increasing retirement pensions and regional minimum wages for Vietnamese employees from July 2024, increasing retirement pensions and regional minimum wages for Vietnamese employees 2024, increasing retirement pensions and regional minimum wages for Vietnamese employees , increasing retirement pensions and regional minimum wage in Vietnam,

Increasing retirement pensions and regional minimum wages for Vietnamese employees from July 2024

Currently, Vietnam does not yet have precise figures regarding the expected increase in retirement pensions and social insurance subsidies starting from July 2024. However, it is anticipated that the retirement pensions and subsidies will be increased by approximately 6%.

Of note, a decree regarding the continued adjustment of retirement pensions is expected to be submitted to the Government in May 2024. Prior to this, from July 1, 2023, the Government issued Decree 42/2023/NĐ-CP, increasing retirement pensions, social insurance subsidies, monthly allowances, and contributions to those with meritorious service by up to 20.8%.

Presently, retirement pensions are still calculated according to the provisions of Article 7 of Decree 115/2015/NĐ-CP, where the monthly retirement pension is calculated by multiplying the pension-receiving ratio with the average monthly salary subject to social insurance contributions. The average monthly salary subject to social insurance contributions is calculated for each insured entity and each period, and there are different retirement pension-receiving ratios for males and females.

Starting from July 1, 2024, during a meeting discussing the proposal to increase the minimum wage from 2024, the National Wage Council decided to raise the regional minimum wage by 6%. Accordingly, the regional minimum wage will increase from 200,000 dong/month to 280,000 dong/month depending on the region. The minimum wage per hour will also increase by 6% from July 1, 2024. Thus:

  • Region I: The projected minimum monthly wage will be 4,960,000 dong.
  • Region II: The projected minimum monthly wage will be 4,410,000 dong.
  • Region III: The projected minimum monthly wage will be 3,860,000 dong.
  • Region IV: The projected minimum monthly wage will be 3,450,000 dong.

When converted to hourly rates, the minimum wage per hour for the four regions will be: region I – 23,800 dong/hour, region II – 21,200 dong/hour, region III – 18,600 dong/hour, and region IV – 16,600 dong/hour.

Therefore, in 2024, the regional minimum wage may be divided into two phases:

  1. From January 1, 2024, to June 30, 2024, the minimum wage will still be based on Decree 38/2022/NĐ-CP.
  2. From July 1, 2024, to December 31, 2024, an additional 6% increase will be applied compared to the first six months of 2024 (applying the new regional minimum wage).

However, it’s important to note that these figures are only projections. There is currently no official information on whether retirement pensions, regional minimum wages, or the extent of the increase will be implemented.

In 2023, there were positive changes in the economic, social, labor market factors, and the operational capabilities of Vietnamese enterprises compared to 2022. The macroeconomic situation remained stable, with GDP growth reaching 5.05%; the labor market continued to recover; business operations of enterprises showed positive trends; and the wages and incomes of employees continued to stabilize and increase, especially in the latter quarter, compared to the previous quarter.

However, the real value of the minimum wage stipulated by Decree 38/2022/NĐ-CP is gradually decreasing over time due to the rising Consumer Price Index (CPI). With the projected CPI increase of about 4% – 4.5% in 2024, the stipulated minimum wage will not guarantee the minimum living standards of employees and their families in the latter half of 2024 (falling short by about 4%).

Therefore, increasing the minimum wage is necessary to ensure that employees can maintain a stable standard of living consistent with societal development.

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