One late afternoon, after finishing her shift selling dairy products, Hoa from Trung My Tay Ward (HCM City) returned home exhausted, unable to hide her constant worry about making ends meet in this expensive city.

Hoa and her husband both have jobs, earning a combined monthly income of about VND13-14 million. This is higher than the minimum wage in HCM City (nearly VND5 million per person per month). It might sound sufficient, but after deducting room rent, food, utilities, and school fees for their two children, little remains.

Whenever electricity or fuel prices rise, Hoa can only sigh. Every expense requires careful budgeting, scraping by to cover costs.

This summer, the couple is anxious about preparing books and uniforms for their children’s new school year. Hoa’s husband works extra hours as a Grab driver or delivery worker in the evening to supplement their income.

Hoa is not alone. In big cities like Hanoi and HCM City, many workers face a similar struggle where income fails to cover expenses. They work overtime, sacrificing health and family time to stay afloat in the city.

Over the past two years, the minimum wage has been adjusted only once, by 6 percent. Meanwhile, electricity prices have risen four times, driving up production costs and essential goods prices. As a result, workers’ incomes are increasingly outpaced by rising living costs.

Many workers clinging to city life are losing opportunities to save, invest in their children’s education, or improve their living conditions.

Minimum wage must reflect true cost of living

Currently, the regional minimum wage ranges from VND3.45 million per month (Region IV) to VND4.96 million per month (Region I), equivalent to VND16,600-23,800 per hour. Although the National Wage Council has agreed to propose a 7.2 percent minimum wage increase, starting from early 2026, with the current low baseline, annual increases of 5-7 percent will continue to lag behind the rising cost of living.

To address this bottleneck, the minimum wage’s core purpose must be redefined. Minimum wage must ensure a basic standard of living for workers and their families in each region. Adjustments cannot be uniform or arbitrary but must be based on real surveys, accurately accounting for essential costs like rent, utilities, school fees, healthcare, and transportation.

Raising the minimum wage is only meaningful if paired with price control measures. If income rises but fuel, electricity, and food prices soar—or even outpace wage increases—workers’ lives won’t improve. Preserving the real value of wages must go hand-in-hand with wage policy adjustments (e.g., if wages rise by 7 percent but inflation is 5 percent, the real wage increase is only 2 percent).

For sustainable minimum wage increases, improvements in labor productivity are essential. Businesses should invest in technology, streamline production processes, and support workers in upskilling to adapt to the ongoing digital transformation. Higher productivity can lead to meaningful income improvements, making the minimum wage a true tool for sustainable living.

Additionally, the government should implement policies to ease workers’ cost burdens, such as developing social housing or affordable rentals for workers and expanding access to essential public services like healthcare and education near industrial zones. These are critical levers to help workers stabilize their lives and stay committed to businesses and the labor market.

For the minimum wage to truly become a “social safety net,” policies cannot stop at modest annual percentage increases. A comprehensive approach is needed: redefining the minimum wage based on actual regional living costs, controlling prices, boosting labor productivity, and expanding social welfare systems. This is not just about wages but a broader challenge of ensuring sustainable development, fairness, and stability in the labor market for the long term.

The Ministry of Home Affairs has proposed a reclassification of regions to apply minimum wage levels following provincial mergers. Specifically, the draft outlines the classification of regions I, II, III, and IV as follows:

Region I and Region II: Includes wards and communes under Hanoi City.

Region I, Region II, and Region III: Includes wards and communes under HCM City and Hai Phong City.

Region II, Region III, and Region IV: Includes wards and communes under the provinces of Bac Ninh, Ninh Binh, Hung Yen, Phu Tho, Lao Cai, Thai Nguyen, Thanh Hoa, Nghe An, Quang Tri, Khanh Hoa, Lam Dong, Vinh Long, Dong Thap, An Giang, Ca Mau, and the cities of Hue, Da Nang, and Can Tho.

Region I, Region II, Region III, and Region IV: Includes wards and communes under the provinces of Quang Ninh, Dong Nai, and Tay Ninh.

Region III and Region IV: Includes wards and communes under the provinces of Tuyen Quang, Cao Bang, Dien Bien, Lai Chau, Son La, Lang Son, Ha Tinh, Quang Ngai, Gia Lai, and Dak Lak.

Vu Diep