Highlights of 2018 TRS Results - by Hoa Nguyen

POST SURVEY
SEMINAR
th
Ha Noi – 11 October 2018
th
Ho Chi Minh - 12 October 2018
Ms. Hoa Nguyen
Senior Director, Talentnet
CONFIDENTIAL
The content of this material is intellectual property of Talentnet-Mercer and is intended to be sent to participants of Talentnet-Mercer's
Total Remuneration Survey
© Copyright 2018. All rights reserved 1 Talentnet in association with Mercer
only. Distribution of this material in any form without written consent from Talentnet-Mercer is strictly prohibited.
CONTENT
Economic
Overview
Compensatio
n & Benefits
Trends
Other Trends
© Copyright 2018. All rights reserved Talentnet in association with
Mercer
VIETNAM ECONOMIC AND POLITICAL OVERVIEW
2018 Estimated: GDP 6.9%, Inflation 4.0%
2019 Forecast: GDP 6.8%, Inflation 4.5%
Policy has been focused on further economic

liberalization and strengthening the banking sector
in order to foster a more transparent investment
environment
The Government committed to pushing on reforms

to the SOE sector, intellectual property rights, e-
commerce and the digital economy
FDI continues to be the long-term growth driver.

Currently, Vietnam has 10 free trade agreements
(FTAs) in force which play an important role in
boosting FDI inflow and Vietnamese trade
© Copyright 2018. All rights reserved 3 Talentnet in association with
Mercer
VIETNAM WORKFORCE OVERVIEW
Vietnam holds strong as a low-cost manufacturing
hub, thanks to cost-competitive but increasingly
skilled workforce
The country young, well-educated workforce

continues to grow as more young people enter the
labour market
Both local companies and MNCs are investing

heavily in aggressive talent acquisition, talent
development, and talent
retention programs
To improve labor productivity and prepare for the

future, the Government plans to strengthen the
education system, foster partnership with
enterprises to improve the match of labour
demand-supply

Mercer
CONTENT
Economic Overview
Compensation &
Benefits Trends
Other Trends
Mercer
SURVEY DEMOGRAPHICS - 2018 VN TRS © Copyright 2018. All rights
reserved
602 2
Organizations Databases
(MNC & Local Co.)
16 2,651
Benchmarking
Industries positions
(by Job & PC range)
531 MNC &
71 Local Co.
314,273
Employees’ data
Talentnet in association with Mercer

2018 PARTICIPANTS’ PROFILE - MNC
Total 16 Industries
Agriculture, Big
13 Industries
Various
Manufacturing, 57
Chemicals, 55
Transportation &
Logistics, 26
Trading, 39
Consumer Goods, 80
Retail, 8
No. of
MNC Companies
Real Estate, 17
Other Industries, 24 531 Education, 10
Financial Services -
Banking, 18
Oil & Mining, 13
Financial Services -
Insurance, 19
Life Sciences, Financial Services - Non Banking,
53 13
High Tech,
86

Mercer
2018 PARTICIPANTS’ PROFILE - LOCAL
2 Local Industries with good number of participants
Big
Industries
Various Manufacturing, Agriculture, 2
6 Chemicals, 1
Transportation &
Logistics, 2
Trading, 2 Consumer
Goods, 13
Retail, 7
No. of
Local Education
Companies ,3
Real Estate, 7 71
Financial Services - Banki

Other Industries, 3
Life Sciences, 3 Financial Services - Insurance,

High Tech,
4 Financial Services - Non Banking, 6

Mercer
COMPENSATION &
BENEFITS TRENDS
I SALARY TRENDS
II INCENTIVES UPDATES
III
WORKFORCE PLANNING
IV
BENEFITS TRENDS
Mercer
QUESTION
What are the

