Regular minimum wage rises have proved ineffective against inflation, argues the Labour, Invalids and Social Affairs Ministry's Salary Policy director Pham Minh Huan.

Workers and economists alike agree.

Hitaco Company worker Dinh Xuan Toan says: "My monthly salary rose by about VND200,000 but the price of goods has escalated.

"A bowl of pho jumped from VND6,000 to between VND10,000 and VND12,000. Even a cup of iced tea rose to VND1,000 from VND500. My higher pay does not match all these price increases." Hai Phong Social Insurance Department employee Pham Van Manh says: "The monthly salary went up, and at first I was very pleased. But then, I found out that nothing had changed for the better in comparison with the soaring prices." Explanations Financial Science Institute economist Le Thi Thuy Van says raising the minimum salary was intended to improve the living standards of employees, but this has not happened.

Adjustments to the minimum wage have yet to embrace the rules of the market, she says.

Salaries at State-owned enterprises are not based on worker productivity but more to pay social insurance as set by the Labour, Invalids and Social Affairs Ministry's Salary Policy Department.

This, with inflation, contributes to the ineffectiveness of pay rises.

The Financial Science Institute's International Finance Department's economist says there are three major reasons why wage rises are ineffective.

"The primary reason is inflation that sometimes tops 12 per cent.

"Then salaries at private enterprises are much higher than at public enterprises. This is clearly manifested in banking where many staff at State-owned banks would prefer to find work at private banks.

"At some enterprises, raising the pay means lowering other income such as bonuses and allowances." Solutions Salary Policy director Pham Minh Huan says the policy for production workers is likely to be changed to take into account those paid through the market.

"The State will continue to boost the minimum pay at public units to make it equivalent with the private sector because the minimum wage at foreign-invested companies averages VND900,000 (US$56.25)," he says.

"The State is also devising ways to control prices. Raising pay is more useful when prices are under control."