Vietnam is poised to implement a 6% minimum wage hike in the business sector starting July 2024, following an agreement reached during a Wednesday meeting between labor and business representatives.

The Vietnam General Confederation of Labor proposed a wage increase of 6.48% or 7.3%, citing a surge in orders for businesses. In contrast, the Vietnam Chamber of Commerce and Industry, representing businesses, suggested a more conservative 4.5-5%, emphasizing the importance of maintaining sustainable business operations with the gradual return of new orders.

This meeting marked the second attempt to discuss the minimum wage raise for the upcoming year, with the initial meeting in August failing to yield any consensus.

Following negotiations, all 16 members of the National Wage Council unanimously voted for a 6% increase. This decision translates to a monthly minimum wage hike ranging from VND200,000-280,000 (US$8.22-11.50), depending on regions, resulting in a new monthly range of VND3.45-4.96 million.

Last July, the minimum wage experienced a 5.88% increase, reaching VND4.68 million ($197.07) per month.

Le Van Thanh, chairman of the council and vice minister of labor, highlighted that the proposed 6% rate, pending government approval, aims to strike a “harmonious” balance between the welfare of workers and the sustainability of businesses.

The wage adjustment comes amid Vietnam’s 4.27% inflation and 3.22% Consumer Price Index (CPI) in the first 11 months of the year, coupled with businesses grappling with declining orders and subsequent layoffs since late 2022.

The International Labor Organization in Vietnam has emphasized that wage increases should consider inflation and economic growth. Despite a 6% minimum wage raise between 2020 and 2022, the organization noted that, accounting for inflation, workers’ actual income only experienced a modest 0.7% rise.