SALARY INCREASES
in
2018 & 2019?
Mercer
SALARY INCREASE TREND (ACTUAL VS FORECAST) - MNC
10.6%
2015
9.4%
Foreca
9.6% st
2016
8.9% Actual
9.2%
2017
8.5%
Mercer
SALARY INCREASE TREND (ACTUAL VS FORECAST) - LOCAL
10.9%
2015
9.7%
Foreca
10.2% st
2016
9.3% Actual
9.6%
2017
8.9%
Mercer
SALARY INCREASE IN 2018
FORECAST from ACTUAL

TRS 2017 from
TRS 2018
MNC 8.7% 8.6%
LOCAL 8.8% 9.0%

Mercer
SALARY INCREASE TREND
Inflation GDP Growth MNC Local
9.9% 9.7%
9.0%
8.7% 8.6% 8.6%
9.4%
9.0% 8.6% 8.5% 8.6% 8.7%
6.7% 6.8% 6.9% 6.8%

6.0% 6.2%
4.5%
4.0%
4.1% 3.5%
2.7%
2.1%
2015 2016 2017 2018 2019 (forecast)
Source: #Asian Development Bank;

#General Statistics Office
Mercer
2018 SALARY INCREASE TREND - TOP 3 & BOTTOM 3 - MNC
TOP 3 INDUSTRIES BOTTOM 3 INDUSTRIES
1 High Tech 9.7% 3 Education 7.1%
2 Life Sciences 9.1% 2 FS – Banking 6.5%
3 Chemicals 9.0% 1 Oil & Mining 5.8%

Mercer
MARKET MOVEMENT - SAME COMPANIES - MNC
Annual Base Salary (COMP 1)
Unit: ’000
2,000,00 VND
0
June- +8
18 Management
1,500,00 June-
%
0 17 +4%
1,000,00
0 Profession
al
+7
%
Para-
500,000 professional
+12%
0
5
40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 7
Position Class

Mercer
MARKET MOVEMENT - SAME COMPANIES - LOCAL
Unit: ’000
2,000,00 VND
0
June-
18 Manageme
1,500,00 June- +13% nt
0 17
+13%
1,000,00
0
Professional
+13
%
Para-
500,000 professional
+12%
0
5
40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 7
Position Class

Mercer
AVERAGE INDIVIDUAL PROMOTION SALARY INCREASE - 2018
23.0%
22.1%
20.0%
18.8%
15.0% 15.0%
MNC
Local
P25 P50 P75

Mercer
SALARY PREMIUM FOR RECRUITING STAFF
How much more (as % of salary) has

your firm paid to Outside Talents to join
your +9%+15%
firm at the Same Level of Job?
How much more (as % of salary) has

your firm paid to Outside Talents to join your +14% +20%
firm at Higher Level of Job?
Source: 2018 Mercer Vietnam Pulse Survey
Mercer
QUESTION
How much is the

PAY DIFFERENCE
between
MNC & LOCAL?
Mercer
PAY DIFFERENCE BETWEEN LOCAL COMPANIES AND MNCs
2,500,00 Unit: ’000 VND
0
2,000,00 Managem
0 MNC -25% ent
Loca
l -34%
1,500,00
0
1,000,00 Profession
al
0
-26%
Para-
professional
500,000
-14%
0
40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57
Position Class
Mercer
PAY DIFFERENCE BETWEEN LOCAL COMPANIES AND MNCs
Annual Total Cash (COMP 3 Actual)
2,500,00 Unit: ’000 VND
0
Managem
ent
2,000,00 MNC -31%
0 Loca -20%
l
1,500,00
0
Profession
al
1,000,00 -21%
0
Para-
professional
500,000
-7%
0
40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57
Position Class
Mercer
QUESTION
What are the

