Oct 13, 2012

Vietnam - Pay rises stay ahead of inflation

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HCM CITY (VNS) — Salary increases this year have in general been higher than inflation a rate, a new survey has found.

The survey was carried out by Mercer, a global provider of human resource services and its associate, Talentnet Corporation.

Speaking at the Post Total Remuneration Survey seminar held in HCM City last week, Hoa Nguyen, head of Mercer Remuneration Surveys and Human Resource Consulting Service, said even though inflation was forecast at less than 10 per cent for 2012, companies had offered employees salary increases of around 13 per cent.

"Workers can expect even better remuneration next year when inflation falls further to about 5.9 per cent," she said.

Puneet Swani, Market Business leader for Mercer's Asean Information Product Solutions, said: "Typically, the salary increase has been 1-2 percentage points above the inflation rate. Last year was an exception, when we saw an unacceptable level of inflation; businesses could not match that high a rate."

With salary increases last year much lower than inflation rates, companies gave extra allowances to cover the gap, he said.

"This year, when inflation has come down to a more manageable level, salary increases have returned to the normal trend," he said.

According to the survey, multinational companies (MNCs) provided employees with an average 13 per cent in salary increase, while the raise offered by local companies was slightly higher at 13.3 per cent.
The raise forecast for next year is 12.7 per cent for MNCs and 13.2 per cent for domestic firms.

Hoa said that besides individual and company performance, market competitiveness was becoming a more important factor affecting salary increments at MNCs and local companies.

However, job level, inflation and length of service play a more important role in salary increments at local companies than in MNCs, she said.

For salary increases by staff category at MNCs, the survey found that blue collar workers enjoyed the highest increase of 13.6 per cent compared to the overall average of 13 per cent.

MNCs found it difficult to recruit and retain blue collar workers last year, so they tended to offer them higher salary increases this year, Hoa explained.

At local companies, executive levels got the highest salary increase at 16.9 per cent since the firms were competing with MNCs in attracting talents, she said.

"With regard to salary increases by industry, in general, more industries have provided salary increases than last year," she said.

The manufacturing industry had the highest level of increase at 13.7 per cent, followed by the pharmaceutical and chemicals industries at 13.5 per cent, and trading and consumer goods industry at 13.4 per cent.

The trend is expected to continue next year with the manufacturing and hi-tech industries forecasting the highest salary increases at 13.7 per cent.

Conversely, companies in banking, financial services and transportation and logistics industries have this year provided a lower salary increase than last year due to difficult business conditions.

The difference in pay between local and MNCs still remains high. It was 33 per cent higher for executive positions at MNCs, 30 per cent at the management level, 25 per cent at professional position and 19 per cent at para-professional level.

The survey also pointed out that oil and mining and banking industries are still the top two industries in pay scale, while manufacturing and transportation and logistics industries remain the two industries that pay the lowest.

Hiring intention for the next 12 months is slightly lower than last year, with 68 per cent of the companies planning to add headcount and three per cent, mostly from the banking, oil and mining and consumer goods industries, planning to reduce their staff strength.

The survey showed that benefit practices development at MNCs are almost the same as last year, mainly focusing on accidental death and dismemberment insurance and inpatient and outpatient healthcare.
Meanwhile, there has been an increase in local companies offering benefit practices development, the survey found.

Survey respondents said sales manager, marketing manager and sales executive were the most challenging positions to recruit and retain.

A total of 371 companies from 13 industries, including consumer goods, hi-tech, manufacturing, chemicals, pharmaceuticals, financial services, and oil and mining took part in the survey.


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