Vietnam to see strongest wage growth in southeast Asia next year, says Mercer report
Author: PM editorial | Date: 14 Dec 2016
Country helped by a thriving tech sector described as a “breeding ground for technical talent”
Vietnam will be the southeast Asian country with the strongest wage growth next year, according to Mercer’s Compensation Planning for 2017 report.
Nominal wage growth in the country is expected to hit 9.2 per cent, closely followed by Indonesia at 8.9 per cent.
It is ‘emerging economies’ that are forecast to enjoy the greatest salary increases, whereas the more mature economies of Hong Kong and Singapore are both expected to grow by just over four per cent.
Although forecasts for growth are variable between industries, the strongest sectors in Asia are likely to be life sciences and chemicals.
Leading the way in Vietnam’s ebullient economy is the technology sector, helped by a young, tech-savvy working population. Asian news and technology website Techwire recently reported that Vietnam’s tech sector is thriving and described the country as a “breeding ground for technical talent.”
Neil Fraser, a Google engineer, visited schools in Vietnam and was impressed by the engineering skills of the students. “Vietnam has the highest-performing computer science students I’ve ever encountered […] the exercises I watched them solve would be considered challenging problems for a Google hiring interview,” he said.
Despite overall salaries being expected to grow strongly, earlier this year Vietnam raised its minimum wage by the lowest rate in over a decade. International charity Oxfam expressed concern that wages at the lower end of the scale were being depressed to attract foreign investment.
Also included in Mercer’s wage growth projections for 2017 were Malaysia and Thailand at 5.5 per cent each, Korea at 4.5 per cent and Taiwan at 3.8 per cent.
Puneet Swani, partner and growth markets talent leader at Mercer, said that increased competition for talent throughout the region was a major contributing factor, especially in finance. “Changing business models and restructuring in financial services has meant that the sector may not be hiring at rates seen in the last three years, but we continue to see the highest level of pay increases as retaining high-performing talent has become even more critical," he said.