[2023] Guide to Vietnam's Salary Trends and Strategies for Attracting Top Talent

Vietnam is expected to continue its long-term economic growth.

In recent years, the rising labor costs in Vietnam, along with the impact of the yen’s depreciation, have made “securing good talent at reasonable costs” one of the key challenges.

In this article, we have compiled various available data to provide an overview of “Vietnam’s salary trends and what Japanese companies should do now to secure top talent.”

Vietnam is gradually moving beyond being merely a cost-effective destination.

Without proper salary structures that align with the capabilities of local staff and market standards, companies may risk losing talented employees who contribute to the business.

Many companies may be conducting salary reviews around the 2024 Tet holiday. By reading this article, we hope you gain insights into understanding Vietnam’s appropriate labor cost standards and securing top talent.

 

Average Salaries for Japanese Companies Increased by About 8% Year-on-Year

According to JETRO’s “Business News,” the nationwide average monthly income in Vietnam during the second quarter of 2022 was 6.6 million VND (approximately 40,000 yen*).

This marks an 8.2% increase (500,000 VND) compared to the same period last year. Despite a temporary decline in average income in 2020, this represents a 13.7% increase compared to pre-COVID levels in 2019.

Moreover, the “2022 Survey on Japanese Companies in Asia and Oceania” reported that 75.2% of Japanese companies in Vietnam cited “employee wage increases” as a managerial challenge, indicating widespread concern among companies over the continuous rise in labor costs.

*Based on the VND/JPY exchange rate as of October 2023.

 

Source: JETRO Business News: “Employment Sees Slight Increase Centered on the Service Industry, Average Monthly Income Continues to Rise (Vietnam)”

 

Average Monthly Income by Position in 2023

According to the Vietnam Salary Survey Report conducted by ICONIC, which surveyed 227 local Japanese companies (with a total of 55,321 employees) in May, the rise in monthly income for white-collar workers has been particularly significant. Notably, the salary increase rate for executives in 2023 was 21.6%, significantly higher than that for department and section managers.

Even for non-managerial white-collar workers, salary increases were notable, with a 14.6% rise for senior staff and 12.5% for regular employees. This suggests that securing talented white-collar workers is becoming a critical focus for companies.

In contrast, the salary increase rate for blue-collar workers was around 6%, with the overall average being driven up by the higher wage increases for white-collar and senior management roles.

The borderline between non-managerial and managerial positions, based on the 75th and 25th percentiles, is approximately 32-33 million VND (195,000-201,000 yen) per month.

>>　Source: Free Guide to ICONIC 2023 Vietnam Salary Survey Report

 

Regional Salary Differences: A 54% Gap Between Urban and Rural Areas

According to a report based on the “2022 Household Living Standards Survey*” conducted by the General Statistics Office of Vietnam, the average monthly income per person in Vietnam was 4.673 million VND (approximately 29,000 yen) in 2022, a 2.3-fold increase over the past decade.

Regionally, urban areas had an average income of 5.945 million VND (approximately 36,000 yen), while rural areas had an average income of 3.864 million VND (approximately 24,000 yen), showing a 53.8% regional disparity.

The highest monthly average incomes by city or province in 2022 were 8.08 million VND (approximately 49,000 yen) in Binh Duong Province, followed by 6.42 million VND (approximately 39,000 yen) in Hanoi, and 6.4 million VND (approximately 39,000 yen) in Ho Chi Minh City, with Hanoi slightly surpassing Ho Chi Minh City.

JETRO’s “2022 Survey on Japanese Companies in Asia and Oceania” indicates that the average monthly income at Japanese companies in Vietnam was 6.6 million VND, about 40% higher than the national average in Vietnam.

*The report was conducted on 46,995 households across Vietnam and collected data on a wide range of items including income, expenditures, demographics, education, health, employment, housing, durable goods, and sanitation.

*Groups 1–5: Group 1 represents the lowest 20% income bracket, with subsequent groups divided every 20% up to Group 5.
>>　Source: JETRO Business News: Results of the 2022 Household Living Standards Survey; Diets Changing as Incomes Rise
>>　Source: THÔNG CÁO BÁO CHÍ KẾT QUẢ KHẢO SÁT MỨC SỐNG DÂN CƯ 2022

 

What Japanese Companies in Vietnam Should Do to Secure Top Talent

It is becoming increasingly important to have a solid HR system and salary design to prevent the exodus of talented employees who are now working for the company.

In addition, when looking to hire external talent, it is crucial to ensure that the company’s appeal and job satisfaction are effectively communicated online. This can be achieved by creating a recruitment page on the company website or by promoting the company’s values and activities on social media.

Whether conducting recruitment internally or using recruitment agencies, if candidates do not fully understand the company’s values, work environment, job satisfaction, and working conditions beforehand, they may leave soon after being hired due to a gap between their expectations and reality. Ensuring that candidates have a clear understanding of the company beforehand is essential for securing top talent.

On the other hand, we feel that many Japanese companies in Vietnam still lack comprehensive recruitment pages on their websites. Therefore, building a recruitment page now could be a key differentiator from competitors and a crucial point in attracting top talent.

 

Summary

In this issue, we have explained the salary situation of Vietnamese and the key points for securing excellent human resources.

The above information can be summarized as follows.

• Average monthly income of Vietnamese in Japanese companies is approximately 6.6 million VND.
• The annual salary increase rate is 6-8% compared to the previous year. (This varies depending on the survey report.)
• Although the rate of salary increase is on a declining trend, it is still at a high level compared to Japan.
• By position, raises are higher for executive-level and white-collar workers.
• There is a 54% difference in average monthly income between urban and rural areas.
• The average salary of Japanese companies is estimated to be about 40% higher than the average for Vietnam as a whole.

 

In light of the above, it is expected that the competition for excellent human resources will continue to intensify in Vietnam in the future. With many European, U.S., Korean, and Taiwanese companies entering the Vietnamese market, the competition for human resources will become even tougher.

In order to keep up with this competition, Japanese companies like ours should proactively communicate the appeal of working for our companies to future candidates, while designing appropriate organizations and salary structures.

At ALIVE Vietnam, we have extensive experience building recruitment websites and have accumulated the know-how to effectively convey the appeal of working at our clients’ companies.

If you are considering reviewing or creating a recruitment page to strengthen your hiring efforts, please feel free to contact us. We will provide you with the most suitable plan after thoroughly understanding your situation.

Thank you for reading until the end.

>> Contact ALIVE Vietnam for a consultation about building a recruitment website

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