Current Situation of Vietnam's Textile and Apparel Industry (II)
Another aspect of the rapid development of Made in Vietnam is the gradual loss of cost advantages. The first is the advantage of labor cost.
For the past ten years, Vietnam raised the minimum wage every year. Due to the epidemic, Vietnam has not adjusted its minimum wage from 2020 to the first half of 2022. However, according to the Vietnam News Agency, from July 2022, the minimum wage in Vietnam will increase by 6% from the current wage base.
In the recruitment of textile enterprises, the actual wage cost is higher.
Ho Chi Minh City is the commercial and economic center of Vietnam and is the preferred investment destination for many foreign-funded enterprises, which makes the city with the highest average salary in Vietnam. Now, the basic salary of textile and garment factories in Ho Chi Minh City is between 200 and 250 US dollars per month, and the average salary after adding piece-rate commission is as high as 450 to 500 US dollars per month. It will be difficult to recruit workers if paid wages do not meet these levels because factories in Ho Chi Minh City are so saturated that they need to be relocated to surrounding cities, which gives workers the power of choice instead.
In addition, as a low value-added, high pollution, high energy consumption industry, textile and clothing are no longer popular in Vietnam. Vietnam hopes to attract more enterprises from the high-end, sophisticated industries in the future.
In 2014, the Vietnamese government stated that by 2025, priority should be given to the development of raw materials and accessories in textile and footwear industries for domestic production and export, and it will give priority to the development of the high fashion and footwear industry after 2025. In the newly issued 2021-2025 economic restructuring action plan, increasing the number of technological innovation enterprises is listed as a priority. Recently, at the Vietnam-EU Business Forum, the representative of Ho Chi Minh City also stated that high-tech and environment-friendly enterprises are more welcome.