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Vietnam wage increase July 2024: new regional minimum rates

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Vietnam wage increase July 2024 means the legal pay floor rose by about 6 percent on 1 July. Decree No. 74/2024/ND-CP, dated 30 June 2024, sets new regional minimum wages. It replaces Decree No. 38/2022/ND-CP. If you employ staff in Vietnam, check your payroll against the new rates now.

Sources: Viet Nam Government News, "Fresh regional minimum wage policy released", 1 July 2024 (en.baochinhphu.vn).

The new monthly minimum rates

Vietnam splits the country into four wage regions. Each region has its own monthly floor. The rises are in dong per month.

  • Region I: VND 4.96 million, up VND 280,000.
  • Region II: VND 4.41 million, up VND 250,000.
  • Region III: VND 3.86 million, up VND 220,000.
  • Region IV: VND 3.45 million, up VND 200,000.

The hourly minimum also rose about 6 percent. It now runs from VND 16,600 to VND 23,800, depending on the region. The last regional rise came in July 2022, so this is the first change in two years.

Sources: Viet Nam Government News, 1 July 2024 (en.baochinhphu.vn).

Which region applies to you

Region I covers the urban districts of Hanoi and Ho Chi Minh City. Region II covers the rural districts of those two cities, plus Can Tho, Da Nang and Hai Phong. Region III covers cities and districts in Bac Ninh, Bac Giang, Hai Duong and Vinh Phuc provinces, among other listed places. Region IV is every other locality.

The region depends on where the work is done. A company with offices or plants in several regions may owe different floors at each site. Recheck the region of every headquarters, unit and branch, since each one can fall in a different region.

Sources: Viet Nam Government News, 1 July 2024 (en.baochinhphu.vn).

Who is covered

The decree applies to people who work under labor contracts. That includes staff of companies, cooperatives, farms and households. It also covers foreign organizations and individuals that employ workers in Vietnam. The regional minimum is the floor that employers use when they agree and pay wages.

If you already pay at or above the new floor, the decree does not force a further rise. If any employee earns less, raise that pay to the new minimum from 1 July 2024.

Sources: Viet Nam Government News, 1 July 2024 (en.baochinhphu.vn).

What it means for insurance contributions

The minimum wage also sets a ceiling for unemployment insurance. That ceiling is 20 times the regional minimum. From 1 July 2024, the top monthly salary used for unemployment insurance is:

  • Region I: VND 99,200,000.
  • Region II: VND 88,200,000.
  • Region III: VND 77,200,000.
  • Region IV: VND 69,000,000.

A separate Decree, No. 73/2024/ND-CP, raised the basic salary to VND 2,340,000 a month from VND 1,800,000. That is a 30 percent rise. It lifts the top salary used for social and health insurance from VND 36,000,000 to VND 46,800,000 a month, which is 20 times the basic salary. Both decrees took effect on 1 July 2024.

For staff paid at the old minimum, a higher floor also lifts the pay base for social, health and unemployment insurance. That means the employer's insurance cost rises along with the wage bill. Vialto Partners notes that employers will face higher employment costs from July 2024.

Sources: Vialto Partners, "Government boosts minimum basic salary and regional wage from July 2024", 4 July 2024 (vialtopartners.com).

A payroll checklist

Employers can work through a few simple steps. Take them in this order.

  • Confirm the wage region of each site.
  • Check every pay slip against the new monthly and hourly floor.
  • Update labor contracts where pay was set at the old minimum.
  • Recheck any pay rate in your contracts or policies that is tied to the minimum wage.
  • Update insurance calculations and the new caps in your payroll system.

The rise is about 6 percent for the regional minimum, and 30 percent for the basic salary. The last regional rise came in July 2022, so this is the first update to your wage floor in two years. Budget for it from July, close any gap between current pay and the new minimum, and keep the decree numbers on file as your reference. If you run payroll through an outside provider, send them the new rates and the date they apply from, so every pay slip from July matches the decree.

Sources: Vialto Partners, 4 July 2024 (vialtopartners.com).

Sources

Viet Nam Government News, "Fresh regional minimum wage policy released", 1 July 2024, en.baochinhphu.vn. Vialto Partners, "Vietnam | Social Security | Government boosts minimum basic salary and regional wage from July 2024", 4 July 2024, vialtopartners.com.