Vietnamese Economic Environment

In order to give relative substance to our survey findings, we feel it is important note a few facts about the current economic environment in Vietnam. Since 1986, Vietnam’s 73+ million inhabitants have been striving to capitalize on the economic reforms of doi moi (the switch to a market economy). As a result of this focus, the cities of the HCMC and Hanoi have realized increased spending, most clearly visible by the increasing number of cars and motorbikes in the streets.

Despite this seemingly rapid advancement in urban centers, Vietnam as a whole is still quite poor. A World Bank report on poverty released in February 1995 reported the average annual per capita income at less than US $240. Although this study praised Vietnam’s reforms for encouraging economic growth, this per capita annual income level still places it among the poorest countries in the world. The report estimates that more than half of all Vietnamese were living below international standards for poverty at this time. Using a lower standard, a Vietnamese government report released around the same time estimates that only about 20% of Vietnamese households fall below the poverty line.

The definition of poverty in these two studies is broadly defined. In 1995, the Vietnamese government defined poverty as earnings of less than 50,000 dong/month (~US $4.50) in rural areas and 70,000 dong/month (~US $6.40) in the cities. Adjusted for the official 1996 inflation rate for the whole country of 4.5%, the rural figure grows to 52,250 dong/month and the urban figure, adjusted by 7.1% which is the inflation rate for HCMC, rises to 74,970 dong/month. These figures represent 1996 annual income levels of approximately $57 and $82 for rural and urban areas, respectively.

Although these figures seem staggeringly low by Western standards, the data we collected during our field study confirm that the cost of living in Vietnam is far below what one might imagine. Moreover, analogies drawn between Western wage levels and Vietnamese wage levels are inherently deficient, given that Vietnam is many years from achieving price parity with the Western

world.

We found that the government mandated monthly minimum wages for the NIKE contract factories range between $35 and $45, depending on their geographic location. According to James Rockwell, President of American Service Company of Hanoi, the average annual income in Vietnam today is approximately $220 while the average annual income of a Nike worker is $384.

Our research indicates that the annual income for NIKE workers in the VS and VJ factories, calculated using factory base wages, amounted to $545 and $566, respectively. These figures are clearly higher than previous estimates and suggest that the factories’ base wages are meeting or exceeding government mandated minimum wage levels.

Survey Scope

NIKE contracts five footwear factories in Vietnam, all located in rural areas surrounding HCMC. When we arrived in Vietnam, our original intentions were to conduct a large scale written survey of factory workers within all five NIKE Vietnam footwear factories, similar to the survey the NIKE Indonesia team eventually undertook. After initial discussions with NIKE Vietnam management, it became evident to us that the factory workers would not be an "objective" population to sample, given that many of the workers had already been surveyed and interviewed extensively by both NIKE Labor Practices and outside consultants. The fear was that many of the factory workers had become fully aware of the intent of these surveys and were no longer motivated to respond in an unbiased fashion. Because of this possibility, we decided to extend ourselves to surveying residents within the local vicinities surrounding the factories to collect the information we sought.

What also became evident to us was that a written survey would not be an effective means to collect information when sampling rural Vietnamese households. After all, how receptive or reliable would household members be if we were to arrive uninvited and unannounced at their home requesting that they fill out and return to us extensive survey questionnaires? We consequently decided to conduct person to person interviews of household members qualified to answer our questions at randomly selected households. We concluded that this approach would be less presumptuous and intimidating and ultimately yield more reliable results.

A serious difficulty which we faced upon making this decision was the fact that person to person interviews tend to be a very time consuming and manpower intensive exercise. With the time that we had available onsite in Vietnam to gather data, it became apparent that covering all five factory areas would be an endeavor beyond the time or resources we had available to us. We decided to narrow our coverage down to only two factory areas, VJ and VS. The following table sets forth a number of characteristics specific to VJ and VS.

VS/VJ Factory Profiles

VS Area vs. VJ Area Demographics

We selected VJ and VS for one primary reason – the areas surrounding them have the lowest and highest government mandated minimum wages, respectively. Within the HCMC province, the Vietnamese government sets minimum factory wages based on a factory’s proximity to HCMC. The wages are set in bands of concentric circles radiating from the HCMC reference point. The further away from the city, the lower the required minimum factory wage, based on the assumption that areas further away are more rural. VJ is one of the NIKE factories furthest away from HCMC while VS, actually residing within the HCMC province, is one of the closest. The rationale was for us to cover the theoretically poorest and richest factory areas and sample the lowest and highest standards of living within the areas proximate to NIKE Vietnam factories. Hence, we selected VJ and VS, which have government mandated minimum wages of $35 USD per month and $45 USD per month, respectively. (As an aside, the Vietnamese government actually sets minimum wage requirements in U.S. dollar denominations. This typically creates complications for factory administrators, who have to deal with frequent currency fluctuations when paying their workers in Vietnamese dong.)

