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Average wages at multinational and domestic enterprises in Vietnam expanded only 6.5 percent and 5.2 percent this year respectively, the lowest levels in a decade, according to a report by human resources solutions firm Talentnet Vietnam and American human resources consulting firm Mercer.
Over the past 10 years, average salaries in both groups had risen at least 8 percent a year, the report said.
The report surveyed 600 businesses in 16 different industries including technology, consumer goods, pharmaceuticals and manufacturing. Average wages were calculated off the firms’ total salary budget for each year.
According to the report, 14 percent of multinationals surveyed said there will be no increase in employee salaries this year, and 34 percent of domestic firms said the same. Six percent of multinationals and 3 percent of domestic enterprises also said they will continue to implement the same "austere" approach in wage policies next year.
In 2020, the sectors with the highest wage growth have been insurance with 8.7 percent, hi-tech with 8.5 percent, and pharmaceuticals with 8.4 percent. These are sectors least affected by the COVID-19 pandemic, Talentnet said.
Meanwhile, the oil and gas industry recorded the lowest salary growth rate at 2.1 percent, followed by banking with 5.6 percent, and processing with 6.5 percent.
Although almost all companies said they were tightening their purse strings, many said they are willing to give special bonuses to employees who play a key role in their business. As many as 69 percent of companies surveyed said they will pay such bonuses in a lump sum by year-end, while 13 percent said they were doing this quarterly, and another 13 percent were doing it monthly.
Due to specific industry characteristics, businesses surveyed in the financial sector including banks, consumer lending companies and fund management companies were handing out the highest performance-based rewards, with bonuses ranging between 20-20.4 percent of annual basic salary, the report said.
As of last year, Vietnam had one of the lowest average wages in the Asia-Pacific Region. An average Vietnamese worker earned $242 per month in 2019, compared to the regional average of $1,801, according to recruitment firm ManpowerGroup’s annual Total Workforce Index 2019.
Minimum wage proposed to remain unchanged in 2021
|Workers at a garment factory in Hanoi. Photo by Shutterstock/Jimmy Tran|
The National Wage Council has advised the Government to keep the minimum wage unchanged until the end of 2021 instead of raising it as planned.
The council said this was due to the number of enterprises that had been heavily affected by the COVID-19 pandemic and were facing financial difficulties, according to Vietnam News.
Holding the current minimum wage would create favourable conditions for enterprises to recover and ensure the livelihoods of employees, it said.
Currently, the minimum monthly wage is VND4.42 million ($191) for employees in Hanoi and HCM City, and VND3.92 million ($167) for those in major urban areas in Can Tho, Da Nang and Hai Phong.
In Bac Ninh, Bac Giang and Hai Duong provinces, the level is set at VND3.43 million ($146) a month, while employees in the rest of the country receive a minimum of VND3.07 million ($131).
Regional minimum wages have been applied since January 1, 2020.
The labour market has been evaluated as unstable this year. In the first six months, about 1.2 million labourers were unemployed, of which over 451,600 were young people, accounting for 36.8 percent of the total.
The unemployment rate has reached its highest level in five years due to declining demand. More than 11.6 percent of enterprises were forecast to reduce their workforces in the third quarter of this year.
|Currently, the minimum monthly wage is VND4.42 million ($191) for employees in Hanoi and HCM City, and VND3.92 million ($167) for those in major urban areas in Can Tho, Da Nang and Hai Phong. Photo: VNA|
The National Wage Council assessed that enterprises were facing many difficulties. In particular, the export sector was the hardest hit with multiple contracts broken in the third quarter of this year. The export outlook for 2021 remains unknown.
Notably, 84.8 percent of enterprises said they had encountered financial difficulties due to the impacts of COVID-19. Large and medium-sized firms appear the most vulnerable to the pandemic.
The majority of enterprises have been forced to implement measures such as reducing staff, rotating workers, unpaid leave or reducing wages.
The Government has been encouraged to implement measures to facilitate the economic recovery and business production, and ensure employment for workers. It has so far launched three support packages on tax exemption and reduction, credit support and social security worth VND62 trillion ($2.64 billion) to help both enterprises and labourers to overcome difficulties caused by the pandemic.
As a result the National Wage Council recommended the minimum wage should remain unchanged. Labourers, enterprises and the State should work together to ensure livelihoods and create favourable conditions for businesses to overcome these difficulties towards an economic recovery./.
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