Foreign firms cannot keep talent despite pay hike
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Companies continue to hike wages to retain talent but are not succeeding, a bi-annual survey by US-based Towers Watson Vietnam has found.
The survey of 167 foreign-invested enterprises (FIEs) in nine industries in Vietnam as of March 1 found that with employee turnover increasing by 2 percent year on year to 17.8 percent, the war for talent has intensified.
The pay gap between industries has widened due to the need for specialized talent, the survey, which polled manufacturing, financial services, high technology, pharmaceutical/healthcare, fast moving consumer goods (FMCG), trading, chemicals, petrochemical/oil and gas, and others, said.
Accordingly, the average salary increase by employee level varied from 14.4 to 16.4 percent in 2011, and projected increase for 2012 varied from 13.5-13.9 percent.
In terms of average salary increase by industry, manufacturing, trading, and FMCG enjoyed the highest rates of 16.1 percent, 15.1 percent, and 15 percent in 2011.
Next year chemicals and high technology are projected to enjoy the highest rises at 14.7 percent, followed by FMCG and pharmaceutical/healthcare with 14.2 percent.
Pharmaceutical/healthcare, FMCG, and manufacturing saw the highest staff turnover at 20.2 percent, 19.4 percent, and 17.7 percent respectively.
The labor market trend in Vietnam reflects a sustainable economic recovery, the survey said, since hiring projections continue to rise.
The average hiring trend for all levels for 2012 is 83 compared to 63 in 2011, of which the employment of clerical/general staff and officer/supervisor/technical staff will see the strongest growth of 89 and 21 compared to 74 and 17 this year respectively.
The trend will focus on sales, marketing and manufacturing with a growth of 21.8 percent, 10.4 percent and 9.1 percent respectively.
Training and development is the key reason (61.1 percent) for the increase in HR budgets, followed by introduction of new benefit policy (53.3 percent) and upgrade of HR functional capacity (3.9 percent).
Towers Watson’s report, the May 2011 HR Market Trends Survey, holds a positive view on long-term economic growth, saying business expansion will continue and competition to retain talent remains fierce.
Major concerns related to career development, including leadership development and succession and salaries will continue to rise with incentives being used increasingly as a motivational tool, it adds.
“Organizations should have a positive approach to the 2011 salary budget preparation, be open to add increments for key talent, and be able to adopt more flexible and practical ways to attract and retain talent,” Mark Mamalateo, Towers Watson’s project manager for data services, Asia-Pacific region, said.
“Focusing on tailor-made career development programs and designing medium- to long-term performance rewards are keys to keeping high performers and transform them into next generation leadership candidates,” he said.
Towers Watson has carried out its semi-annual salary surveys in Vietnam for the last seven years.
