Vietnam has one of Southeast Asia’s largest and most dynamic labor markets. With more than 50.3 million people currently employed and a consistently declining unemployment rate, Vietnamese workers are the pillar of the country’s economic and social development.
At present, Gen Z (born in 1997-2012) and Millennials (born in 1981-1996) account for the majority of the workforce at 54%, while Baby boomers (born in 1946-1964) make up 0.6%. By 2025, Gen Z will take up 25% of the total workforce.
The fact that a new generation of workers is now dominating the labor market has driven the business and workforce structures to undergo massive transformations. Add to that are the trends that ensued from the COVID-19 pandemic. Young workers have a different perspective on what drives their productivity and how they want their workplace to be.
While Gen Zs are the employees of the future, Vietnam’s older generation of workers remains a significant contributor to economic growth. For decades, they’ve pushed Vietnam to where it is today, and they continue to be the backbone of this storied country.
A recent report by Talentnet, the exclusive partner of asset management company Mercer, delved deep into the current status of Vietnam’s labor force — across generations, genders, and industries. The 2022 Talentnet-Mercer Total Remuneration Survey weighed answers from more than 483,000 employees across Vietnam to better understand the challenges they’re facing, what’s making them stay in a company, and their demands for more holistic benefits and sustainable development.
Here are some highlights:
Varying stressors for different segments
Differences in generations, genders, and social status impact the kind and level of stress workers confront daily. Working parents are said to be losing two days of productivity a week due to childcare and stress, which a recent article by VnExpress also highlighted. Especially for the 4.1 million factory workers, the lack of public kindergartens and the high costs of private education have caused a nursery crisis, adding to the stress working parents already feel at work.
For Gen Z employees, not knowing what the future holds for their jobs and careers is a major stressor. Meanwhile, baby boomers are concerned about their physical health and financial well-being — considering that most of them are still their family’s breadwinners.
For many females holding managerial positions, experiencing a “double-double” shift results in higher levels of cumulative stress. Employed mothers are often said to be working a ‘double shift,’ as they do their office jobs and then return to a home where they are responsible for childcare and house chores.
Any businesses will be in a winning position for the new future of work if they know how to listen to their employees and adjust the organization’s remuneration scheme and culture properly,” noted Talentnet.
Job security is top reason for staying
Employees have distinct reasons they accept a job offer, but there is a common reason they stay in a company: Job security.
The Mercer survey revealed that having a stable job from which they’d be unlikely to be dismissed is the most critical factor for Gen Y, Gen X, and Baby boomers. Having meaningful work, competitive pay, and professional development are also some of the reasons workers stay.
Gender-wise, female personnel are more concerned with well-being policies and flexible working hours. Men prioritize jobs with competitive salaries, advancement opportunities, and professional development.
Pay transparency is important
According to Mercer's talent trends report, 69% of employees say transparency is essential, but the majority of workers actually don’t know how much they are paid. About 80% of those earning more than the average think they are paid less or the same as the market pay range, while 64% of those who are paid at market, believe they have below-market pay and are more likely to look for other job opportunities.
Companies usually keep information about salaries confidential, but employees surveyed expressed that being aware of how they are paid results in more trust and confidence in employers. The report added that employees' perception of pay is 5x more impactful on engagement than how they are actually paid relative to the market.
Retail and real estate have highest turnover rates
It’s no secret how the pandemic affected companies in Vietnam. The border closures and monthslong lockdown forced businesses to reduce their workforce or had employees voluntarily tender resignations to look for greener pastures. Because of this, Vietnam saw its turnover rate for the first half of 2022 fall at 11.9% for local companies and 8% for multinational companies (MNCs).
“This number indicates that Vietnam is still experiencing ‘The Great Resignation’ for a variety of causes,” Talentnet noted.
The top three industries that posed the highest rate of resignations in MNCs are retail (15.6%), real estate (12.7%), and various manufacturing (10.1%). Inarguably, these industries have been the worst hit by the pandemic.
Oil and mining, renewable energy, and chemicals recorded the lowest turnover rates, the same as the previous year. The competitive pay in these industries is a vital factor for employee retention.
Local companies pay lower than MNCs
Vietnam has seen a steady decrease in its rate of pay growth since 2015. In 2020, the halt in almost all industry operations globally, brought the pay rate to its lowest point But compared to MNCs, Vietnamese-owned companies have been experiencing worse declines. Budgets for MNC pay rises increased by 0.2% in 2022 compared to 2021, while local Vietnamese businesses experienced a 0.3% decline.
It’s expected, however, that both MNCs and local companies will witness similar pay growth trends at 7.1% next year — thanks to a robust economic rebound and a more stable inflation rate.
According to the 2022 TRS report, the top three industry sectors with the highest salary increase are High-tech (up 8.88%), Insurance (up 8.2%), and Life-Science (up 7.6%). This signals the increasing influence of industry digitalization, with consumers and businesses now oriented towards technology applications, especially in healthcare.
Oil and mining (up 3.6%), various manufacturing (6.1%), and retail (up 6.2%) continue to have the lowest pay growth.
Seeing how retail has the highest turnover rate and the lowest pay growth indicates that the industry needs to “rethink their strategy of talent retention and acquisition for the future.”
Pawternity? Big yes.
Many companies in Vietnam are now offering hybrid working arrangements, allowing employees to work wherever they feel the most productive and creative. This trend, reinforced by the pandemic, has also paved the way for more disruptive demands from the workforce.
A 4-day work week or service awards have already been implemented by some firms in Vietnam and the Asia-Pacific region. Putting up a badminton court and karaoke — a pingpong table or a foosball to be more practical — is also becoming a trend.
For those with pets, having a pawternity leave benefit can be a game-changer. Many workers, especially those living away from home, care for their pets like family. Having that setup acknowledged increases employee satisfaction.
Many workers are calling for more holistic health packages that include employees’ families, gender-inclusive benefits, or weight loss programs. Having the assurance that their families receive healthcare benefits from their companies allows employees to be more focused at work.
Unlimited vacations or sustainable travel awards (rewarding employees with additional paid time off for choosing sustainable ways to travel) should also be considered by human resource professionals and business leaders.