When we finally began our fieldwork in the VJ and VS areas, we discovered nearly the opposite of what our original assumptions dictated. The VJ area, with the lowest government mandated minimum wage, in fact appeared to be much more developed and possessed a higher overall standard of living than the VS area, which had been granted the highest minimum wage. The VJ area, which was very near the towns of Vinh Cuu and Bien Hoa, appeared to have much more extensive infrastructure in place than the VS area, and its economy was more dependent on industrial production. The VS area, on the other hand,

had much less basic infrastructure in place, and possessed a more pronounced agrarian characteristic. Our sample population consisted of 78 households in the VS area and 68 households in the VJ area. These households effectively comprised 149 income earners in the VS area and 151 income earners in the VJ area. Based on this sample set, we were able to make the following observations:

The VS area has a higher concentration of agricultural and livestock activity than the VJ area. 21% of households sampled in the VS area listed farming as a primary occupation vs. 10% of sampled households in the VJ area. The following charts depict the most common occupations within the VS and VJ areas found in our sample.

Common VS/VJ Area Occupations

The vast majority of VS workers are native to the VS area (Cu Chi village), whereas a significant number of VJ workers have come from elsewhere to the VJ area in search of factory work. We posited that since the VJ area is more developed and has a higher concentration of industrial production, it has developed a reputation that extends far beyond Southeast Vietnam as an area which holds opportunities for factory jobs. Therefore, VJ has attracted a large number of workers who are not natives of the Dong Nai province.

The VJ area has noticeably higher income levels than the VS area. Monthly Household Income (in thousands of VND)

VS VJ

Mean 1,058 1,2451

Min 17 300

Max 3,600 5,000

1.Does not include single person VJ households.

Utility expenses include electricity and cooking fuel.

Transportation expenses primarily include gas for motorbikes.

The VJ area has higher levels of expenditure than the VS area. Monthly Household Expenditure Levels (in thousands of VND) Note: Utility expenses include electricity and cooking fuel.

Transportation expenses primarily include gas for motorbikes.

We were surprised to discover that government mandated minimum wages did not appear to serve as accurate indicators of the relative level of economic development for a particular area.

Moreover, we were surprised at how there could be such noticeable economic disparity between two areas which were relatively close to one another, separated by no more than 100 km distance. We believe these "micro-economies" have emerged due to the lack of efficient transportation infrastructure between them. For example, even though the actual distance from HCMC to Cu Chi is only approximately 50 km, the poor quality of the roads, coupled with intense traffic congestion, prevents one from being able to travel this stretch in less than 1.5 to 2 hours time. These transportation conditions prevent fluid, efficient cross-provincial mobility for the typical rural resident of Southeast Vietnam, whose normal mode of transportation is the bicycle.

The VJ factory management, recognizing that the government mandated minimum wage of $35 USD/month did not accurately reflect the economic reality of the VJ area micro-economy, decided recently to raise the factory base wage from $35 USD/month to an effective $47.20 USD/month.

The VS factory management, on the other hand, has kept the factory base wage at the same level as the government mandated minimum wage of $45 USD/month. Factory base wages are defined as entry-level wages for new workers. In terms of average wage paid, VJ far exceeds VS ($56.30 USD/month vs. $47.73 USD/month). The following chart depicts government mandated minimum wages, factory-established base wages, and effective factory average wages for all five NIKE Vietnam footwear factories.

As one can see from the above chart, VS and VJ still in fact "bracket" the range of wages paid to NIKE Vietnam factory workers (this time using factory mean wages as the criteria). However, the two factories have switched positions – VS pays the lowest average wage, whereas VJ pays the highest average wage. Hence, despite these findings being the exact opposite of what we anticipated based on our original assumptions, the VS and VJ areas still serve as the appropriate scope for our data sampling.

