National wage council launched, giving employers and workers a voice in minimum wage setting

The establishment of Viet Nam’s National Wage Council marks a transformation from a solely Government-led minimum wage fixing mechanism into a new tripartite body which recognizes the importance of workers and employers’ participation.

News | 06 August 2013
HANOI (ILO News) – Viet Nam’s National Wage Council was launched today, marking a transformation from a solely Government-led minimum wage fixing mechanism into a new tripartite body which recognizes the importance of workers and employers’ participation.

The Council includes 15 members and is equally represented by the Ministry of Labour, Invalids and Social Affairs (MoLISA), workers’ and employers’ organizations. They meet regularly and can gather for urgent cases upon decision by the Council’s chairman, who is now MoLISA Vice Minister Pham Minh Huan.

According to Chairman Huan, the Council, as a consultancy body for the Government in setting regional minimum wages, will replace the previous indirect and separate consultation between the Government and different parties in industrial relations with direct consultation within the Council in order to share the information and improve consensus in a proposal for regional minimum wage adjustment.

Addressing the launching ceremony, Deputy Prime Minister Vu Van Ninh said minimum wages play a significant role in a market-oriented economy.

“[Minimum wage] sets a floor and no employers are allowed to pay their workers lower than that level. It is the safety net for waged workers in the society, which helps reduce poverty and labour exploitation,” he said, emphasizing that employers and employees can negotiate on a salary higher than minimum wage in the labour market.

Praising the country on the Council launch, the Director of the International Labour Organization (ILO) in Viet Nam Gyorgy Sziraczki called the birth of a new minimum wage fixing body as “a tangible achievement” of Viet Nam in moving towards sound and cooperative industrial relations.

“The Council can improve minimum wage setting mechanism based on data and evidence, and at the same time, promote social dialogues and search for compromise, and hence industrial peace,” he said.



The National Wage Council includes 15 members and is equally represented by the Ministry of Labour, Invalids and Social Affairs (MoLISA), workers’ and employers’ organizations. © ILO


The Council will also enable workers and employers’ organizations to work more proactively in developing minimum wage proposals, he added, while the role of the Government in the Council operation remains “particularly critical”. The Government is not only the “institutional architect” of the over-arching framework under which wage deliberations are undertaken it is also an “agenda-setter”, an “information and statistics provider” and a “facilitator” in promoting dialogue and deliberation.

“But making the National Wage Council well operate will be a bigger challenge than establishing it,” said the ILO Country Director.

He called on the Council to find a way to “reconcile” with the still existing regulation that requires MoLISA to prepare and circulate minimum wage proposals to other ministries for comments before finalization.

Other major challenges ahead for the Council lie in the country’s statistical capacity to support evidence-based dialogues, capacity of workers’ and employers’ organizations to effectively participate in the work of the Council, and the enforcement of the regional minimum wages, which requires better labour inspection.

Chairman Huan also admitted lessons learnt from other countries in the region show that it is not easy to reach consensus and agreement in the Council as its members represent different parties with different interests.

The establishment of the National Wage Council followed its introduction in the new Labour Code, which came into effect earlier this year. With its technical and financial support, the ILO has been side by side with Viet Nam in both the lawmaking process and the preparation for the Council launch. This is part of the activities of the US Government-funded Viet Nam Industrial Relations Project.

“We hope to continue to receive your support in the coming time so that the Labour Code and the Trade Union Law can be put into life and the National Wage Council can come into operation and become more perfect,” said Deputy PM Ninh.


Minimum wage setting and collective bargaining for wages are two equally important and complementary mechanisms for wage determination. © ILO/Aaron Santos


Viet Nam currently has four minimum wages, varying from VND1,650,000 (US$78) to VND2,350,000 ($111) per month, for four different regions based on their level of development and living standards.

Minimum wages in Viet Nam have tended to be used as “base wages” to calculate the different wage levels of different groups of workers and even extended to the social security system, such as pension and allowances. This understanding of minimum wages, however, is becoming less common in Viet Nam as the market economy is getting more mature.

ILO Country Director Sziraczki said that minimum wage setting and collective bargaining for wages are two equally important and complementary mechanisms for wage determination. “One cannot replace the other,” he added.

According to the ILO, in determining the level of minimum wages, it’s important to consider such criteria as the needs of workers and their families, the general level of wages in the country, the cost of living, social security benefits, the relative living standards of other social groups, and economic factors (including the level of development and productivity).