Standing Deputy Prime Minister Pham Binh Minh signed Decree No. 38/2022/ND-CP on regulating regional minimum wage of workers on June 12. The new regulation would came into force on July 1, 2022.
The central bank’s decisions clearly reflect its efforts to support economic growth through the credit channel.
At present, the interest rate level basically remains stable, with deposit and lending interest rates tending to decrease
On 14 May 2023, the Vietnamese Government issued Decree No. 24/2023/ND-CP ("Decree No. 24") regarding the basic salary ("lương cơ sở") which is also known as general minimum wage (GMW), for cadres, civil servants, public employees and the armed forces, which took effect on 1 July 2023 and supersedes Decree No. 38/2019/ND-CP dated 9 May 2019.
Decree No. 24 specifically provides that the GMW will be increased from VND 1,490,000 (approx. USD 65) to VND 1,800,000 (approx. USD 78).
Companies should implement a plan to recalculate compulsory insurance premiums as well as trade union dues and fees for full compliance with Decree No. 24.
In more detail
Pursuant to Decree No. 24, the GMW increased from VND 1,490,000 (approx. USD 65) to VND 1,800,000 (approx. USD 78), effective from 1 July 2023.
The GMW applies to the calculation of salaries for individuals working in the state sector, including cadres, civil servants, public employees, and employees working under labor contracts for state agencies and the armed forces.
However, employers and employees in the private sector will also be impacted by this change as the GMW is used to calculate:
The capped salary for the contribution of social insurance and health insurance premiums by both employers and employees, and trade union fees contributed by employers.
The capped contribution of trade union dues contributed by employees.
In particular: (i) the capped salary used to calculate social and health insurance premiums is set at 20 times the GMW; (ii) the total trade union fees contributed by an employer must be 2% of the employer's salary fund used for the contribution of social insurance; and (iii) the capped contribution of monthly trade union dues paid by employees is set at 10% of the GMW.
Therefore, the increase of the GMW will correspondingly result in an increase of labor costs in the private sector, in respect to statutory social and health insurance premiums, as well as trade union fees contributed by employers and trade union dues contributed by employees.
Companies should therefore recalculate their compulsory insurance premiums as well as trade union dues and fees in light of the new GMW in order to ensure regulatory compliance and the rights of their employees.
Source: CCIPV / BAKER MCKENZIE