For each factory area, a random sampling of households was performed using the following methodology:

We sampled the third home along any given street. If no household adult qualified or willing to respond to our survey questions was present, we moved on to the very next adjacent home.

We sampled homes along main arteries as well as within side alleys and hamlets. We discovered that main artery houses were typically occupied by shopkeepers or café owners, whereas "alley" houses were more typically occupied by farmers or workers.

Given that we engaged the services of independent translators to assist us in these survey interviews, we broke up into several distinct interview teams of 1-2 persons each in order to obtain maximum geographic coverage of the factory areas.

We introduced ourselves to sampled households as students conducting survey research, having no affiliation with either factory management or NIKE.

Survey questionnaires were used to give structure to and provide guidance for the interviews. When we were satisfied that the response given to an interview question was based on a full understanding of the intent and meaning of the question, the response was recorded directly on the survey questionnaire. Each interview we administered lasted approximately 20-30 minutes.

Outside Contacts

In order to develop the context necessary to conduct the survey, we tapped into a number of notable sources of information while conducting research in HCMC. These included:

The Harvard Institute for International Development

Ernst & Young

CESAIS Marketing Research

General Statistics Office

UCSD graduate students conducting Vietnam wage research

Farmers, shopkeepers, taxi drivers, and other local residents

The following section provides a summary of the results of our interview sample for the VS and VJ factory areas. All charts represent income or expenditures levels on a household basis. Per person income or expenditure levels were derived by dividing total household figures by the number of household members, with adjustments where appropriate to account for household economies of scale. All monetary figures are represented in thousands of Vietnamese dong. The current conversion rate is approximately 11,650 Vietnamese dong per US dollar.

Household Size

VS VJ

Mean 4.9 4.5

Median 4 4

Mean Monthly Income (per income earner)

The mean incomes per wage earner in our sample were 598,950 dong for the VS area and 572,475 for the VJ area. On a household basis, the mean monthly incomes were 1,058,056 dong for the VS area and 1,169,779 for the VJ area.

Food Expenditures (per household member)

The mean food expenditures per household member per month were 133,368 dong for the VS area and 156,193 dong for the VJ area. On a total household basis, the mean food expenditures per month were 596,364 dong for the VS area and 612,910 dong for the VJ area. The following table lists basic food items which serve as the staple of most rural Vietnamese diets.

Typical "Basket" of Basic Food Expenditures

Rice

Vegetables

Fish, Pork

Condiments, Sauces

Coffee, other breakfast foods

Housing Ownership Status

The vast majority of Vietnamese households own their homes, although they typically do not own the land they live on. The only single person households we encountered were those of factory workers who had come from distant provinces in search of factory work.

Clothing/Footwear Expenditures (Frequency of Purchase)

The mean clothing expenditures per household member per month were 17,565 dong for the VS area and 22,826 dong for the VJ area. On a household basis, the mean clothing/footwear expenditures per month amounted to 83,838 dong for the VS area and 82,573 dong for the VJ area. Most households, especially those with children, indicated that clothing or footwear is typically purchased during holidays or before the start of school each season.

Utilities

Electricity

Nearly all the homes we survey had electricity wired into house. Mean monthly household expenditures for electricity were 53,282 dong (12,105 dong per household member) for the VS area and 58,869 dong (11,856 dong per household member) for the VJ area.

Telephones

Telephones are becoming increasingly common in rural Vietnamese households. Those without phones in their homes typically used public telephones available at local post offices. For those in our survey with phones, the mean monthly household telephone expenditures were 77,353 dong

(17,562 dong per household member) for the VS area and 63,654 dong (15,380 dong per household member) for the VJ area.

Gas/Oil/Wood

Firewood is the most common source of cooking fuel. Most rural households simply gather wood from nearby forests. Gas or oil burning stoves are becoming increasingly common. For those homes utilizing gas or oil, the mean monthly household fuel expenditures are 58,917 dong (12,618 dong per household member) for the VS area and 59,665 dong (15,034 dong per household member) for the VJ area.

Entertainment

Entertainment Expenditures

Not surprisingly, most households surveyed did not note any significant recurring expenditures for entertainment. The VS and VJ areas, being rather rural in nature, offered little in terms of entertainment options. Most residents opted to stay home with their families (watching television or listening to music) when they had leisure time available.

Television

The majority of households owned televisions in both the VS and VJ areas. Televisions typically ranged in size from small black and white 13" sets to larger color 20" sets. Television viewing was the primary form of recurring entertainment for most households surveyed.