INDUSTRIES that
pay premium and
vice versa?
Mercer
PAY DIFFERENCE BY INDUSTRY - MNC
Percentage Deviation from All Percentage Deviation from All
Industries Industries
(Annual Guaranteed Cash - COMP (Annual Total Cash Actual - COMP 3 Actual)
2) 70
Oil & Mining %
68% Chemicals 9%
9% High Tech 3%
8% Life Sciences 10%
4% Consumer Goods 3%
3% Trading 4%
2% FS – Banking 0%
0% FS – Insurance -2%
0% Education -9%
-2% FS – Non Banking -3%
-7% Real Estate -4%
-8% Transportation &
-8% Logistics -13%
-14% Various
-17% Manufacturing -16%
-28% Agriculture -17%
Retail -30%
All Industries Regressed Median
All Industries Regressed Median
Mercer
PAY DIFFERENCE BY INDUSTRY -
LOCAL Percentage Deviation from All
Industries
Percentage Deviation from All Industries
(Annual Total Cash Actual - COMP 3
(Annual Guaranteed Cash - COMP 2)
Actual)
19
17% Real Estate %
6% Consumer Goods -1%
FS – Banking -4%
-7%
Various
-8% Manufacturing -5%
-8% Retail -13%
-13% FS – Non Banking 2%
All Industries Regressed Median All Industries Regressed Median

Mercer
QUESTION
What are
the FUNCTIONS
that get
premium paid
and vise versa?
Mercer
PAY BY FUNCTIONS - TOP 3 & BOTTOM 3 – MNC - MANAGEMENT
TOP 3 BOTTOM 3
1
Gov / Public 3 Administration
Relation
Sales & Customer

2 Marketing 2 Service
Quality
3 Legal / Audit 1 Management
Mercer
PAY BY FUNCTIONS - TOP 3 & BOTTOM 3 – MNC - PROFESSIONAL
TOP 3 BOTTOM 3
1 IT, Telecom & Internet 3 Customer Service
2 Engineering
2 Quality Management
3 Legal / Audit 1 Production

Mercer
COMPENSATION &
BENEFITS TRENDS
I SALARY TRENDS
III
WORKFORCE PLANNING
IV
BENEFITS TRENDS
Mercer
VARIABLE BONUS & SALES INCENTIVES
% Co have
% Co have VB % Co have SI BOTH*
MNC 86% 49% 18%
LOCAL 93% 70% 54%
*BOTH: Variable Bonus & Sales Incentive for Sales employees

Mercer
QUESTION
Compared to 2017, do you

think VARIABLE BONUS
for 2018 will:
a. Increase
b. Decrease
c. Remain the same
Mercer
VARIABLE BONUS TREND
VARIABLE BONUS AS % OF BASE SALARY
25% MNC
22.4%
20.4% 20.9% 20.9% Loc
19.9% al
20%
15% 16.6%
15.9% 16.1% 16.2%
15.2%
10%
5%
0%
2014 2015 2016 2017 (Actual) 2018 (Target)
Mercer
TARGET 2018 VARIABLE BONUS - TOP 3 & BOTTOM 3 - MNC
FS – Non 14.2
1 Banking 25.2% 3 Retail %
13.2
2 FS – Banking 22.2% 2 Logistics %
3 FS – Insurance 21.0% 1 Education 9.0%

Mercer
COMPENSATION MIX TARGET FOR 2018 - MNC
Guarantee Variable
Cash Pay
Executive 24%
76%
Management - Sales 25%
75%
Management - Non Sales 17%
83%
Professional - Sales 29
71% %
Professional - Non Sales

86% 14%
Para Professional 88% 12

%
Mercer
COMPENSATION MIX TARGET FOR 2018 - LOCAL
Guarantee Variable
Cash Pay
Executive 24%
76%
Management - Sales 30
70% %
Management - Non Sales

78% 22%
Professional - Sales
70% 30%
Professional - Non Sales
82% 18%
Para Professional 77% 23%

Mercer
TYPICAL FIXED ALLOWANCES PROVIDED IN THE MARKET
36%
44 Transportation
%
Phone
41
%
Meal
430,000 VND 200,000 VND 750,000 VND
700,000 VND

