VietNamNet Bridge – Salary increases this year are much lower than inflation rates, a survey by Mercer, the leading global provider of human resource services and its associate, Talentnet Corporation, has found.

The survey involved 329 companies from various 12 industries, primarily consumer goods, financial services, high-tech, chemicals, manufacturing and pharmaceuticals, compared to 253 polled companies last year.

Speaking at the Post Total Remuneration Survey seminar in HCM City yesterday, Hoa Nguyen, leader of Mercer Remuneration Surveys and Human Resource Services, said even though inflation was expected to reach 20 per cent this year, multi-national companies here can only give employees an average of 13.3 per cent in salary increases this year due to budget constraints.

Local companies provided higher salary increases this year of 19 per cent due to the devaluation of the local currency against the greenback and high inflation in an aim to catch up gradually with multinational companies, she said.

The survey found that blue-collar workers enjoyed the highest salary increase of 14.1 per cent compared to the average of 13.3 per cent for all other levels since they were the most affected level due to high inflation.

With regards to salary increases by industry, the pharmaceutical industry reported the highest level of increase at 14.1 per cent, followed by transportation and logistics and chemical industry, at 14 per cent and 13.9 per cent, respectively.

Conversely, the hi-tech industry had the lowest salary increase at 12.5 per cent. This also included one company in the financial service sector which had a salary freeze.

"With high inflation, employees often have concerns about an increased cost of living and would expect companies to give higher salary increases to make up for it," she said.

"However, on the employer's side, companies cannot pass on most of their business input increases to their product or service price, and most of them don't have a salary budget that is big enough to provide much higher salary increases than planned," she added.

"Due to high inflation this year, besides raising salaries, many enterprises have plans to provide allowances to levels that are most affected by high inflation," she said.

The survey showed that the benefit practice development is almost the same as last year, except the increase in healthcare coverage for employee's dependants.

In Viet Nam, as well as in other emerging markets, employee retention is a big issue for businesses since emerging markets are short of talent, especially for positions in management and above.

Competitive guaranteed cash was ranked as the most important factor in employee retention.

Thus, to retain key talent, Hoa said that companies must compare their remuneration with the market and maintain competitiveness in pay.

Competitive bonus was the second most important factor.

"While inflation is projected to be much lower in 2012, salary increases forecasted for next year will be almost as high as this year, at 13.2 per cent on average," Hoa said.

Salary increase from companies guaranteed in US dollars for next year is expected to be 11.6 per cent on average, compared to this year. From companies guaranteeing salary in VND, it would be 13.7 per cent on average.

The forecast for salary increases from local companies calls for 19.4 per cent on average.

Three-quarters of polled companies said that they planned to increase their employee head-count in the next 12 months.

Hi-tech, pharmaceutical, trading, insurance and manufacturing industries are expected to hire more people than other industries, she said.

Most participating companies have found marketing and sales managerial positions difficult to fill, she said, adding that companies would also have difficulty in recruiting and retaining finance and human resources managerial positions.

VietNamNet/Viet Nam News