Salary Increment Rate Of 2021 Is The Lowest In 10 Years
October 29, 2021
According to Talentnet's report, the salary budget growth rate in 2021 is 6.2% (for foreign businesses) and 6.3% (for Vietnamese businesses), and it is predicted to increase to 6.7% (group of foreign enterprises) and 6.5% (group of Vietnamese enterprises) by 2022.
Talentnet recently hosted the webinar Rewards Summit 2021, themed “Rewards Transformation in The New Now.” Presenting the results of the Total Remuneration Survey (TRS) conducted by Talentnet – Mercer is the purpose of this yearly event. With 597 businesses in 16 various industries (high-tech, manufacturing, consumer goods,…) participating in the survey in 2021 alone, it is the largest compensation and benefits survey in Vietnam.
As per the report, due to the epidemic’s impact, 6.4% of foreign companies and 7.7% of local firms would not raise pay in 2021. This rate has dramatically decreased as compared to the previous year, when the salary freeze rate was 14 % (external enterprises) and 34 % (domestic enterprises).
By 2022, it is predicted that 3.4% of foreign firms and 2.2% of Vietnamese companies will continue to maintain unchanged salaries.
However, when compared to 2020, the rate of salary increment in foreign firms declined (6.6% in 2021 compared to 7.2% in 2020), and it is predicted to climb again to 7.0% in 2022. Conversely, this ratio in Vietnamese enterprises has only marginally increased (6.8% in 2021 versus 6.5% in 2020), and it is projected to fall insignificantly to 6.7% in 2022.
According to Talentnet‘s report, the rate of salary budget growth in 2021 is 6.2% (for foreign businesses) and 6.3% (for Vietnamese businesses), and it is predicted to increase to 6.7% (group of foreign enterprises) and 6.5% (group of Vietnamese enterprises) by 2022.
The pay growth rate continues to decline in comparison to 2020, particularly in businesses that have increased compensation or expect to do so this year. More specifically, it is 6.6 % in the group of foreign firms (opposed to 7.6% in 2020) and 6.8 % in the group of Vietnamese companies (compared to 7.9% in 2020). This is the lowest pay increment in more than a decade, despite a 2.8% inflation rate and a 3.8% GDP growth rate in Vietnam.
Pay disparity between multinational and Vietnamese-owned businesses
On average, the annual base salary differential between local firms and multinational companies is around 35% lower in 2021, as shown in the survey results. The disparity is more considerable at senior positions, in which the highest gap is at the management level (41%), the second is at the specialist level (33%).
Voluntary turnover rate
Vietnamese enterprises continue to have a greater turnover rate than multi nationals, with a rate of 10.1%, a difference of around 3 %. Retail (29.7%), non-banking financial companies (22.9%), consumer goods (17.7%) are the top three sectors with the highest percentage of people quitting their jobs. Similarly to last year, the top three companies with the lowest turnover rate were petroleum, chemical and supply.
Hiring intentions for 2022
With Vietnam’s gradual economic opening, 38% of businesses intend to expand their workforce in 2022, while 38% intend to maintain their current staff. The top 5 industries predicted to increase the number of employees in foreign enterprises are Finance – Non-banking, Insurance, Finance – Banking, Agriculture, and Transport & Logistics.
On the other hand, only 3% of the businesses polled have plans to reduce their workforce. The remaining 21% of companies do not have a clear recruitment plan in place for this year.