Huynh Minh Quan, General Director of Nhan Viet Management Group confirmed that social insurance payment for its employees would increase from 1% to 2% in 2012 according to Law on Social Insurance 2010. In addition to higher minimum salary, the changes will affect strongly to corporate operations due to increase in salary fund.

In the point of view of employers, Nguyen Thi Dang—Head of Labor and Salary Policy Office of HCM City Department for Labor, Invalid and Social Affairs said that the state-ruled minimum salary was the indicator for reference because factually, many companies in HCM City have higher salary.

However, according to the department’s data, most FIEs in the fields of apparel and footwear plan to pay minimum salary higher than the state’s regulated level for employees.

Given assessment on the minimum salary increase to operation, the 2010 survey conducted over some northern and southern industrial zones by United Nations Development Program (UNDP) and Ford Foundation indicated that the questioned enterprises last year increased salary by at least 2 times and workers’ income surged 8-12%. There were at least 3 increase times in 2010 so during the last 2 years, workers’ income jumped 20-30%, lifting the input cost of corporates up 2%.

She added, FIEs particularly and companies generally should consider sharing social insurance payment with employees because higher insurance means lower income of workers.

But, Tran Thi Ha Binh—Management Head of PungKook Saigon III Co Ltd, producer of bags and back bags, emphasized that the company now has 5 factories with 16,000 workers excluding 2,000 others to be employed in 2012 when increasing capacity of the factory in Ben Tre province. So supporting the employees to pay additional insurance is unfeasible.

The company will base on labor capacity to increase allowances to ensure employee income, she said.

Meanwhile, Adidas Vietnam with the workforce of 140,000 will face many difficulties in carrying out production plans and controlling input costs when labor costs will be increased due to higher insurance payment, said Tu Kha Huy Vu—the company’s Director on Environment and Society.

First of all, Adidas will cooperate with partners to study inflation and contract values to define suitable payment for workers.

One of partners of Adidas in Vietnam is Taiwanese Pouchen Co said that Pouchen is considering employee salary and has not had new recruitment plan due to the orders for Q1 of 2012 decreases by around 30%.