Vietnam has marked the beginning of 2026 with a significant labor policy reform that affects millions of workers and thousands of businesses across the country. On November 10, 2025, the Vietnamese government issued Decree No. 293/2025/ND-CP, mandating an average 7.2% increase in regional minimum wages for employees working under labor contracts, with the new rates taking effect from January 1, 2026. This increase ranges from VND 250,000 to VND 350,000 (approximately US$9.50 to US$13.30) per month, depending on the region.

This policy adjustment represents a critical development in Vietnam’s labor landscape, balancing worker welfare with economic sustainability amid ongoing post-pandemic recovery and inflationary pressures. For both domestic enterprises and foreign-invested companies operating in Vietnam, understanding these changes is essential for maintaining compliance and managing labor costs effectively in 2026.

Updated Regional Minimum Wage Classification

Vietnam’s minimum wage system is organized into four distinct regions, each reflecting different levels of economic development and cost of living. The four regional categories could be defined as follows:

Region I: Core metropolitan and economic hubs with the highest cost of living and wage floor, characterized by intense competition for skilled labor and a concentration of high-value-added services and advanced manufacturing.

Region II: Industrial spillover and satellite areas surrounding major cities, offering a balance between labor cost and workforce availability, and serving as key destinations for manufacturing expansion and logistics.

Region III: Emerging production bases with lower labor costs and abundant workforce, primarily attracting cost-sensitive, labor-intensive industries and supporting industrial decentralization.

Region IV: Predominantly rural and less-developed areas with the lowest minimum wage levels, where policy emphasis is placed on basic employment creation, social stability, and gradual economic development.

Decree No. 128/2025/ND-CP introduced a shift to commune-level administrative units for minimum wage application, effective July 1, 2025. The new configuration will include 2,636 communes, 672 wards, and 13 special administrative zones. Of these, 3,193 are newly established as a result of mergers, consolidations, or boundary adjustments[1]. Due to ongoing administrative restructuring, businesses are strongly advised to re-verify their specific region.

While many areas saw upward adjustments to reflect infrastructure growth, some localities in provinces like Quang Ninh and Quang Tri were reclassified downward (e.g., from Region I or III to Region IV) to better align with the new commune boundaries. To ensure compliance and optimize labor costs, companies should cross-reference their location with the latest Appendix of localities issued under Decree No. 293/2025/ND-CP (which updated the previous list of Decree No. 128/2025/ND-CP) to confirm if they are in Region I, II, III, or IV[2].

Number of localities by minimum wage region (As of January 2026)

100% = 3,321 commune-level administrative units

원천: Vn경제

The adjustment of certain localities after 1.5 years of implementation (As of July 2024 to end of December 2025), with Region I increasing by 39 localities, Region II decreasing by 16, Region III decreasing by 8, and Region IV decreasing by 15, does not result in a substantial change across the overall total of 3,321 commune-level administrative units nationwide.

Updated Minimum Wage Rates for 2026

Since 2000, Vietnam has adjusted the minimum wage 20 times, with most revisions (15 of 18) taking effect on 1 January, coinciding with the start of the fiscal year. Adjustments outside this schedule have typically reflected exceptional economic conditions, such as the 1 July 2024 increase implemented during the post-COVID-19 recovery phase[3].

Starting from 2026, the monthly minimum wage increases by region are: Region I rises by VND 350,000; Region II increases by VND 320,000; Region III grows by VND 280,000; and Region IV increases by VND 250,000 compared with the current minimum wage level. Hourly minimum wage rates have also been revised, with Region I increasing from VND 23,800 to VND 25,500 per hour, maintaining proportional gaps between regions. These hourly rates provide stronger legal protection for part-time workers and employees in flexible working arrangements[4]. The aforementioned minimum wage represents an average increase of 7.2% compared with the current minimum wage level.