Mercer
COMPENSATION &
BENEFITS TRENDS
I SALARY TRENDS
III
WORKFORCE PLANNING
IV
BENEFITS TRENDS
Mercer
QUESTION
Compared to previous year, do

you think the VOLUNTARY
STAFF TURNOVER rate will:
a. Increase
b. Decrease
c. Remain the same
Mercer
VOLUNTARY STAFF TURNOVER TREND
25%
20.2%
20%
17.8%
17.2% 17.0% 17.5% MNC
Loc
15% al
15.6%
13.7% 14.2% 15.1%
12.7%
10% 10.1%
H1-
2018
7.8%
5%
0%
2014 2015 2016 2017 2018 (Forecast)
Mercer
VOLUNTARY STAFF TURNOVER - TOP 3 & BOTTOM 3 - MNC
1 Retail 37.6% 11.1

3 Trading %
2 FS - Banking 19.6%
2 Chemicals 9.6%
3 Real Estate 18.9%
1 Oil & Mining 3.7%
Mercer
TOP 3 HOT JOBS IN 2018 - MNC
DIFFICULT TO
ATTRACT
SALES - Professional
SALES - Management
TOP 3 DIFFICULT
ENGINEERING - Professional HOT JOBS
TO RETAIN
SALES -
Professional
SALES - Management
ENGINEERING - Professional

Mercer
HIRING INTENTIONS FOR 2018 - MNC
70%
63%
59%
60% 55% 55%
49%
50% Add
40% Staff
40%
30%
20%
10%
0%
2014 2015 2016 2017 2018 2019
Mercer
COMPENSATION &
BENEFITS TRENDS
I SALARY TRENDS
III
WORKFORCE PLANNING
IV
BENEFITS TRENDS
Mercer
BENEFITS SURVEY
Participant Profile
Mobility-Related Benefits
Insurances related
•Telecommuting
•AD&D Insurance
•Business Travel
•Medical Insurance
•Relocation
•Supplementary retirement
421 •Housing Benefits
PARTICIPANT
Other Benefits
Leaves related S
•Training & Development
•Working Hours & Overtime
•Leaves & Holidays
12 •Referral Programs
•Long Service Awards
•Congratulation &
INDUSTRIES
•Flexible Benefits
Condolences
•Perquisites and Loans
•Dependent Care Support
•Vehicle policies
•Termination & Redundancy
•Allowances (transport, meal, acting,
…)
Mercer
TYPICAL BENEFITS
Percentage of companies provide
PRIVATE HEALTH
ACCIDENT INSURANCE
INSURANCE LIFE INSURANCE
94%
92% 61%
COMPANY CAR LOAN

44% 11%
Source: 2018 Vietnam Benefits Survey

Mercer
CONTENT
Economic Overview
Compensatio
n & Benefits
Trends
Other Trends
Mercer
HR BUDGET ALLOCATION FOR 2018
Items for which HR Budget Allocation may change in 2018 compared to 2017
Base salary increase
(N=104) 50% 4% 46%
Recruitment (N=99) 34% 8% 56% 2%

Training & development
(N=100) 28% 9% 60% 3%
Health care benefits (N=98) 27% 1% 69% 3%

Short-term incentives
(N=96) 20% 7% 64% 9%
Work life balance program 19
(N=94) 17% 2% 62% %
37
Long-term incentives (N=93) 12% 2% 49% %
Would likely increase the

proportion Would likely reduce the proportion
Would likely be unchanged Not applicable
Source: 2018 Mercer Vietnam
Pulse Survey
Talentnet in association with
© Copyright 2018. All rights reserved 47 Mercer
QUESTION
How much is the

PAY DIFFERENCE
between
LOCATIONS?
Mercer
PAY DIFFERENCE BY LOCATIONS – MNC – CONSUMER GOODS
Ho Chi Minh
6% City
- Ha
2% Noi
- North
5% Region
- South
7% Region
- Centre
10% Region
Mercer
QUESTION
CHANGES IN
LABOUR
REGULATIONS
Mercer
KEY CHANGES IN LABOUR REGULATIONS
Regional Minimum Wage
st st
From 1 From 1 %
Region
January, 2018 January, 2019 increase
Zone 1 3,980,000 4,180,000 ~5.0%

