Labor productivity in Vietnam, in terms of productivity, is also modest at 4.7% in the 2011-2017 period.

At the same time, the regional minimum wage increased by 20.4% on average for domestic enterprises, 14.4% for FDI enterprises in the period 2008 - 2018. In competition, many businesses have proposed to halt the minimum wage adjustment in 2019.
 

 

According to representatives of the Vietnam Textile and Garment Association, in 2018 and the following years, the whole sector faces many difficulties due to the increasing demand of consumers. The global textile and garment demand increased only 1 - 2% even without change. Fierce competition in the global textile market. Accordingly, the challenges for the textile and garment industry come from the sector, the weakening of spinning, weaving, dyeing, labor productivity is not high, low profits, lack of high manpower ... Along with that, the policy mechanism has been reviewed by the Government, Ministry of industry but there are still many barriers for businesses.

"Eat" profit

Meanwhile, some countries have recently focused on supporting their textiles such as Bangladesh, India, Pakistan to reduce corporate income tax, import duty on yarn ... And the EU imposed a tariff of 0% for imported textiles. From less developed countries such as Cambodia, Myanmar ..., the US applied the preferential tax rate of 0% for some items of Cambodia, while Vietnam garment still has an average tax rate of 17.5% in the US market. , 9.6% to the EU market.

Meanwhile, the cost burden on enterprises is still increasing. Regional minimum wage has increased regularly in the last 20 years, putting great pressure on businesses in the labor-intensive sector such as textiles. In particular, the minimum wage is based on the first level salary, the distance from each step in the payroll is 5%. Thus, the increase in the minimum wage means a rise in the payroll. Especially for labor-intensive enterprises such as textiles and garments, the minimum wage increase is to increase the premiums paid by salary, social insurance, increase labor cost and reduce corporate profits.

TS. Futoshi Yamauchi, a World Bank specialist, said the increase in minimum wages would lead to an increase in average wages, which would reduce jobs and reduce profits. Specifically, when the minimum wage increases by 100%, the rate of return is likely to decrease by 3.25 percentage points.

Research by the Institute for Economic and Policy Studies (VEPR) also showed that when the minimum wage increased by 1%, the rate of return on sales of enterprises will decrease by 2.3%. "The rapid rise in minimum wages has led many businesses to dash. At the same time, the increase in minimum wages will result in increases in insurance payments, including social insurance, health insurance, and unemployment insurance, over time. "Dr. Nguyen Duc Thanh, Director of VEPR emphasized.

According to VEPR Director, the principle of salary and productivity must go together because salary reflects productivity. However, in Vietnam the minimum wage increase is higher than the productivity growth rate from 25% in 2007 to 50% in 2015. "The wage process is changing faster than productivity in Viet Nam. South created the "isolation" compared to other countries in the region, making Vietnam gradually lose advantage. Salaries are rising faster than productivity, "corrode" corporate profits, "Thanh emphasized.

Loss of collective bargaining power

In addition, the Association of Textiles and apparel, the minimum wage increase every year also affect the attraction of FDI. Reduce the role of leverage of wages, do not encourage positive labor. In particular, the increased minimum wage leaves no room for collective bargaining. The Association of Textiles and Clothing analyzes, the minimum wage increases and compulsory regimes such as for trained workers of 7%, labor in hard conditions of 5% ... For example, with area 1 is 3.980. VND 7% x 5% = VND 4,471,530, accounting for 70% of the average salary of the employees.

"Meanwhile, the ILO's recommendations should only be 60%, leaving the rest to the negotiating parties, signing collective bargaining agreements, encouraging labor in many regimes," said the representative of the Association. Textile Association said.

Therefore, the Association of Textiles suggested expanding the minimum wage increase area 2-3 years / time instead of annual. In addition to increasing the minimum wage as the cost increases, enterprises spend more time and effort to revise their payrolls, adjust the fees and deductions for each employee.

The Vietnam Textile and Garment Association recommends that the State stipulate clearly the function of the minimum wage which is the "net" for the protection of vulnerable workers, low income, not related to the contribution of other contributions. "Pay the minimum wage for its proper function. Enterprises shall pay salaries to laborers not lower than the minimum wage prescribed by the State. At the same time, we have the right to choose the structure of wages to encourage businesses and employees, "the representative of the Textile Association emphasized.

According to vinatex.com