Salaries in Vietnam are forecast to rise an average of 9.2% in 2015, down a fraction from 2014, before inflation is taken into account, according to Towers Watson Vietnam's Total Rewards Survey 2014.
The survey highlights an average increase of 9.6% in 2014, down from 11.7% last year. The general industry average staff turnover rate is reported at 12.7%, higher than the median of 11%.
After inflation is built in, it is set for a 3.1% increase, making Vietnam one of the leading countries in East Asia for salary increases in 2015, according to the recent APAC Salary Budget Planning Report.
By sector, the pharmaceutical industry is highest in terms of overall salary increases with 11.2%, but at the same time, it has the highest staff turnover rate at 15.9%.
The insurance industry is lowest in pay increases with only 7.2% yet ranked high in turnover rate with 13.9%, followed by financial services at 13.6%.
"As the salary-increase budgets stabilize, companies need to carefully evaluate where to spend their limited funds for the next year," says Trang Vu, Global Data Services practice manager, Vietnam at Towers Watson. "Differentiating between your crucial skill talent, high potentials and average performers is becoming more essential than ever to ensure the best use of your budget.”
“We’re seeing a pick-up in economic growth in Asia Pacific in the coming year against a backdrop of declining unemployment, which will create inflationary pressures,” said Huynh Thu Huong, General Director, Towers Watson Vietnam.
“The challenge for companies in Vietnam is to keep employees engaged, and staff turnover down, while not getting caught up in a pay-inflation spiral.
"From our Global Workforce Study, we know that, whatever people say, base salary is the number one driver for attracting and retaining highly skilled staff, so a fine balance needs to be found.”