VCR

VCR ownership is becoming increasingly common. Both the VS and VJ areas had several local videotape rental shops with a fair selection of Vietnamese language movies and musicals. Many households surveyed rented videotapes regularly (approximately 1-2 per week). Videotape rental prices were typically in the 1,000-2,000 dong range per tape.

Radio/Stereo Cassette

Most households surveyed owned audio equipment. Cassette players were very common as well.

Transportation

Motorbike Ownership

Of the households surveyed which owned motorbikes, most owned only one to be shared among the members of the family. Mean monthly household gasoline expenditures were 164,387 dong for the VS area and 178,487 dong for the VJ area.

Bicycle Ownership

Bicycles were by far the most common means of transportation in the VS and VJ areas. Nearly all the factory workers at both VS and VJ commuted to work by bicycle.

Health Care

Health Insurance

Health insurance is purchased on a individual basis. Very rarely did households possess comprehensive health insurance coverage for the entire family. VS and VJ workers received health coverage through the factories. Government workers (local police, teachers, etc.) typically received subsidized health coverage. Parents often were required by schools to purchase health insurance for their children. However, most adults who were self-employed (farmers, shopkeepers) typically did without health insurance. For those with health insurance, the mean monthly household expenditures were 26,256 dong (6,432 dong per household member) for the VS area and 20,766 dong (4,930 dong per household member) for the VJ area.

Medication

Medication costs were more common for households with aging grandparents or very youngchildren. For those households incurring regular medication costs, mean monthly household expenditures were 100,993 dong (23,703 per household member) for the VS area and 94,762 dong (28,720 dong per household member) for the VJ area.

Education

Education spending included costs for tuition, outside tutoring, and books. Education costs for younger children are typically quite affordable. However, these costs rise dramatically as children reach higher grade levels. Many families with teenage children have difficulty bearing education expenditures, which can reach several million dong per year for each student. The mean monthly household expenditures for education were 130,827 dong (67,985 dong per student) for the VS area and 143,314 dong (71,597 dong per student) for the VJ area.

Savings

Approximately 48% of households surveyed in both the VS and VJ areas can save either regularly or from time to time.

The complete survey results are available in tabulated form in the appendices.

Comparing Results with the 1993 Vietnam Living Standards Survey

In 1992, the Vietnamese State Planning Committee and the General Statistical Office, under the technical direction of the World Bank, conducted an extensive survey to measure Vietnamese living standards. Completed in 1993, the Vietnam Living Standards Survey (VLSS) is a comprehensive report detailing income and expenditure levels for a large sample of households within the six major regions of Vietnam. The quantitative results from this survey were categorized in successive quintiles with the fifth quintile representing households with the highest aggregate expenditure levels and the first quintile representing households with the lowest levels.

In order to develop a frame of reference for our survey, we decided to benchmark our results against those found in the 1993 VLSS. Before we compare results, it is important to cite the material differences between our survey and the 1993 VLSS.

1993 VLS Our Survey

Geographic Scope

Region 6 – SE Vietnam.

Includes Song Be, Tay Ninh,

HCMC, Dong Nai, and Ba

Ria/Vung Tau

VS Area (Trung An Village, Cu

Chi District, HCMC Province);

VJ Area (Thanh Phu Village,

Vinh Cuu District, Dong Nai

Province)

Sample Size

~ 680 households

78 VS area, 68 VJ area

Survey Method

Extensive questionnaire

Formal Interview

Sampling Method

Random number generated

sampling of census indexed

geographic regions

Sampling of every 3rd home

along any given street

Income Levels

Income levels have risen dramatically in this region. The VLSS indicates that the median monthly household income (middle of 3rd quintile) was 414,400 dong in 1993. Our survey results show that median monthly household income has increased to approximately 971,000 dong for the VS area and 1,000,000 dong for the VJ area. Assuming that the VLSS figure was indicative of 1993 household income for both the VS and VJ areas, this increase represents a cumulative annual growth rate of 23.7% for the VS area and 24.6% for the VJ area. These growth rates can be viewed as proxies for the level of annual inflation that has occurred in these two areas since 1993.

Expenditure Levels

Expenditure levels have exhibited an equally dramatic rise. The VLSS indicates that median monthly household expenditures amounted to 462,700 dong in 1993. Our survey results show that median monthly household expenditures today are 1,173,000 dong for the VS area and 1,206,000 dong for the VJ area. This increase represents a cumulative annual growth rate of 26.2% for the VS area and 27.1% for the VS area since 1993.

