You are using an outdated browser and your browsing experience will not be optimal. Please update to the latest version of Microsoft Edge, Google Chrome or Mozilla Firefox. Install Microsoft Edge

December 28, 2017

New Decree on Minimum Wage Increases in Vietnam

Subscribe to Updates

On December 7, 2017, the government issued Decree No. 141/2017/ND-CP stipulating new minimum wage requirements for employees working under labor contracts (Decree 141). Under the provisions of Decree 141, which will apply from January 1, 2018, the monthly minimum wage will be increased by VND 180,000 to 230,000 (USD 7.92 to 10.13), depending on the region.

Levels of Increase  

Decree 141 determines four minimum wage rates in Vietnam for four different regions (cumulatively covering the whole country). Each region is evaluated according to its socio-economic development, costs of living, and location. The specific level of minimum wage increase applied in each region is summarized in the table below:

As such, by January 1, 2018, the average minimum wage will increase by about 6.5 percent.
 

Adjusted Regions

As mentioned above, the minimum wages vary across four geographical regions. The number of regions remains unchanged in the new decree, but there are slight adjustments to the list of cities/provinces which each region covers.

Under Decree 141, Region I spans the urban areas of Hanoi and Ho Chi Minh City. Region II covers the rural areas of Hanoi and Ho Chi Minh City, in addition to the urban localities of Can Tho City, Da Nang City, and Hai Phong City. Region III comprises the provincial cities of Bac Ninh Province, Bac Giang Province, Hai Duong Province, and Vinh Phuc Province, while Region IV covers the remaining localities. Some cities/provinces are moved up from Region II to Region I, from Region III to Region II, and from Region IV to Region III, while some others are moved down a level.

Reasons and Impacts

According to the Ministry of Labor, Invalids and Social Affairs, the level of minimum wage increase was calculated based on the necessary compensation for daily living expenses in 2017 to ensure that employees meet their minimum needs. Once Decree 141 comes into effect, the new minimum wages should help meet about 92-96% of the minimum living demands of employees and their families, depending on the region.

The above-mentioned adjustment plan was given taking into account the impacts of minimum wage increase on various matters such as jobs, unemployment, difficulties in manufacturing and trading, conditions of enterprises, minimum living requirements of employees and their dependents, etc. In particular, the adjustment plan was also affected by the new provisions which expand the range of employees who are subject to the statutory social insurance contribution (according to which employees with a labor contract of one month or more must participate in the social insurance scheme, as opposed to those with a contract of three months and more as presently), and the new salary will be used as the basis for payment of statutory insurance contributions.

As a result, the raise will meet basic living costs and certainly improve the living standards of employees and their families. However, on the other hand, the expenditures of enterprises will increase, as they must not only adjust the monthly salary of their workers, but must also increase their statutory insurance contributions.

Related Professionals

Practices

Employment

Location

RELATED INSIGHTS​ 

October 12, 2023
Myanmar has made important amendments to its minimum wage framework by increasing the minimum compensation for workers in both the public and private sectors. Background In May 2018, the National Committee for Setting the Minimum Wage determined that all workers in Myanmar should receive a minimum wage of MMK 4,800 per day (approx. USD 2.29), equivalent to MMK 600 per hour for an eight-hour workday. This rule applied to all workers, without differentiation in location or job. Government Workers and Organizations In September 2023, the Ministry of Planning and Finance announced that daily workers in government departments and organizations are entitled to receive an additional benefit of MMK 1,000 on top of their existing daily wage, which was already MMK 4,800. Consequently, they could earn a total of MMK 5,800 per day for eight hours of work. Private-Sector Workers On October 9, 2023, the national committee announced an increase of minimum wages for employees in the private sector. According to Notification No. 2/2023, workers at private-sector employers with more than 10 employees are now entitled to minimum compensation of MMK 5,800 per day (approx. USD 2.77)—an additional MMK 1,000 per eight-hour workday over the previously established minimum wage. The changes took effect on October 1, 2023. For more details about these changes, or any aspect of employee compensation or employment law in Myanmar, please contact Tilleke & Gibbins at [email protected].
Read More
August 18, 2023
On August 16, 2023, Laos’ Prime Minister’s Office issued Notice No. 1502/PMO, which increases the minimum wage for all workers in Laos. This increase is a continuation of the stepped increases in the minimum wage that began in mid-2022. The recent notice increases the minimum monthly wage from LAK 1,300,000 (approx. USD 66) to LAK 1,600,000 (approx. USD 82), in accordance with an agreement reached in the government’s ordinary session in July 2023. The new minimum wage rate will take effect on October 1, 2023. This is the third minimum wage increase in Laos since June 2022. Two of the main factors responsible for this heightened frequency of minimum wage increases are the depreciation of the Lao kip against foreign currencies and inflation in the price of goods for daily consumption. These stepped increases also show the government’s proactive approach toward addressing the cost-of-living crisis in Laos and its effect on low-wage workers. For more details on the new minimum wage, or on any other labor and employment matters in Laos, please contact Dino Santaniello at [email protected] or +856 21 262 355.
Read More
July 7, 2023
Tilleke & Gibbins is pleased to announce the release of Employment Law Basics in Southeast Asia. This publication serves as an indispensable resource for businesses navigating the complex landscape of employment law in Cambodia, Laos, Myanmar, Thailand, and Vietnam. Authored by Tilleke & Gibbins’ regional team of employment law specialists, the guide provides a detailed overview of key employment law topics essential for businesses operating or planning to expand their operations in Southeast Asia. From employment contracts to termination procedures, each topic is examined in depth to ensure businesses are well-equipped to comply with local regulations and protect their interests. Key topics covered in the guide include: Employment contracts Probationary period Minimum wage Social security and statutory payments Working hours Leave and holidays Work rules Termination Foreign employees Data protection Remote work AI and automation Our guide offers multinational corporations establishing a presence in the region and local enterprises alike practical insights and actionable advice tailored to the unique regulatory environments in Cambodia, Laos, Myanmar, Thailand, and Vietnam. To access the full guide, please download the PDF below.
Read More
April 28, 2023
Instead of the typical dystopian scene of flames, wastelands of shattered buildings, and robotic overlords policing the remaining humans, our actual dystopian future may be a workplace filled only with men named Jared who once played lacrosse in high school. This may sound far-fetched, but one resume-screening tool was found to be using an algorithm that concluded two factors were most determinative of job performance: the name Jared and a history of playing lacrosse in high school. The frailties of artificial intelligence (AI) systems in recruitment and hiring could transform our workforces in unpredictable ways. If employers blindly follow AI outcomes without a deeper examination of how the algorithmic decision is reached, hiring outcomes may be not only ridiculous but also discriminatory. Risks of AI-Reliant Hiring Some employers have enthusiastically embraced AI as a way to reduce costs and replace human bias in the recruitment process. Human recruiters do not have a great track record; for example, in France, discrimination in recruitment has posed such a serious problem that the government submits false work biographies with ethnic names to identify and punish employers that unreasonably reject qualified ethnic applicants. Unfortunately, AI is modeled on human thinking, so it may amplify our own prejudices and errant conclusions while giving the appearance of providing a fair and clean process. AI typically learns inductively by training on examples and historical data. Factors such as exclusion of certain groups from educational or career opportunities has often shaped this data, so AI’s decisions may amplify this past prejudice. For instance, Amazon experimented with mechanized recruitment in 2014, but abandoned these efforts prior to implementation after the AI tool selected a predominantly male workforce. The AI learned by analyzing patterns in resumes submitted to the company over the last 10 years. Since over this period
Read More