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How factories ‘manipulate’ minimum wage regulations

Ho Chi Minh CityEvery year, factories still adjust wages to attract workers, but most rely on the minimum wage to calculate remuneration, keeping workers’ incomes from being high.

Since 2020 until now, more than 700 workers have been officially hired by the Nidec Vietnam factory in Hi-Tech Park (Thu Duc City). All received a base salary of 4.73 million VND, which is about 7% higher than the minimum wage in Region I (4.42 million VND, applied in Ho Chi Minh City, Hanoi, Binh Duong…).

Luu Kim Hong, chairman of the company’s union, said the company raises wages twice a year. The first time when the state adjusted the regional minimum wage, all workers benefited. Where, workers get the highest increase of 5%, managers depending on the level will increase 4-4.3%. Second salary increase when the employee terminates the contract to be re-evaluated and signed a new one. Usually 75% of people who re-sign contracts get a raise, depending on their capacity and work attitude, the highest rate is 15% and the lowest is 2.5%.

Vietnamese Nidec factory workers during a meal shift.  Photo: An Phuong

Vietnamese Nidec factory workers during a meal shift. Photo: An Phuong

“In the past two years, the regional minimum wage has not increased, so factories have not adjusted base salary,” said Mr Hong. To supplement income and offset rising costs as the epidemic spreads, workers have to work continuous overtime, many working thousands of hours of overtime each year.

According to Mr. Hong, the failure to increase the minimum wage not only caused workers’ monthly income to decline but also brought many other losses. Overtime pay, Tet bonus, other benefits are also calculated based on the base salary.

“The minimum wage target to meet the lowest standard of living of workers has not been carried out according to schedule, constantly missed appointments with workers, but no responsible agency was found,” asked Mr. Hong.

Meanwhile, at the Phong Phu International Joint Stock Company (Thu Duc City), the minimum wage forms the basis for establishing the salary scale for social insurance contributions and as a reference for ensuring that there are no underpayments.

The company has three salary scales for senior managers, middle and professional managers, and direct production workers. For direct production workers, there are three groups from simple to complex, each group has 8 salary levels. Where, the lowest salary is VND 4,641 million for untrained workers, doing simple work in factories, the highest rate is 7,402 million VND for skilled people, who are in charge of the most difficult stages.

Nguyen Thi Lien, deputy general director of the company, said that high performing workers would be promoted or new entrants with high skills would be placed at the highest level. It is also a base salary that is automatically paid to employees according to job position, part of the factory’s 3P salary system. The remaining two factors of 3P salary are performance capacity and work output, on the basis of which the real income of workers can be calculated.

“If you rely on the minimum wage for remuneration, no one will work, and workers’ incomes are very low,” said Ms. lien.

In 2021 and 2022, regional minimum wages will not increase.  Image: Khanh Hoang

In 2021 and 2022, regional minimum wages will not increase. graphic: Khanh Hoang

According to Mr. Nguyen Thanh Do, Head of Policy and Law Department (Ho Chi Minh City Labor Federation), companies use the minimum wage as the basis for establishing basic salaries and signing contracts with employees. Trained people are increased by exactly 7% and VND 2,000, according to regulations not wrong because they meet the requirement “not lower than the regional minimum wage”.

“With this effort, the minimum wage will not increase, workers’ income will stop,” said Pak Do. In addition, there are still businesses that have established good pay policies to attract workers. Wage increases do not depend on minimum wage adjustments by the state, but on efficiency and productivity to raise workers’ wages on a regular basis.

According to a survey by the Research Center for Industrial Relations, more than 90% of companies have set a base salary of 7-10% higher than the regional minimum wage, in accordance with labor law provisions but still far from the salary. .enough to live. Do Quynh Chi, director of the center, said that many international brands require workers in their supply chains to be paid a living wage because it is a basic right.

“Therefore, manufacturing companies for these partners are forced to build wages to ensure the lives of workers,” said Ms. Chi.

Currently, many factories do not hire or find it difficult to retain workers, which is a big reason for paying workers salary is not enough to live for workers, the base salary too closely follows the regional minimum wage. Since the beginning of the year, there have been many collective work stoppages related to the base salary not increasing. While the business argument is that the wages paid are higher than the regional minimum, which is not illegal, workers and unions need salaries to meet a basic standard of living.

“Factories can no longer pay regional minimum wages,” said Ms. Chi. Even within a region and locality, there are differences in the level of labor expenditure. For example, in Ho Chi Minh City, a worker working in a suburban district typically costs 10-20% less than someone working in a factory near the city center. Therefore, each factory should use a living wage calculator to develop a suitable salary.

Factory workers 3/2 in Binh Duong during production hours.  Photo: Dinh Trong

Factory workers 3/2 in Binh Duong during production hours. Photo: Dinh Trong

Mai Duc Chinh, former vice president of the General Confederation of Labor Vietnam, former vice president of the National Wage Council (2013-2018 period), said that in fact, workers receive high monthly income, much higher than regional income. minimum wage.

“So why are so many bosses disapproving of a minimum wage increase?” asked Chinh, saying that the point is that the company wants to reduce the cost of participation in social insurance.

According to the regulations, the basic salary is built on the basis of the regional minimum salary with allowances and is required to calculate social security contributions. Therefore, if the minimum wage is low, the premium reduction will be low. Businesses will “split” salaries into benefits such as gas, telephone, housing… because this is income that does not include insurance.

According to Mr. Chinh, in the long run, low minimum wages put workers at a disadvantage, especially when they retire. The premiums are low, but pensions are part of the insurance process, so there is a risk that some workers when they reach the end of working age will live below the poverty line. This puts pressure on the social security system.

In addition, a low base salary for 8 hours of work will cause workers to work overtime to increase their income. “That’s why there are factories that don’t work overtime. This is a ‘trap’ that workers often fall into,” Chinh said.

Le Tuyet

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