Expenditure Mix

The expenditure mix for households has changed as well since 1993. The following points detail the comparison of expenditure mix between 1993 and today:

Utilities which in 1993 comprised 5.9% total household expenditures, today account for 9.2% and 7.5% of expenditures for the VS and VJ areas, respectively. This increase can likely be explained by the increased proliferation of electricity usage among Vietnamese households. Our survey results indicate that nearly all households in the VS and VJ areas are wired for electrical connectivity, whereas in 1993, the percentage was much smaller.

Transportation and communication expenditures have risen in importance as well. In 1993, the VLSS indicated that transportation and communication expenditures comprised 4.4% of household spending. Our survey indicates that transportation and communication expenditures have risen to represent 18.6% and 16.6% of household spending for the VS and VJ areas, respectively. This increase is due to: (i) increased ownership of motorbikes among households, thereby increasing monthly expenditures for gas, and (ii) increased proliferation of household telephones.

Food expenditures as a percentage of household spending have remained steady at approximately 50% since 1993. Likewise, expenditures for clothing/footwear, health care, and education as a percentage of total household spending have remained stable, exhibiting no material changes.

Developing Typical Expenditure Profiles

Based on the survey data gathered, we can develop monthly expenditure profiles for both individuals and households living in the VS and VJ areas. These expenditure profiles can be built based on the mean (or median) monthly expenditure levels for each of the essential needs categories, which are defined as: food, housing/rent, clothing/footwear, utilities, transportation, communication, health care, education, and entertainment. They are meant to represent "typical" monthly spending patterns for the residents of the VS and VJ areas.

Although most factory workers live with their families, there are a notable number of factory workers who reside on their own, particularly in the VJ area. The following table depicts a typical spending profile for a single person household whose primary occupation is factory work.

Individual Monthly Expenditure Profile

(in thousands of VND)

Category Mean Median Mean Median

Food1 163 150 186 180

Housing/Rent2 40 40 40 40

Clothing/

Footwear3 33 33 33 33

Utilities4 22 20 20 20

Transportation5 - - - -

Communication6 8 8 8 8

Health Care7 29 12 34 15

Education8 - - - -

Entertainment9

Other10 27 27 27 27

Total

Expenditures 322 290 348 323

A much more representative economic unit in rural Vietnam is the household family, which typically consists of parents and children but can also extend to include grandparents and unmarried siblings.

The following table depicts the monthly spending patterns of typical households living in the VS and VJ areas.

Household Monthly Expenditure Profile (in thousands of VND)

Category Mean Median Mean Median

Household Size 4.9 4 4.5 4

Food1 596 600 613 600

Housing/Rent2 - - - -

Clothing/Footwear3 84 46 83 67

Utilities4 129 108 119 90

Transportation5 164 150 178 150

Communication6 77 68 64 50

Health Care7 127 70 115 45

Education8 131 65 143 100

Entertainment9 29 12 86 50

Other10 54 54 54 54

Total

Expenditures 1,391 1,173 1,455 1,206

[Table Footnotes]

Discretionary Income Potential

 Given that the VS and VJ factories pay mean monthly wages of approximately 554,000 and 653,000 dong respectively, it appears that individual factory workers, after incurring essential expenditures, can generate a significant amount of discretionary income. Even at the base (entry-level) wage rates of 527,000 dong (VS) and 548,000 dong (VJ), which represent the lowest wage rates paid at each factory, the workers appear to be able to generate discretionary income.

Individual Worker Discretionary Income Based on Factory Mean Wages

Factory Mean Wage 554 653

Total Expenditures 322 348

Discretionary Income 232 305

Individual Worker Discretionary Income Based on Factory Base (Entry-level) Wages

Factory Base Wage 527 548

Total Expenditures 322 348

Discretionary Income 205 200

Many of the individual factory workers we interviewed (in the process of randomly selecting households) noted that much of the discretionary income they generate frequently gets sent home to support family members. Other uses for discretionary income include purchasing "big ticket" items, such as bicycles or wedding gifts for family or friends getting married. Workers noted that they very rarely accumulate personal savings on a recurring basis either for emergency purposes or for anticipated future expenditures such as education.

