What is happening in Vietnam?
Salaries in Vietnam are increasing significantly (between 10 – 15% in 2014), largely brought about by the increased demand for talent as more and more companies enter the country to take advantage of the low establishment costs and current competitive national wages (compared to other nearby countries). But demand is quickly outstripping supply and salaries are responding accordingly. It is therefore critical that in-county salaries remain competitive in order to attract and retain national employees.
What is happening with salary movements in Ho Chi Minh City, Vietnam in 2015?
In Ho Chi Minh City, salaries are predicted to increase on average by 5.1%. But with expected inflation for 2016 to be around 2.5%, predicted salary increases for 2016 are:
3.8% Labour shortages however will drive these increases even higher. Market predictions are that within the finance sector, for example, there is limited local talent yet demand continues to be strong for suitably qualified and experienced personnel. Salaries are therefore increasing between 15 – 25 % in this sector. For a mid-level Accountant with a starting salary of around 100M Vietnamese Dong, such increases will be around 15 to 25 M. When talent is hard to source in a market that is becoming very competitive, the last thing any HR practitioner wants is to see their talent leave to join competitors or having to continually respond to salary adjustments on an ad hoc basis because their remuneration strategies and matrices are not in line with the market. Up front preparedness and knowledge of the market is essential.
So how do you find out how much to pay an employee in Vietnam?
Don’t wait until you start losing your talent to become better informed on what to pay your employees. There are organisations out there that will provide you with a range salary related data. When considering which data to purchase and where should you purchase it from, Margaret Nielsen, from Kelsen HR suggests you consider these three key areas
- Industry sector and participants. Are participants to the surveys ‘like’ organisations to yours?
- Pay Elements. Can they report on all pay elements i.e. base salary, benefits, short term incentives or long term incentives and at all quartiles?
- Is the data reported current? Collected at least annually.
Whatever you do, keep in mind that salary movements in Ho Chi Minh City will differ from those in Hanoi, Da Nang and Haiphong so it is important when you are sourcing salary data that you consider the region or city where the individual will be working. Not only that, but as salary is only one part of the compensation story, valuable information can be gleaned from country reports which will also detail the country’s employee benefits and legislative requirements.
Source Data provided by KelsenHR.