On 30 June 2024, the Government issued Decree No. 74/2024 ("Decree No. 74/2024") to increase the basic salary in Vietnam. The decree took effect on 1 July 2024.
Decree No. 74/2024 increases the basic salary across Vietnam's different regions, with the new basic salary varying depending on the region. For example, in Region I (which includes major cities such as Hanoi and Ho Chi Minh City), the basic salary will increase from VND4.68 million to VND4.96 million. This means the contribution cap for each employee will be increased from VND93.6 million to VND99.2 million.
Although the basic salary applies to salaries for state officials, state employees and armed forces personnel, it is significant to the private sector because these wages are used as a benchmark for calculating statutory social and health insurance contributions for employees. These contributions are capped at a rate of 20 times the basic salary.
For companies that have a significant number of employees, the increase introduced by Decree No. 74/2024 will have a noticeable financial impact.
