The minimum monthly wage will be raised to 830,000 dong (US$40) from 730,000 dong, the government said Tuesday in a statement.

The government said it will also raise pensions for these workers by 13.7% from May.

"The wage hike will definitely push the consumer price index higher," said Le Tham Duong, an economist with the Ho Chi Minh City Banking University.

The increase, however, was unavoidable, said Duong, because the government had to help employees cope with rising prices. In addition, he said the higher wages will boost aggregate demand.

Vietnam's consumer price index rose 13.89% in March from a year earlier, the fastest on-year pace since February 2009, the General Statistics Office said late last month.

The high inflation is just one of several problems the Vietnamese government has been struggling to control after pushing a policy of high economic growth. The country is also faced with a persistent trade deficit that has undermined confidence in its currency, the dong.

By Vu Trong Khanh - The Wall Street Journal - April 4, 2011