Zone 2 3,530,000 3,710,000 ~5.1%
Zone 3 3,090,000 3,250,000 ~5.2%
Zone 4 2,760,000 2,920,000 ~5.8%
As a result, the maximum insurable earning which is

capped at 20 times regional minimum wage (in
contribution to unemployment insurance) will increase
5.0% - 5.8% since 01 January 2019.
Mercer
KEY CHANGES IN LABOUR REGULATIONS
Common Minimum Wage
New Common Minimum Wage
Increase 6.9% from 1,300,000

VND/month to 1,390,000 VND/month
since 01 July 2018
As a result, the maximum insurable

earning which is equal to 20 times
the common minimum wage (in
contribution to social insurance and
health insurance) was increased
6.9% from 26,000,000 VND/month to
27,800,000 VND/month since 01 July
2018
Mercer
HAPPY ANNUAL SALARY REVIEW
THANK YOU
& SEE YOU NEXT YEAR
Mercer

Highlights of 2018 TRS Results - by Hoa Nguyen

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POST SURVEY

Policy has been focused on further economic

The Government committed to pushing on reforms

FDI continues to be the long-term growth driver.

The country young, well-educated workforce

Both local companies and MNCs are investing

To improve labor productivity and prepare for the

© Copyright 2018. All rights reserved 4 Talentnet in association with

Talentnet in association with Mercer

© Copyright 2018. All rights reserved 7 Talentnet in association with

Financial Services - Banki

Life Sciences, 3 Financial Services - Insurance,

© Copyright 2018. All rights reserved 8 Talentnet in association with

What are the

FORECAST from ACTUAL

MNC 8.7% 8.6%

LOCAL 8.8% 9.0%

6.7% 6.8% 6.9% 6.8%

2015 2016 2017 2018 2019 (forecast)

Source: #Asian Development Bank;

TOP 3 INDUSTRIES BOTTOM 3 INDUSTRIES

1 High Tech 9.7% 3 Education 7.1%

2 Life Sciences 9.1% 2 FS – Banking 6.5%

3 Chemicals 9.0% 1 Oil & Mining 5.8%

© Copyright 2018. All rights reserved 16 Talentnet in association with

© Copyright 2018. All rights reserved 17 Talentnet in association with

P25 P50 P75

How much more (as % of salary) has

How much more (as % of salary) has

How much is the

What are the

6% Consumer Goods -1%

-8% Retail -13%

-13% FS – Non Banking 2%

All Industries Regressed Median All Industries Regressed Median

Sales & Customer

3 Legal / Audit 1 Production

MNC 86% 49% 18%

LOCAL 93% 70% 54%

*BOTH: Variable Bonus & Sales Incentive for Sales employees

Compared to 2017, do you

TOP 3 INDUSTRIES BOTTOM 3 INDUSTRIES

3 FS – Insurance 21.0% 1 Education 9.0%

Professional - Non Sales

Para Professional 88% 12

Management - Non Sales

Para Professional 77% 23%

© Copyright 2018. All rights reserved 36 Talentnet in association with

Compared to previous year, do

TOP 3 INDUSTRIES BOTTOM 3 INDUSTRIES

1 Retail 37.6% 11.1

© Copyright 2018. All rights reserved 41 Talentnet in association with

COMPANY CAR LOAN

Source: 2018 Vietnam Benefits Survey

Recruitment (N=99) 34% 8% 56% 2%

Health care benefits (N=98) 27% 1% 69% 3%

Would likely increase the

How much is the

Zone 1 3,980,000 4,180,000 ~5.0%

Zone 4 2,760,000 2,920,000 ~5.8%

As a result, the maximum insurable earning which is

New Common Minimum Wage

Increase 6.9% from 1,300,000