions, still only covers 80 percent of workers’ basic needs.

Vietnam’s labor federation had proposed an 11 percent increase, but the Vietnam Chamber of Commerce and Industry, which represents employers in the country, only agreed to 5 percent. The 7.3% was settled on after negotiations among stakeholders.

Wages have been a contentious issue in Vietnam of late as the rates of pay have gone up an average of 26.4% per year for local business. Earlier this year, wages went up 12.4%.

Because Vietnam has only met 41 percent of its export target for 2016, textile and garment factories in the country threw out the idea of a wage freeze to help the country maintain its competitiveness. As such, employers were imploring the government to hold off on any hikes for 2017 and only increase the wage thereafter every two or three years.

That request, however, seems to have gone unheeded. The government will now review the wage council’s proposal for next year’s increase and come back with a final decision. If the 7.3% increase gets approved, it would be workers’ lowest pay raise since 2010.