Why is Compensation Management a priority in Vietnam?

We’re excited to launch our 10-part executive series: 

"Compensation strategy in Vietnam: Essential insights for business leaders"

As Vietnam continues to evolve into a competitive and rapidly developing economy, managing compensation is no longer a routine HR function — it’s a critical component of business strategy. 

Each week during the 2025 Vietnam Salary Survey, ICONIC will share insights designed to help senior leaders make more informed, future-ready decisions.

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A growing economy — and rising labor costs

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Vietnam’s economy remains one of the strongest performers in ASEAN. With continued investment, industrial expansion, and urbanization, the country presents significant opportunities for growth.

However, that growth brings new pressures. Labor costs have increased steadily over the last decade. In Region 1 — including Ho Chi Minh City and Hanoi — the regional minimum wage has more than doubled, from VND 2.35 million in 2013 to VND 4.96 million in 2024.

This sharp rise underscores a reality that business leaders can no longer ignore: compensation strategy is directly linked to profitability, workforce stability, and long-term scalability.

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Vietnam’s labor market: Fast-moving and highly competitive

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Beyond cost, Vietnam’s labor market has structural characteristics that demand a more agile and proactive compensation approach:

1. High workforce mobility

Top performers are highly career-oriented and frequently change employers in search of better opportunities. The average job tenure for skilled professionals is short — typically 2 to 3 years — creating constant pressure on companies to rehire, retrain, and rebuild teams.

2. Unpredictable salary movement

Salary expectations shift quickly and vary widely by sector, level, and economic outlook. In recent years, the average annual salary increase has fluctuated from 10% down to 5%, depending on industry and labor supply.

In such a fluid environment, rigid salary structures and outdated benchmarks put businesses at a disadvantage. Successful organizations are those that continuously monitor the market and recalibrate their compensation systems accordingly.

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Compensation as a Competitive Advantage

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The ability to attract and retain high-caliber talent is now a critical differentiator in Vietnam’s business landscape. According to the Vietnam Talent Trend Report 2025:

• 63% of employees resign due to compensation concerns
• 73% of candidates identify salary as their primary decision factor when choosing a new job

These numbers reflect a clear shift: compensation is not just a cost — it’s a value proposition.

Forward-thinking companies treat compensation as a strategic system — one that supports business performance, reinforces employer brand, and enhances organizational resilience.

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The First Step: Benchmarking your compensation

To compete effectively in this talent-driven environment, businesses must first understand their current market position.

Participating in the 2025 Vietnam Salary Survey provides access to a complimentary executive summary outlining key salary benchmarks of the latest Vietnam’s labor market. This data will enable your leadership team to:

• Assess the competitiveness of your current compensation level
• Identify areas of misalignment to the market and potential talent risk
• Make informed, strategic and right compensation decisions for 2025

📍Coming up in Part 2

“Is your salary table outdated?”
Discover how outdated salary table create business risk — and how to bring your strategy in line with today’s labor market.
👉 Stay informed. Stay competitive.