Since 1986, Vietnam officially began its transition from a centrally-planned economy towards a market-oriented economy. In parallel to drastic economic reforms, the regulatory environment was improved and enhanced, in order to facilitate this transition. One of the most prominent challenges in a developing country such as Vietnam is the fight against poverty, which both influences and is influenced by the success of these reforms.
This paper analyses the extent to which current wage and labour regulations can help reducing poverty levels in Vietnam. Since Vietnam is planning to join the World Trade Organization (WTO) in 2005, this study timely coincides with the preparatory process. It identifies some of the remaining regulatory gaps necessary to protect the poorer segment of the population. The approach for this study is based on the belief in the human right to have decent employment, including adequate minimum wage and labour standards. For this purpose, the paper evaluates the depth of infiltration of wage and labour regulations in the labour market, using commune level data on wages released in 1998.
The minimum wage is defined as the legal minimum level of payment for work performed. The purpose of minimum wage is to protect vulnerable low wage labourers from exploitation and poverty. It usually applies to unskilled adults and is legally enforceable. The minimum wage should be set such that it is sufficient to attain a basic standard of living.
However, two major factors play against the use of the minimum wage as a policy tool to combat poverty. The first is the level of under-employment and unemployment in the economy. The second is the extent of informalisation, as workers move out of the formal sector and into the informal sector. Therefore, this paper also identifies the extent of wage differentiation between sectors and genders, and the potential impact of wage and labour regulations on the poor.
The paper is organised into six sections. Following this introduction, the second section presents a background on trends in population and pattern of employment since 1990. Annexe A gives detailed indicators to complement this background. The third section reviews the wage and labour market regulations. The fourth presents the Vietnamese labour market in context and discusses the poverty alleviation strategy. The fifth presents the results the empirical analysis based on the Vietnam Living Standard Survey of 1998. The final section present the regulatory options to be explored and concludes on the extent to which they can be integrated into the poverty alleviation strategy.
Content
1. Introduction
2. Population And Employment Since 1990
3. Wage And Labour Regulation In Vietnam
Recent Key Amendments To The 1994 Labour Code
Farms Labourers
Minimum Wage Regulation In Enterprises
Female And Junior Labourers
4. The Vietnamese Labour Market In Context
Labour Market Imperfections
Poverty Alleviation Strategy
5. Analysis Of Commune Level Data
Vietnam Living Standards Survey Commune Data
Agricultural Wages
Industrial Wages
6. Policy Implications And Conclusion
Annexe A: Demographic And Employment Indicators
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