Same as the previous ones, this newsletter refers to the latest inflation and its affect on the living of employees and also companies from labour management aspect. The newsletter analysed the large gap between the by-law minimum salaries and the minimum cost of living in reality, and draws employers’ attention to the setting of “safe” and competitive salaries for the lowest grades in their companies. The newsletter has given some updates on DTK Consulting’s recruitment and HR consulting services. It also gives advice to individuals on the need to improve their English so that they would not miss opportunities in career advancement.
Newsletter No.8
(July 2008)
Written for individuals - collaborators
and organizational counterparts
“Hot” Economics Issue Affecting Workforce’s Living and Enterprises
After May 08’ peak inflation (3.91%), the Government applied a number of “strong” measures, trying to control the inflation and so the July’s CPI has increased at a much lower speed, at 1.13% compared to June 2008 and 19.78% compared to December 2007. However, the July CPI has already increased 27.04% compared to the same period last year and with the sharp rise in fuel price in the end of July, there will be probably much higher inflation for August 2008.
Table 1: Price Index in July 2008
|
|
Price Index in July 2008 Compared to (%) |
CPI of the first 7 months in 2008 compared to same period in 2007 |
|
July
2007 |
Dec. 2007 |
June 2008 |
|
Consumer price index |
127.04 |
119.78 |
101.13 |
121.28 |
|
Food and foodstuff |
144.69 |
132.02 |
100.99 |
134.65 |
|
Of which: - 1. Food |
172.72 |
158.85 |
99.63 |
143.50 |
|
2. Foodstuff |
136.25 |
123.45 |
101.33 |
132.52 |
|
USD price index |
106.58 |
106.94 |
101.83 |
101.36 |
|
Gold price index |
146.38 |
119.99 |
103.20 |
140.25 |
(Source: Website of General Office of Statistics)
It is so much worrying that the food price level has been increased by nearly 73% compared to July 2007. It significantly reduced the living standards of the majority of employees. Is has been recorded that a number of strikes (though not following the laws) in labour-intensive companies had happened, with an objective to have the salary increased to off set the reduced living quality due to high inflation.
Minimum Cost of Living in Reality
By now, the Vietnam Government has considered the low labour cost an advantage in attracting foreign investment. It is not a long-term comparative advantage of the country and there are potential sources of social unrest when the employees are paid too low.
It is too complicated and relatively unfair with a set of 6 minimum salaries, depends on the type of the business and where a company is located (VND 540-620k for local companies, and VND 800-1,000k for foreign ones).
In Newsletter No.7, DTK Consulting (DTKC) already suggested a minimum cost of living, to be used as reference for setting the minimum salary in a progressive and competitive organisation/company.
Table 2: Minimum Cost of Living (MCL)
|
Categories of expense |
Percentage (by DTKC) |
MCL for a person (with one dependant) in May 2008, VND, by DTKC
|
Average figures from a mini-survey done with an HR Group in July 2008, VND |
|
Food and foodstuff |
38.2% |
2,062,000 |
|
|
Clothing |
8.7% |
469,000 |
|
|
Transportation |
6.9% |
372,000 |
|
|
Accommodation |
30.7% |
1,657,000 |
|
|
Education |
10.8% |
583,000 |
|
|
Saving |
4.8% |
257,000 |
|
|
Total |
100% |
5,400,000 |
5,100,000* |
*: most respondents are from Hochiminh City; VND 3,300,000 for a person with no dependant.
The figures calculated by DTK Consulting, and those obtained from the mini-survey, though are about 5 times higher than specified by law, express the basic needs of the employees. If they do have job mobility but are still paid under this threshold, they will always try to change job once they have a chance. Only those who do not have enough competencies to “move up” will stay and must accept the relatively difficult life. The latter are those who easily go on spontaneous (and illegal) strikes, that affect the company’s stability and welfare. This group of employees should be given adequate attention to by the company, through the line managers and HR Department.
The figures from Table 2 show that, for single employees (with no dependant), they would not be committed to a job with a monthly income lower than VND2.7 mil (indicatively), as the salary does not support their basic needs.
DTKC’s Recruitment Service
DTK Consulting officially started the operation in December 2006. By July 2008, 20 months passed and the average number of vacancies is 13 per month, including some vacancies posted as promotion for friends and partners. For the starting phase of DTKC and taking into account its size, this average order shows the high recruitment demand of the market (management and professional positions). Of course the successful rate is lower, because there is a relatively large gap between the requirements of the employers and the expectations of the candidates. If the employers have 5-10 job specific requirements or even more, the candidates, beside the income, care much about the locality, the size of the company, the company culture, working environment; the senior candidates even consider other factors like company strategy. Signing a labour contract nowadays has become a fairer act, with both sides having equal choice.
A new Client of DTKC is Minda Vietnam Ltd, a member of the Minda Group - one of the leading manufacturers of automobile components with a turnover of around US$ 150 million and employs 3500 people India-wide & Overseas. DTK Consulting is supporting Minda Vietnam Ltd in recruitment to a number of management and professional positions. Minda Vietnam Ltd has its factory in construction in Binh Xuyen Industrial Zone, Binh Xuyen district, Vinh Phuc province, about 35 km from Ha Noi.
DTKC’s HR Consulting Work
DTK Consulting has been acting as the HR consultant in the building of the website www.vnemployers.com.vn for Bureau for Employers’ Activities (BEA) of Vietnam Chamber of Commerce and Industry. By now the Vietnamese content has been uploaded and the webpage will be launched soon. Wherever necessary, articles in English will be prepared and posted. Vietnamese (and also foreign) employers will find from this website useful information for running their business in Vietnam, from labour management aspect.
Seeing business social responsibility an important aspect of the company, DTKC has registered with BEA (VCCI) to be a Mentor in HRM and those fields the company has strong experience in, for the young enterprises within the Business Mentoring Programme, that is planned to be launched on 27 August 2008.
To utilize one’s specific knowledge and experience to support the business community worldwide, the Director of DTK Consulting has become a member of Gerson Lehrman Group Councils. The first consultation has been provided to a Client from India.
Advice to Collaborators
From our first hand experience in interviewing applicants for positions in foreign companies or those with a requirement to command English, we have noticed that a large number of young university graduates are very weak in English. This obstacle prevents them from moving to positions with a better pay and career advancement. This can be seen in applicants for admin jobs (like receptionist) and accounting ones. Especially, for those accountants who work in local companies, though there is no chance to use English daily yet, they should take English lessons or self-study, to prepare themselves for better job opportunities. It is crucial in the era of international cooperation and integration ■
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