Vietnam proposes another minimum wage hike
Recent news reports out of Vietnam indicate that the nation continues to experience widespread inflation. To address that, the government there recently announced another proposed hike in minimum wages.
Agence France-Press reported this week that this fall, the government will require the basic wage to rise 29% for overseas companies and 48% for domestic companies.
Sources say that wage increases occur in Vietnam at least once if not twice a year. But not only is this latest hike higher than normal, it also comes on top of a 13.7% increase announced in April.
In furniture factories, this could have an impact on pricing of finished goods given the labor intensive nature of the business. Rises in materials and transportation costs also could have an effect.
Sources say that rising labor costs are also a factor in China, due in large part to the government's push to build a consumer-driven economy that supports local manufacturers.
But the issue of rising wages appears as serious, if not more pronounced, in Vietnam, no thanks to the issue of inflation. Consumer prices there in July were an alarming 22% higher than they were in July 2010, according to the Agence France-Presse report.
Another issue that continues to be of growing concern at least in the furniture industry is a possible antidumping case against Vietnamese wood bedroom furniture producers. A meeting of government officials and Vietnamese manufacturers held in mid-August to address the issue was inconclusive at best, but some firms are said to be considering hiring law firms just in case.
While Vietnam remains competitive in bedroom production, these issues all lead to some uncertainty for those who source product from there. Are you concerned?
Heloise commented:
Ecnoiomes are in dire straits, but I can count on this!
Laneta commented:
Ppl like you get all the barins. I just get to say thanks for he answer.
Roger commented:
Inflation is a concern of any country and Vietnam imports many goods because they are not very efficient at producing/distribution of goods/materials for the domestic market and for factories that rely on exporting. Most foreign owned factories in Vietnam will not be as much effected by the minimum wage increase as they pay a higher salary than domestic factories. So this increase will effect their sub-cons as they will be asking for price increases. Also in 2007 the Dong value was about 16000 per USD and now its inching toward 21000. This and improvements in worker productivity will help to offset the increase in wages. By next year the inflation rate should cool down to about 8% which is about normal for many SE Asian countries.
