Pay Rises Stay Ahead Of Inflation
October 8, 2012
The survey involved 371 multinational and big local companies from various industries, primarily consumer goods, hi-tech, manufacturing , chemicals, pharmaceuticals and financial services collecting remuneration data from 1,381 positions of more than 121,000 employees across Vietnam.
The survey involved 371 multinational and big local companies from various industries, primarily consumer goods, hi-tech, manufacturing , chemicals, pharmaceuticals and financial services collecting remuneration data from 1,381 positions of more than 121,000 employees across Vietnam. Being seen as the biggest and the most comprehensive salary report in Vietnam for 13 consecutive years, in 2012, the Mercer-Talentnet salary survey report has one additional new industry for clients to refer to which is Real Estate industry.
Ms Hoa Nguyen, the leader of Mercer Remuneration Surveys & HR Consulting from Talentnet said, different from last year when salary increase was lower than inflation, in 2012, salary increase is higher than the 9.5% forecasted inflation. Multinational companies give employees an average of 13.0% salary increase while local companies give a slightly higher salary increase of 13.3%.
When comparing the difference in pay between different industries among multinational companies, according to the survey, employees working in oil and mining industry, then banking industry receive the highest and the second highest salary. On the contrary, employees working in manufacturing industry, then transportation & logistics industry receive the lowest and the second lowest salary, according to the survey.
In terms of salary increase by industry, among multinational companies, manufacturing industry being the lowest pay industry, provided the highest salary increase rate at 13.7%. Still having quite good business performance compared to other industries, pharmaceuticals and chemical industry provided the second highest salary increase, both at 13.5%. Due to less market demand in difficult business condition, the financial services industry which include fund management sector, business consulting sector, and consumer finance sector has the lowest salary increase rate at 11.3%.
The survey indicated that local companies who often consider inflation as an important factor for salary increase, provided the lower salary increase rate than last year. In order to gradually reduce the big gap in pay of top management level with multinational companies, local companies provide a very high salary increase rate to their top management level, at 16.9% compared to 13.2% of other levels. Different to local companies, multinational companies provide not much difference salary increase rate for different employee levels. They only provide slightly higher salary increase rate to their blue colar workers at 13.6%.
When comparing pay between big local companies and multinational companies, in general, there is still quite a gap between them. While the gap is only 19% lower at staff level, it’s is gradually wider at professional level, 25% lower, and much wider at management level, up to 30% or more lower. However, since local companies often have higher portion of bonus as number of monthly salary compared to foreign companies, when comparing total income which include salary and bonuses, the gap between local company and foreign companies is smaller. Currently, to attract talents from multinational companies, local companies often have to pay outside of their salary range.
Knowing that there is still a gap in pay, big local companies who compete for talents directly with multinational companies, are closing it by gradually improving their salary especially for management level. “However, it would take a number of years before big local companies’ pay catches up with multinational companies’ pay. For now, to attract talents, motivate and retain hi-performers, hi-potential employees, local companies often use long term incentive tool such as stock grant, stock option, long term cash… ”, Hoa said.