Ms. Hoa Nguyen, Senior Director of Mercer Salary Survey and HR Consulting Services at Talentnet, spoke about its latest salary survey.

■ Besides offering resourceful data and figures about the total remuneration of enterprises in Vietnam, the salary survey also presents comprehensive analysis on Vietnam’s labor market. What were the most significant findings this year?

Our 2016 Talentnet-Mercer Total Remuneration Survey had 557 companies submitting data on the compensation and benefits of more than 244,000 employees. Among these companies were 481 multinational companies (MNCs) and 76 large domestic companies.

The results this year exhibit some very positive signs. The overall 2016 salary increase at MNCs is considerably higher than the inflation rate for the year (8.9 per cent compared to 3.0 per cent). Planned 2017 salary increases are even higher than the 2016 figures, at 9.2 per cent. 

However, the pay gap between domestic companies and MNCs remains high, at 31 per cent in salary and 27 per cent in salary plus bonuses. Industries seeing very good growth in 2016 were high-tech and manufacturing, with salary increases of 9.9 per cent and 9.8 per cent, respectively.

■ According to the report, the average salary offered by domestic companies is 31 per cent lower than at MNCs. Does this mean domestic companies are still far behind their foreign counterparts?

Yes, the pay at domestic companies is still much lower than at MNCs, by 31 per cent on average. 

This is lower at the staff level (20 per cent) and higher at the managerial level (38 per cent or more). 

MNCs usually have higher requirements when hiring new employees, such as good English skills, experience in working at other MNCs, and a high level of competency. 

They offer much higher salaries in management positions to fairly compensate for their greater contribution to the company. Though paying less in general, domestic companies are willing to be more flexible in pay to attract talent from MNCs to help them to improve their systems.

■ Under the Mercer methodology, are there any differences between the salary report in Vietnam and other countries?

In compensation and benefits it is different by country. Regarding the survey results, Vietnam is the only country in the region that has two separate remuneration databases for clients: one for MNCs and the other for domestic companies, as there is still a pay gap of 31 per cent between these two groups.

■ What are the three leading factors that affect salary increases in Vietnam and how can the report benefit employers in recruiting and retaining talent?

The three leading factors affecting salary increases in Vietnam that companies should consider are: company profit or revenue from last year and next year; market practice (companies’ actual vs. pay policy or vs. market, and salary increases in the market); and inflation. In Vietnam, salary is the first factor in attracting talent and the third factor in retaining talent. 

Our reports provide benchmarking remuneration data for more than 2,500 jobs in the market, which helps companies benchmark with the market and design a competitive salary structure so that they can attract talent. 

Companies can also use our survey reports to review their salary, bonus, and long-term incentive schemes for talent retention purposes.

■ Given global integration, Vietnamese companies and the country’s workforce have their own pros and cons compared to others in the region. What are they and how can they be improved?

Vietnam currently has a “prime age” workforce with a lot of competitive advantages: low cost, young & dynamic, hard-working, and eager to learn. 

However, productivity and English skills are two key areas that need improvement in order for Vietnam to better compete with other countries’ workforces. Similar to other countries in ASEAN, our young workforce also lacks management skills. 

Solutions to be considered include offering adequate training in management roles at all levels, providing meaningful feedback in a constructive manner on a regular basis about the company culture and staff habits, or designing economic incentives so that employees at all levels, especially those in management roles, can benefit from them. 

These can serve as a “wake-up call” that spur leadership and management and encourage employees.

VN Economic Times