So when I sit in a small pho shop and ordered a regular bowl for VND50,000 (US$1.90), I instinctively doing the maths in bowls of pho. One of the things I convert is the minimum wage in different places, figures I happen to know rather well, given the nature of my work.

The minimum wage of just over VND5 million currently applied in Hanoi is roughly equivalent to 100 bowls of pho – enough to stretch to three bowls a day. Of course, I realize no one eats pho three times a day. But the comparison does highlight something important: many workers are left with very little to cover other basic needs for themselves and their families.

Minimum wages have long been a critical policy tool for protecting workers and supporting stable business growth. Yet for many low-paid workers, from export processing zones in the south to industrial zones in the north, maintaining even a basic standard of living for their families remains a daily struggle.

Over the past decade, Vietnam's minimum wage has increased significantly, largely keeping pace with inflation and reflecting the country's strong economic and social progress. Yet the overall wage level remains relatively low.

While cheap labor was once a competitive advantage, in today's context, productivity gains must translate into better incomes for workers if Vietnam is to pursue a sustainable and inclusive development path.

Against this backdrop, the concept of a living wage has been gaining attention worldwide. A living wage is the wage needed to ensure a decent standard of living for workers and their families, taking national circumstances into account and calculated on the basis of work performed during normal working hours.

It is not an abstract ideal, but a benchmark grounded in human rights, consistent with the Constitution of the International Labor Organization and the Universal Declaration of Human Rights. The ILO also provides principles for estimating living wages, based on the needs of workers and their families for food, housing, transport, education, healthcare and other basic necessities.

Workers at a garment company in Ho Chi Minh City in August 2025. Photo by VnExpress/Quynh Tran

In Vietnam, policymakers and labor experts have already begun important discussions around living wages. These constructive debates provide a strong foundation for eventually translating the concept into practice – built on sound statistics and consultation with workers' and employers' representatives, rather than on subjective estimates and contested figures.

Recently, the Government of Vietnam took a welcome step by approving a plan to develop and publish an annual minimum living standard starting in 2028. This is a positive signal that will help establish a stronger data foundation for determining social policy benchmarks for workers and provide a basis for evidence-based wage negotiations at the national level as well as at lower levels.

In our view, a living wage is not meant to replace the minimum wage. Rather, the two concepts complement one another in the wage-setting process, giving policymakers additional practical reference points.

The minimum wage currently serves as a solid legal floor, set through negotiations among relevant stakeholders and taking into account factors such as business's ability to pay and the broader macroeconomic conditions.

A living wage, as defined by the ILO approach, is grounded in the actual costs needed to meet a decent standard of living for workers and their families – covering food, housing, healthcare, and education. Introducing this concept helps measure the gap between earnings and a decent standard of living, providing a practical basis for adjusting wage policies in ways that are fair, sustainable, and respectful of workers' dignity.

Vietnam stands out in Asia for its relatively well-developed wage-setting institutions. Like my home country, the Republic of Korea, Vietnam has long had a National Wage Council, bringing together representatives from government, employers, and trade unions as a cornerstone of tripartite dialogue.

However, narrowing the gap between current wages and real living costs will require further strengthening these institutions, particularly in terms of data, analytical capacity and technical tools.

A major challenge is the significant disparity in the cost of living across different localities. Increases in the minimum wage may keep pace with rising living costs in rural areas, but they often struggle to match the much higher cost of living in large cities such as Hanoi, Da Nang, or Ho Chi Minh City.

To translate the concept of a living wage into practice, Vietnam could follow a feasible roadmap. The first step would be to estimate living costs by province using the ILO’s methodology.

This approach is grounded in the actual cost of living for a typical household, rather than relying solely on productivity or employers’ ability to pay. At its core is the construction of a basket of essential goods and services that ensures a socially acceptable standard of living. This basket includes food meeting nutritional requirements for calories and micronutrients; housing that meets minimum standards; healthcare, education, transportation, clothing and communication; as well as mandatory social protection contributions. The total cost is calculated for a typical household and then adjusted according to the number of income earners in the family.

These estimates are not intended to become mandatory wage levels. Rather, they serve as reference points for minimum wage adjustments and for wage negotiations at sectoral and enterprise levels.

At the same time, wage policies and wage-setting mechanisms should remain closely linked to the health of the economy, including labor productivity, enterprises’ ability to pay and the characteristics of different sectors and regions, in line with ILO Convention No. 131 on minimum wage fixing.

Throughout this process, the National Wage Council plays a central role in synthesizing data, assessing impact, and promoting evidence-based social dialogue. Minimum wages continue to serve as the legal floor, while collective bargaining gradually lifts actual wages toward living-wage levels in a sustainable way.

Perhaps when workers no longer need to convert their income into "how many bowls of pho" to calculate whether they can make ends meet each month, the meaning of a living wage will truly be felt.