THE MINIMUM SALARY IN VIETNAM: OBSERVATION AND ANALYSIS

Abstract

Over the course of 70 years, minimum wage in Vietnam has gradually developed in order to create a "safety net" protection of employees, as well as a driving force for development of national economy. The paper presents the history of minimum wage in Vietnam and analyzes the current situation of applying the new minimum wage by region to employees working in enterprises. Many surveys show that the increase of regional minimum wage has a multidimensional impact on enterprises and employees: For enterprises, the most obvious impact is the increase in labor costs due to the increase of social insurance, health insurance, and unemployment insurance. Businesses tend to adjust their structure to reduce wages and other related costs, including potentially reducing labor demand. For employees, the average income only meets the most basic expenses and does not have savings or risk provisions, because the market prices also increase in line with the wage increases. Therefore, the increase of regional minimum wage still has potential undesirable effects.

Keywords: regional minimum wage, employee, business, expense, saving