Higher salaries loom ?
Vietnam’s labour costs are set to rise on the back of the country’s growing foreign direct investment and rampant inflation. In the newly released Vietnam Salary Survey 2007 Aged Report, Navigos Group, Vietnam’s largest recruiting and integrated human resource solutions provider
, forecast that the average rate of salary increases in Vietnam for 2007 would range from a low of 8.5 per cent to a high of 15 per cent.
Navigos’ report emphasised that these predicted salary increases would be applicable to the entire market regardless of economic sector. At present, salaries vary wildly in different industries, companies, job categories and economic sectors.
“We hope that the report will help businesses get an overall view of the current labour situation, within the full context of changes in the economy. This way they can implement better salary strategies to retain staff,” said Winnie Lam, director of the HR Advisory Services at Navigos Group.
She said the data analysed included foreign direct investment (FDI) and the unemployment and inflation rates.
“New foreign-invested companies setting up in Vietnam cause an added pressure because most will hire candidates from the same sector, resulting in higher pay. For companies to survive in such an environment, they may need to further raise salaries to retain talent and beat the competition,” she said.
According to the Navigos report, in the first seven months of 2007, Vietnam’s FDI growth rate hit 49.7 per cent compared to 25.4 per cent in 2006.
As FDI steadily increased, the unemployment rate fell, moving from 4.8 per cent in 2006 down to a predicted 4.4 per cent in 2007.
In addition, the inflation rate - a factor seen as a “safety net” rather than a direct driver of salary increases in recent years - reached 8.3 per cent in the first seven months of this year and is forecast to rise further by the year’s end.
In response to the changes in the economy, the Ministry of Labour, War Invalids and Social Affairs (Molisa) said it had plans to raise the minimum salary for workers at foreign invested enterprises (FIEs) by 6-8 per cent per annum beginning next year.
This has caused concern among foreign investors.
The ministry also said the proposed rises were aimed to introduce a common minimum wage for Vietnamese workers at state-run, privately-run and foreign-invested enterprises by 2010. At present, the monthly minimum salary of a worker at an FIE ranges between $45-$55, depending where the enterprise is operating.
A survey conducted by the Japan External Trade Organisation (Jetro) on investment-related costs in major cities in Asia, released in June of this year, indicated that the monthly wage of workers and engineers in Vietnam had increased but at competitive rates.
According to the Jetro survey, the monthly wage of a Vietnamese worker in Hanoi and Ho Chi Minh City in 2006 was $155.75, only higher than Jakarta’s rate of $134.33 per month. The regional rate was $262.67 for 2006.
Meanwhile, the monthly wage for a Vietnamese engineer in Hanoi and Ho Chi Minh City last year was rated at $367.75, compared to the regional average of $624.93.
By Hoang Mai - Vietnam Investment Review - October 22, 2007.
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