One weekend morning, I received a message from a childhood friend. She and her husband had decided to sell their home in Hanoi and move back to Thanh Hoa due to the overwhelming cost of living in the capital.

Both worked as factory workers in an industrial zone near central Hanoi. After more than a decade of careful saving, along with financial support from their families, they managed to buy a small apartment not far from the city center.

Despite owning a home in Hanoi, their family of four had been relying solely on a combined monthly income of 17 million VND (approximately $680). As their two children grew, so did their household and education expenses, increasing their financial strain.

After much deliberation, they made the difficult decision to sell their apartment and return to their hometown, where they could work in a local shoe factory.

"Even though our combined salary in Thanh Hoa will only be around 14–15 million VND ($560–$600) per month, the lower cost of living and better educational opportunities for our children mean that we won’t feel as much financial pressure as we did in Hanoi," my friend explained.

Their situation reflects the struggles of many families in major cities like Hanoi and Ho Chi Minh City. Even with incomes significantly higher than the state-mandated minimum wage, many still find it impossible to make ends meet. As a result, an increasing number of people are choosing to relocate to more affordable areas where their earnings provide greater financial security.

The need for a shift from minimum wage to a living wage

Recognizing these challenges, Nguyen Thien Nhan, a National Assembly representative from Ho Chi Minh City, recently proposed a transition from a minimum wage to a living wage.

During a discussion on the 2025 socioeconomic development plan, Nhan pointed out that the current minimum wage for Region 1 (which includes Hanoi and Ho Chi Minh City) is about 5 million VND ($200) per month.

However, a family with two working parents and two children requires at least 21 million VND ($840) per month to sustain a basic standard of living. This means a true living wage should be around 10.5 million VND ($420) per person per month.

A previous study on the living wage in Ho Chi Minh City’s textile industry found that, in 2018, the minimum necessary income for a worker was nearly 9 million VND ($360) per month, while the official minimum wage for Region 1 was only 3.98 million VND ($160) at the time.

This significant gap between minimum wages and actual living expenses remains a persistent issue. While wage increases occur periodically, the rising cost of living consistently outpaces them, making it difficult for workers to achieve financial stability.

A living wage should provide enough for a worker to maintain a decent standard of living while working under normal conditions - eight hours a day, 48 hours per week. It should cover nutritious food, education, social interactions, and even allow for some savings to handle emergencies.

Why maintain the minimum wage system?

Given that the living wage is significantly higher than the minimum wage, a question arises: why does the government continue to set minimum wages?

According to the International Labour Organization (ILO) and labor laws worldwide, the minimum wage is the lowest amount an employer is legally required to pay workers for simple jobs under normal working conditions. It ensures that workers can meet their most basic needs.

In Vietnam, the regional minimum wage is established by labor laws to account for differences in living costs across regions. These regulations aim to prevent employers from paying wages below subsistence levels and help maintain fair compensation practices.

Without a mandated minimum wage, businesses in lower-cost regions might exploit workers by paying even less, leading to severe income disparities and reducing overall living standards.

Thus, setting regional minimum wages remains essential to protecting workers' rights, ensuring fairness in labor relations, and contributing to sustainable economic development.

Boosting productivity to achieve a living wage

Bui Sy Loi, a labor and wage expert and former Deputy Chairman of the National Assembly’s Social Affairs Committee, believes that increasing productivity is the key to achieving a living wage.

Raising labor productivity requires a systematic approach, including restructuring production processes and implementing more efficient work practices. This effort begins with investing in workforce training and focusing on high-value industries like electronics and semiconductors, which drive economic growth.

Moreover, productivity gains depend heavily on technological advancements and capital investment. Companies must modernize equipment and adopt cutting-edge manufacturing techniques rather than relying on a large, low-skilled workforce.

Additionally, linking wages to productivity is crucial. When labor productivity rises, wages should increase accordingly. Ensuring fair compensation motivates workers to perform better, which in turn benefits businesses and strengthens the broader economy.

Encouraging private-sector growth and enhancing domestic enterprises’ competitiveness are also essential. A thriving private sector creates more job opportunities, improves income levels, and enhances workers’ overall quality of life.

Vu Diep