Many businesses support the salary increase from July 1, despite the cost increase

Ms. Nguyen Thi Tuyet Nhung, Deputy Finance Department, Hanoi Urban Equipment and Lighting Company, said that the income of workers in 2020 is about 12 million VND and will decrease to 11.5 million VND in 2021 due to photo effect of translation. Therefore, the increase in the regional minimum wage does not have a large impact on the salary fund of this enterprise, but mainly affects the costs of paying social insurance and health insurance premiums.

According to Ms. Nhung, if the minimum wage increases by 6%, the cost of paying social insurance will also increase accordingly. The company calculates that with 400 employees, the payment of social insurance premiums will increase by about 500 million VND, still within the payment estimate. “The more cost savings and increased labor productivity, the more favorable conditions for the factory to increase wages for workers,” said Ms. Nhung.

Mr. Nguyen Trang Huy, Assistant Director of Viet Pacific Company, a textile and garment enterprise in Ha Dong, said that orders at this time are stable or even increase, ensuring an average income of VND 7.5 million for each customer. worker. The company is paying the basic salary for employees higher than the regional minimum wage, with an increase of 6%, the business can still balance the salary fund and social insurance contributions.

“Two years without salary adjustment, the epidemic caused many workers to quit, the factory decreased from 1,500 workers to 1,200, many people withdrew their social insurance once,” Huy said.

Catalan company (Yen Phong Industrial Park, Bac Ninh), an enterprise specializing in exporting ceramic tiles to Europe, currently has more than 800 employees with an average income of 10.5 million VND in 2020 and increased to 10.9 million in 2021, including basic salary, overtime pay, and allowances.

Mr. Nguyen Van Nguyen, deputy director of Catalan, said that the company pays time-based wages for administrative workers and product wages for workers directly in production. The actual wages paid to workers are much higher than the regional minimum wages, so the adjustment does not have much impact on workers’ wages.

Enterprise costs will increase when wages increase by 6%, but according to Mr. Nguyen, the increase is mainly due to payment of social insurance, health insurance and some other items and is still within the tolerance level. Catalan invests in modern machinery, has a small percentage of direct labor to produce, and a small proportion of wages in product costs. The biggest cost that enterprises have to bear is the irregular increase in the cost of raw materials such as rare earths, magic eyes, sensors, some things increase by 300-400%; gas fuel cost increased up to 88% compared to conventional fuel…

Agreeing to increase the minimum wage from July 1, Mr. Nguyen explained that after two years of the pandemic, it has become a common ground with the entire enterprise, no one is better than anyone else. The laborers are exhausted without knowing who to call because the prices of all petroleum products, gas, travel and accommodation costs have increased. Wages account for a small proportion in product costs and compared to other countries in the region because Vietnam’s labor costs are still low, early wage increases will give workers more benefits.

The pandemic has created a comprehensive crisis that has caused a wave of labor to move from the city to the countryside and is still happening quietly, causing a shortage, especially of high-quality human resources. “It is very important to adjust wages to keep workers in the city, to save money later,” said Mr. Nguyen.

The leader of an electronic component manufacturing business in Que Vo Industrial Park (Bac Ninh), which is employing 32,000 workers, mainly unskilled workers, said that if the minimum wage was increased, the cost would “unsuccessful”. problems with the company”.

The salary currently paid to workers of this company is nearly 2 million more than the regional minimum wage, over 6 million dong. Each year, the enterprise increases the seniority pay 4 times, each time 100,000 VND for all employees, including workers who quit their jobs or commit violations while working. This amount is added to the salary for calculating social insurance contributions, in order to retain workers and increase competitiveness with other companies in the region.

Dr. Pham Thu Lan, Deputy Institute of Trade Union Workers, said that through a survey, many businesses have goodwill to increase wages and agree to increase from July 1, rather than waiting for the beginning of next year. With a minimum wage increase of 6%, the Technical Department of the National Wage Council calculates that the production costs of enterprises increase by an average of 0.4-0.5%, the textile industry alone increases by 1-1, first%. A survey by the Center for Labor Relations shows that the profit margin of textile, garment and footwear businesses participating in the global supply chain is about 5-6%.

“Production costs increased by about 1.1%, which is insignificant compared to the profit margin of labor-intensive enterprises,” concluded Ms. Lan.

Dr. Do Quynh Chi, Center for Labor Relations Research, assessed that the minimum wage currently accounts for only 60% of an employee’s income with the time-based salary system and about 40% with the product salary system. This level is very low. While the order price of the leather and footwear industry has increased by about 5-10%, the textile and garment industry is about 3%. Businesses will still have room to increase wages for workers.

Through the survey, Ms. Chi said that from October 2021 up to now, there has been a relatively fierce competition to entice labor between the two areas: the South – where the old industrial parks are located. North and Central, where there are emerging industrial zones.

After the outbreak, many businesses, despite the situation, actively raised wages to retain workers, and many places paid higher than the regional minimum wage. Textile enterprises in the North and Central region even benefited when the labor force in the South returned, received new orders and increased prices.

Ms. Chi analyzed that businesses do not object to salary increases, but mainly do not want to increase from July 1. For businesses that pay wages over time, they always “anchor” the value of the lowest level in the salary system, which is 0.5-3% different from the minimum wage and adjusted by about 5% with the next steps. The salary system of labor-intensive factories goes up to 20 ranks, with workers who have worked for 18-20 years receive high salaries. When the minimum wage increases by 6%, factories often adjust the base salary for workers of all tiers. The salary fund immediately increased proportionally. “The water is up, pushing the boat up” makes the companies cry.

With a factory that pays wages by product, the minimum wage is almost the basic salary for calculating social insurance contributions, health insurance, union costs, etc. Salary increases may not immediately increase the income of workers, but the contribution will be. these funds of enterprises also increased.

Businesses can anticipate an increase in contributions, but may not expect the union to propose an increase from July 1. Large factories can renegotiate with brands, but with outsourcing enterprises, it is very difficult to negotiate. At that time, the salary fund goes up and “eats” straight into corporate profits. For small and medium-sized factories, the cost of rising wages along with the price of raw materials, gasoline, logistics, etc., increases, making profits decrease. This is the main reason that business associations want to raise wages from the beginning of next year.

Ms. Chi said that instead of just recommending to the Government, businesses should cooperate with each other to negotiate with brands – which hold the export business’s pocket through orders. And the minimum wage increase is necessary for both sides in this situation, so it should be considered a force majeure issue for the sake of integration.

Experts recommend that more brands be present, creating a tripartite negotiation instead of the current two parties of workers – employers. Brands are almost still out of the story of salary increases, benefits, and regimes of outsourcing countries while this is the story of the global supply chain.

Hong Chieu