Table of Monthly and Hourly Minimum Wages for Vietnamese Workers
(effective from 1 January 2026)

원천: Government E-Newspaper

One of the reasons for increasing the minimum wage is that various socio-economic factors have eroded the real value of the 2024 minimum wage due to rising consumer prices. The CPI index is projected to increase by an average of 3.7% per year in 2025 and 2026. Without adjustment, by the end of 2026, the current minimum wage would fall approximately 6.6% below the minimum living needs of workers and their families. According to the Ministry of Home Affairs, a 7.2% adjustment would exceed the projected minimum living standard through the end of 2026 by about 0.6%, thereby helping to improve incomes and enable workers to achieve a better quality of life

From a historical perspective, between 2021 and 2025, Vietnam’s minimum wage recorded a steady upward trajectory. In Region I, the minimum wage increased from VND 4.42 million per month in 2021 to VND 4.68 million in 2022, reached VND 4.96 million in 2024, and further rose to VND 5.31 million per month in 2025 under successive government decrees. Over the same period, Region IV experienced an increase from VND 3.07 million to VND 3.70 million per month[6].

Overall, minimum wages rose by approximately VND 630,000-890,000 per month within five years, a pace that exceeds average inflation and general price growth, underscoring the government’s commitment to improving worker welfare and strengthening social protection.

Comparison of Monthly Minimum Wage

Unit: million VND

원천: Vietnam Legal Library

Business Impact and Compliance Requirements

Direct salary implications

The minimum wage is the lowest wage as the basis for contracting and paying salary for employees, ensuring the salary according to the job or title of the employee completing the agreed labour or work norms must not be lower than the minimum wage. All employers must review their current wage structures and ensure that no employee receives compensation below the applicable regional minimum.

For companies located in an industrial park or export processing zone, the highest minimum wage rate will apply[7]. This provision ensures that workers in these economically important zones receive competitive compensation regardless of the specific location within the zone.

Impact on Production Costs

The Ministry of Home Affairs’ impact assessment estimates that production costs will rise by an average of 0.5% to 0.6% across the economy. However, this impact varies significantly by sector. The impact will be more pronounced in labor-intensive industries, such as textiles, footwear, and apparel, where labor costs could see an increase of around 1.1% to 1.2%[8]. Companies in these sectors must factor the new minimum into their 2026 operational budgets and pricing strategies to maintain competitiveness while ensuring profitability.

For many foreign-invested enterprises in high-value manufacturing or service sectors, the direct impact may be minimal, as most already pay wages significantly above the minimum. However, even these companies need to update their payroll systems and documentation to reflect compliance with the new legal requirements.

Social Insurance and Mandatory Contributions

Perhaps the most significant financial impact stems from the ripple effect on mandatory insurance contributions. The change will impact multiple aspects that are calculated based on the statutory pay rate, including social insurance (SI), health insurance (HI), union fees, and unemployment insurance (UI), as well as benefits from social insurance.

Under Articles 5 and 15 of Decision No. 595/QD-BHXH, the salary used to calculate UI contributions, which is the same as that used for compulsory SI, may not be lower than the applicable regional minimum wage[9]. Consequently, increases in the regional minimum wage automatically raise compulsory SI and UI contribution levels.

At the same time, with the increase in regional minimum wages, the maximum unemployment benefit will rise accordingly. Under Clause 1 Article 38 of the 2025 Law on Employment, monthly unemployment benefits equal 60% of the average insured wage over the six months prior to unemployment, capped at five times the regional minimum wage in the final contribution month (revised from the 2013 law)[10].

Effective 1 January 2026, the maximum monthly unemployment benefit will be:

– Region I: VND 26.55 million (+1.75 million)

– Region II: VND 23.65 million (+1.60 million)

– Region III: VND 20.70 million (+1.40 million)

– Region IV: VND 18.50 million (+1.25 million)

Employees whose salary for insurance contribution purposes exceeds the old caps will need to pay a higher portion of their unemployment insurance contributions, as will employers, since both parties contribute 1% of salary toward unemployment insurance.

Application Rules for Employers

Employers operating in a specific region must apply the minimum wage stipulated for that region. If an employer has units or branches operating in areas with different minimum wages, each unit or branch shall apply the minimum wage of the area where it operates.

