Minimum Wage Increases for 2017

The National Salary Council has issued a recommendation that Vietnam’s Minimum Regional Wage should be increased for 2017 by an average 7.3% (see table below for specifics).

In early October 2016, draft Circulars have been issued supporting the National Salary Council’s recommendation. Although it is still awaiting final approval from the National Assembly, history shows that this proposal will likely pass and we suggest that enterprises should take this proposed increase into account for their budget planning for the upcoming 2017 year.

This will see the Minimum Regional Wage increase by an average of 7.3% from 1 January 2017

It is essential to distinguish “Minimum Regional Wage” from “Minimum Basic Wage”; terms that are often confused. Minimum Basic Wage is used by Government organisations as a the foundation for payroll calculations, allowances and other salary matters, and is also used as a threshold upon which the maximum payment for Social Insurance and Health Insurance is calculated.

In contrast, the Minimum Regional Wage forms the basis for salary calculations and negotiations between commercial employers & employees, which is evidenced in labour contracts. It is also used as a threshold upon which the maximum payment for Unemployment Insurance is calculated. Minimum Regional Wages are applied at different rates using “zones” that are to align for areas with different economic and living standards.

Proposed increase to minimum regional wage

Although not yet finalised, the increase in the Minimum Regional Wage should be understood and planned for by management for their 2017 budget planning for salaries, along with updating payroll calculations in terms of Unemployment Insurance contributed by employers and employees.

In specific, such proposed changes are illustrated as following:

Table: Increase in Minimum Regional Wages from 1 January 2017 Unit: VND/month