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Vol. 1 | Understanding Vietnam’s Labor Market in 2026
As part of the Vietnam Salary Survey 2026 campaign, we are launching a special 10-part series: “Vietnam Compensation Strategy: 10 Key Issues that Define HR Decision-Making.”
This series explores the key labor market and compensation trends shaping business and HR decisions in Vietnam today.
In this first edition, we examine how tariff uncertainty, the China Shift, and AI adoption are reshaping Vietnam’s labor market — and why a more precise understanding of talent dynamics is becoming critical for compensation strategy in 2026.
Vietnam’s Economic Outlook: Short-Term Uncertainty, Long-Term Momentum
Recent changes in US tariff policy have created concerns across export-oriented industries in Vietnam. Sectors such as textiles, electronics, furniture, and manufacturing have responded cautiously, with some companies delaying hiring plans or reducing investment activity.
However, Vietnam’s long-term advantages remain strong. The country continues to benefit from factors supporting the ongoing China+1 strategy, including:
- A young and competitive workforce
- Improving infrastructure
- Open trade policies
- Relative geopolitical stability
Foreign direct investment (FDI) remains resilient, and Vietnam maintained GDP growth above 7% in 2025, reinforcing confidence in its long-term economic outlook.
At the same time, the labor market itself is becoming far more segmented. Hiring conditions can vary significantly depending on the industry, region, and job function involved.
Manufacturing: Growth Continues, but Hiring Needs Differ by Region
According to ICONIC’s Vietnam Manpower Planning Forecast Report 2026, based on a survey of 123 companies operating in Vietnam, most manufacturing companies still plan to increase headcount.
However, hiring priorities differ considerably between Northern and Southern Vietnam.
In Southern Vietnam, companies are mainly focused on securing production workers and factory operators to support ongoing operations.
In Northern Vietnam, hiring demand is shifting toward higher-skilled technical roles, including:
- Production engineers
- Automation engineers
- R&D positions
- Advanced manufacturing specialists
This reflects the growing concentration of high-value manufacturing investment in the North as global companies continue diversifying supply chains beyond China.
Despite these differences, labor shortages remain a common challenge across both regions, and competition for manufacturing talent continues to be intense.
IT Sector: A Rapid Shift in Supply and Demand
Vietnam’s IT labor market is also undergoing major changes.
After years of severe talent shortages, the sector is beginning to rebalance due to two key factors:
- Global layoffs in the technology industry
- The rapid adoption of AI-powered development tools
As a result, demand for some IT-related positions is expected to slow over the coming years. In particular, roles focused on IT interpretation and translation are becoming more vulnerable to AI replacement.
Demand for software engineers is also softening compared with previous years. Some companies now report receiving dozens — or even hundreds — of applications for a single engineering position, a situation rarely seen in the past.
However, demand remains relatively stable for positions that combine technical expertise with communication and coordination capabilities, such as:
- Bridge SEs
- IT project managers
- Client-facing technical roles
These functions still rely heavily on human interaction, stakeholder management, and problem-solving skills that are more difficult to automate.
White-Collar Hiring Is Becoming Increasingly Polarized
One of the clearest trends emerging in 2026 is the growing divide between white-collar job functions.
Across industries, hiring demand for sales and business development roles remains strong, particularly in the trading sector. Companies are also actively seeking service engineers who can provide technical support while maintaining customer relationships.
These roles continue to see strong demand because they require:
- Relationship-building
- Commercial judgment
- On-site problem-solving
- Customer interaction
At the same time, demand for specialized engineering talent is rising in several sectors.
In the CAD and BIM outsourcing industry, talent shortages in Japan are driving increased offshore demand in Vietnam. Many companies are planning significant expansion of CAD/BIM operator teams over both the short and long term.
Construction and real estate companies are also maintaining strong hiring demand for:
- Project managers
- Construction engineers
- Site management professionals
Meanwhile, back-office functions are facing a different reality.
AI-driven efficiency improvements are accelerating changes in functions such as:
- Accounting
- Administration
- General affairs
- Sales support
More companies are beginning to review workforce structures and consider headcount optimization in these areas.
According to the survey, the job functions viewed as most exposed to AI replacement risk are:
- Interpretation and translation
- Finance and accounting
- Sales administration
Interestingly, companies in Northern Vietnam show significantly higher awareness of AI-related restructuring risks in finance and accounting compared with companies in the South.
For HR leaders, this highlights an important point: broad “white-collar” classifications are no longer sufficient for compensation planning. Hiring pressure and market competitiveness now vary significantly by function and capability.
Why Precision Matters in Compensation Strategy
One of the biggest mistakes companies can make today is treating Vietnam’s labor market as a single, uniform market.
An automation engineer in Bac Ninh, an IT communicator in Ho Chi Minh City, and a CAD operator in Da Nang are all operating under very different market conditions. Talent availability, salary pressure, hiring competition, and turnover risks vary significantly across these roles.
As companies prepare salary reviews, update pay structures, and plan workforce budgets, compensation decisions need to reflect these differences more accurately.
The ability to analyze the labor market by:
- Job function
- Seniority level
- Industry
- Geographic location
is becoming increasingly important for making effective HR and compensation decisions.
In 2026, organizations that understand these market nuances will be in a much stronger position to attract, retain, and manage talent effectively.
To Stay on Top of the Latest Vietnam Pay Data, Join the Salary Survey
Now in its 17th year, the Vietnam Salary Survey has become one of the country’s most established compensation benchmarking studies, with 392 participating companies in the latest edition.
The survey provides organizations with practical market data to support:
- Compensation benchmarking
- Salary review planning
- Workforce budgeting
- Talent retention strategies
- HR decision-making
Participating companies receive access to detailed survey findings and additional benchmarking resources.
📍 Next Issue Preview (Vol. 2)
“Pay Compression in Vietnam: When New Hire Salaries Catch Up with Existing Employees”
As labor market conditions shift, many companies are facing a growing compensation challenge: the salary gap between newly hired employees and existing staff is narrowing — and in some cases, disappearing altogether.
Known as “Pay Compression,” this issue can affect employee engagement, retention, internal equity, and overall compensation effectiveness.
In the next issue, we will examine:
- What is driving pay compression in Vietnam
- The business and HR risks companies should be aware of
- Practical approaches to managing pay compression strategically