Given that the vast majority of factory workers live with extended family members in large households, it is important to consider how factory wages contribute to supporting entire households. However, it is a much more difficult task to build a representative discretionary income profile for households based on the assumption of factory wages being the sole source of income.

This assumption would, in fact, not be representative at all, given that none of the households we interviewed depended solely on household members employed by NIKE factories to support the family. In most cases, factory wages earned by older sons or daughters served to augment aggregate household income, with the primary occupation of the household parents being farming or shopkeeping. Many households interviewed commented that the steady nature of factory wages has helped the family to consistently maintain an overall higher level of economic existence.

Supporting a family based only on farming or shopkeeping is typically difficult, given the sporadic, unpredictable nature of income flows.

Given these circumstances, we chose not to try to construct an artificial discretionary income profile for households based on factory wages.

Qualitative Discussion

The information that we gathered during our stay in Vietnam extended well beyond the raw survey data. In addition to the numerous household interviews we conducted, we had the opportunity to speak to a number of other sources of information. The knowledge obtained from these sources as well as from our own observations, served to provide us with a rich base of context from which to conduct the survey. The following sets forth many of our learnings.

The most predominant household structure within the areas we surveyed is the extended family. This would include the father, mother, children, often times the grandparents, and sometimes unmarried siblings of the father or mother. The only instances in which we saw single person households was in the case of factory workers (primarily in the VJ area) who had displaced themselves from their native provinces in search of factory work.

The VS area is significantly less developed in terms of infrastructure than the VJ area. When Sam Yang Co. began construction of the VS factory three years ago, it had to invest significant amounts of money to install the basic infrastructure necessary to operate a factory, including electricity, running water, sewage, transport roads, etc. This investment in infrastructure has contributed significantly to the overall economic development of Cu Chi village during the last few years.

Of those whom we interviewed within the VS and VJ areas who indicated that they could save, many held their savings in a number of interesting vehicles. Farmers typically held their savings in the form of rice. If they needed extra cash, they would sell a few bags of rice. Pig and other livestock farmers often invested directly in their livestock, either by purchasing new animals or increasing the quantity of feed. These animals had the potential to be sold for significant profit. Those who wished to earn interest on savings would contribute their cash into "village money funds" (called hui in Vietnamese). These funds would be aggregated by a nearby villager in need of capital who would promise to pay back the principal contribution plus a fixed interest payment within a certain period of time. The Vietnamese very rarely place their savings into bank deposits.

The residents of the VS and VJ areas are just beginning to become accustomed to the idea of factory work. Prior to their factory jobs, many of the workers had never before had to work shifts consisting of eight contiguous hours. The agricultural work or shopkeeping which typically occupied their daily time in the past tended to less rigorous and fast paced.

We observed that food expenditures, particularly on a per person basis, were quite uniform from household to household, regardless of income. There seems to be a commonality between the diets of most Vietnamese families – nearly all the surveyed respondents indicated that rice, vegetables, fish or pork, and condiments/sauces comprised the vast majority of their food expenditures. And these basic foodstuffs appear to be widely available and relatively inexpensive.

There appeared to be variety in preparation of dishes rather than variety in choice of basic ingredients.

Education expenditures were cited by many household parents as being the most troublesome to manage, particularly for their older children. Tuition costs rise dramatically when children reach teenage years and college expenses are virtually out of reach for most rural families. Furthermore, many older students typically engaged in extensive outside private tutoring, especially during the summer months, in order to get ahead in their classes.

Aside from official tuition costs, many households complained of "outside charges" which they had to pay directly to the teacher in order for their child to receive good care and attention.

A highly typical household profile (especially within the VS area) consisted of a father and mother who listed farming or shopkeeping as their primary occupation. These families were able to significantly augment their household income through one or more of the older children working in the factory. In fact, several households indicated that the steady income realized from the factory wages has provided for a significant increase in well being and standard of living. Without the factory jobs, these families would have had to revert to the sporadic type of income commonly earned by farmer or shopkeepers.

Government mandated minimum wages are many times inaccurate indicators within state-owned factories, as well. Many state-owned factories reportedly adhere to mandated minimum wage policy, but in fact pay out effective wages much higher than minimum. A state factory worker earning a $35 USD/month minimum wage can in fact earn nearly double this amount, through receiving specialized allowances (for transportation, child-care, cosmetics, etc.) which the state-owned factory typically pays as cash benefits to its workers.

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