Employers operating in industrial parks, export processing zones, high-tech parks, or centralized digital technology parks located across areas with different minimum wages shall apply the highest minimum wage level. This provision prevents wage arbitrage and ensures equitable treatment of workers in special economic zones.

For employees paid by the week, day, product, or through fixed-task contracts, the converted monthly or hourly wage must not be lower than the statutory monthly or hourly minimum wage. Employers using these alternative payment structures must ensure their conversion calculations comply with labor regulations.

If changes to administrative areas result in a lower minimum wage for a locality, employers are not allowed to reduce the wages of employees who were hired on or before 31 December 2025. These employees must continue to receive the minimum wage that applied on that date. This rule remains in effect until the Government issues new regulations.

Additionally, under Decree No. 293/2025/ND-CP, there is also no requirement in 2026 to pay an additional 7% above the minimum wage for workers with college or university qualifications. For contracts signed before 1 January 2026, employers must continue paying at least 7% above the regional minimum wage if this was agreed, unless both parties agree otherwise. For contracts signed from 1 January 2026 onward, there is no obligation to pay the 7% premium, but wages must not be lower than the regional minimum wage.

결론

The nationwide minimum wage increase taking effect from January 2026, alongside a series of new policies covering labour registration, administrative sanctions, agricultural land tax, and technology transfer for major railway projects, represents part of a broader modernization of Vietnam’s labor and business regulatory environment.

The 7.2% minimum wage increase provides important signals about Vietnam’s economic trajectory and policy priorities. The government is clearly committed to improving worker welfare while maintaining the country’s competitiveness as a manufacturing destination. Businesses operating in or considering entry into the Vietnamese market should view this policy change not as a burden, but as an indicator of a maturing economy with increasingly sophisticated labor governance. Compliance with the new minimum wage requirements is straightforward for well-managed companies, while the broader implications for labor market dynamics, regional development patterns, and sector competitiveness warrant careful analysis as part of long-term strategic planning.

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[1] https://vietnamnet.vn/en/vietnam-to-consolidate-into-34-provinces-and-3-321-communes-by-2025-2399871.html

[2] https://thuvienphapluat.vn/van-ban/Lao-dong-Tien-luong/Nghi-dinh-293-2025-ND-CP-quy-dinh-muc-luong-toi-thieu-lao-dong-lam-viec-theo-hop-dong-lao-dong-665866.aspx

[3] https://vneconomy.vn/luong-toi-thieu-du-kien-tang-cao-nhat-350-000-dong-tu-1-1-2026.htm

[4] https://xaydungchinhsach.chinhphu.vn/tu-1-1-2026-muc-luong-toi-thieu-duoc-tang-bao-nhieu-119251111091442629.htm

[5] https://baodautu.vn/bo-noi-vu-trinh-phuong-an-nang-luong-toi-thieu-72-tu-nam-2026-d397858.html

[6] https://fili.vn/2025/12/luong-toi-thieu-vung-nam-2026-tang-manh-nguoi-lao-dong-can-chu-y-gi-4260-1373256.htm

[7] https://thuvienphapluat.vn/chinh-sach-phap-luat-moi/vn/ho-tro-phap-luat/chinh-sach-moi/98102/toan-van-nghi-dinh-293-2025-nd-cp-muc-luong-toi-thieu-vung-tu-01-01-2026-voi-nguoi-lao-dong-lam-viec-theo-hop-dong-lao-dong

[8] https://diendandoanhnghiep.vn/tang-luong-toi-thieu-vung-tac-dong-sao-toi-chi-phi-doanh-nghiep-10164592.html

[9] https://thuvienphapluat.vn/van-ban/Bao-hiem/Quyet-dinh-595-QD-BHXH-Quy-trinh-thu-bao-hiem-cap-so-bao-hiem-the-bao-hiem-2017-348047.aspx

[10] https://baohiemxahoi.gov.vn/tintuc/Pages/linh-vuc-bao-hiem-xa-hoi.aspx?ItemID=25707&CateID=168