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The Vietnam News

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Vietnam sees strong salary growth

Foreign and local employers in the country’s major economic hubs have been competing to attract skilled workers by continuously offering higher salaries, shows a survey. David Jensen, project manager of Vietnam Salary Survey 2005, said at a seminar in Ho Chi Minh City yesterday that offering high salaries was a vital tool for enterprises to attract workers.

The survey, the largest ever undertaken in the country, found wages in Vietnam are not only keeping pace with, but in many cases are exceeding the country’s economic growth rate. Blue-collar workers registered a 7.8 % increase in annual base net salary between 2004 and 2005, while white-collar jobs, including general staff, professionals and management, all averaged an annual base net salary rise in excess of 10%. This result is higher than in other regional countries. Another significant finding is the enormous impact of education on earning potential, Jensen told the seminar, attended by more than 400 business managers and human resources professionals from across the country.

Individuals with basic technical certification are paid 42% higher than those with only a high school education on average. A college degree, in turn, corresponded to an additional 51% increase in earning potential. Even more impressive, individuals with a university degree were found to earn 103% more than those with only a college degree. Jensen said, “These education-income gaps are significant because they suggest that an education has almost an exponential effect on opportunities for promotion and career development, and a higher standard of living.”

The survey, sponsored by Navigos Group and VietnamWorks.com, found that salaries are increasing more rapidly in local companies than in foreign companies. Although foreign businesses pay as much as 34% higher than local businesses, the annual salary increase by Vietnamese companies in 2004-2005 was 2-3% higher than that of foreign companies. “This trend is a positive signal for the local economy, especially as local businesses try to raise their competitiveness in preparation for heightened integration into regional markets and Vietnam’s eventual entry into the World Trade Organisation,” he said.

Jonah Levey, managing director of VietnamWorks.com and Navigos Group, said compensation and benefits are typically a business’ single largest expense yet there had been surprisingly little research done to date on salary data for the Vietnam labour market. Market information on salary levels is critical in determining how much companies need to pay to keep their best staff, he said. “Competition for skilled labour is increasing rapidly and most businesses are at risk of losing their best people who may leave for a bigger paycheque.” A comprehensive and locally relevant salary survey should be a part of every company’s toolbox to develop effective recruiting, retention and compensation policies, he said.

Vietnam Salary Survey 2005 gathered detailed compensation and benefit data from 208 leading foreign and local businesses, including more than 35,000 employees located in all major business and industry centres of the country.

Vietnam Economic Times - July 04, 2005.