Is the minimum wage the cause of unemployment

That’s a fairly bold statement for somebody who has no clue about economics. But it’s something I have often thought about since coming to Vietnam. I haven’t seen one beggar in Hanoi. But I have seen many people working for less than a minimum wage.

There are the dirt collectors. Pushing bicycles with a type of bucket attached divided into different compartments labourers collect the dirt while at the same time separating the garbage. They get paid for this chore, probably by the bucket - so to speak.

Then I was watching some women using the traditional wooden poles and baskets shoveling special soil into their woven baskets and carrying them with that swinging walk across a building site in order to dump the load into a corner for use at a later stage. I’m guessing that they don’t earn a minimum wage either.

Many people working in offices and as shop assistants and other lower ranked jobs earn in the region of 1 million Vietnamese dong. That is about $55 per month. Not particularly great. So how do they manage to live?

Well, they live with family sharing a home.  Money is spent on food and a big TV! A sort of pajama style outfit is good enough to cover the daily clothing requirement and anything left over goes into airtime for the mobile phone.

There is not much left for the disposable goods the West loves to accumulate. The people of the developed world spend a fortune on stuff they don’t need at all and that loses its value as soon as the credit card has been swiped. Realistically, the moment you walk out of the shop carrying your purchases the value of your goods is a fraction of what you paid for them.

That sweater you just spent $100 on? What would you be able to sell it for around the corner of the shop? The brand new car you bought? Not even the dealership would be prepared to refund you the full amount the moment you have taken ownership and driven it around the block from the showroom.

What does that say about what we spend our money on? So why do we need to earn huge salaries to buy things of little value? At least one thing the recession has done that is of value, it has forced people to go back to their communities and many families have moved back together again.

But I digress. Has the minimum wage led to these unbelievable numbers of unemployment? Probably not exactly. But I imagine it has contributed to it. I read somewhere an interesting statement that Trade Unions in fact contribute more to unemployment than they benefit the working person.

The more demands the work force makes for higher wages, less working hours per week, medical benefits and pensions amongst many items, the more the company starts to consider moving its operation to a country such as Vietnam where there are no Trade Unions or such things as minimum wage.

Of course, just as an aside, it is probable that Vietnam has signed the International Labour Charter. But with many of the other charters it has signed, not much notice is taken of them and the policies certainly mostly don’t find their way to the man in the street.

In the case of employment, I’m inclined to think - thank goodness.

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