However, the real income of CEOs of state-owned groups in Vietnam is 5-6 or even 10 times more than the basic salary of $250/month. But even 5-6 times more than the basic salary is still modest when the source of high-ranking personnel is so scarce in Vietnam now.

Head of the Salary-Wage Department under the Ministry of Labour, War Invalids and Social Affairs, Pham Minh Huan, said that this basic salary was only the foundation for defining social insurance and considering rewards for CEOs, not their total income.

Mr. Huan emphasised that leaders were always attached to the production and business results of a business, whether it was a state- or private-owned firm. Therefore, it is unable to accurately define the income of a CEO or chairman of a state-owned group because this individual’s income depends on his role in and responsibility to the business.

“VND4 million – $250 – per month is just equal to the income of a new graduate so with that salary, nobody wants to be a leader of a state agency,” Mr. Huan joked.

Related agencies are compiling guidance documents for the implementation of this decree. However, according to Mr. Huan, the monthly salary of $250 is the minimum salary for CEOs but their total income may be 6 or 9 times more than this level.

“In 2006, the highest salary paid to a CEO of a state-owned group was VND35 million – $2,100. This record will be broken,” Mr. Huan revealed.

State-owned companies worry of brain-drain

Nguyen Minh Phong, Head of the Economic Research Department of the Hanoi Institute for Economic-Social Research Development, said that it was absurd to apply inflexible regulations on salaries or the way to calculate the salaries of leaders of state-owned groups because it would not encourage the development of those firms. On the other hand, to ensure fair treatment of personnel, state companies will have to have ‘latent’ funds to compensate their employees.

In the context of fierce competition for high-ranking personnel, salary is one of the first factors for companies to attract talents. In other countries, the salaries of CEOs are often much higher than politicians. Each year reputed business magazines in the world announce the list of CEOs with the highest incomes in the year and through that evaluate their talent.

Along with the presence of many foreign groups in Vietnam and the establishment of thousands of new companies, the high-ranking personnel market is burning. Restrictions of payment mechanisms for leaders are reasons for the disadvantages of many state-owned companies in the competition for high-ranking personnel.

The chairman of a big state-owned company, which is about to be equitised, said that the CEO at his company was paid less than VND20 million ($1,200) a month while CEOs of non-state companies earned more than VND50 million (3,100) per month, not including bonus shares, the right to buy shares or other special treatment.

“We expect to complete equitisation soon. When our company becomes a joint stock firm, besides business ambitions, we will take the initiative in treating our personnel well and keeping talents,” he said.

An official of the Vietnam Post and Telecommunications Group (VNPT) said that in the past, employees of VNPT were considered to earn high incomes. However, along with the participation of new companies in the fields of telecom, VNPT’s salary policy seems to lag behind others. While Viettel, a new company with a smaller number of staffs is allowed to use 6.5% of its turnover for salary payment, VNPT can only use 15% of its turnover to pay the salaries of its over 90,000 employees.

“That’s why VNPT is suffering brain-drain. Many qualified employees of VNPT have gone to other companies,” he said.

An official of the Ministry of Information and Communications recently joked that state agencies were training staff for foreign-owned and private companies.

“We have to sympathize with them. Morality comes only after sufficient food and clothing and certainly they have to go to companies with higher pay,” he said.

The current average salary for a normal expert at state agencies is around VND500,000 to VND1.5 million ($30-90) per month compared to VND2-5 million ($120-300) at foreign-invested firms. This wide gap has made personnel a burning issue at state agencies.

Using salary to invite qualified employees

“High salaries and bonuses for employees are an effective means of investment,” said Le Dac Son, CEO of VP Bank. This bank is ready to pay high salaries and give good bonuses to its key officials which are much higher than those for its normal staffs.

Vice CEO of Viettel, Nguyen Manh Hung, said that the salaries of Viettel’s employees at different levels was also different, depending on business results.

According to a survey by Dragon Capital, a fund management company, conducted at the end of 2006, foreign-invested companies in Vietnam are ready to pay VND20.2 million ($1,250) per month for their medium-level managers, compared to VND9 million ($550) at private and around VND7.4 million ($450) at state-owned companies.

Vinnie La, manager of personnel consulting division of Navigos Group, said that salary plays a key role and companies must consider this factor carefully to keep their qualified employees.

As the competition for qualified personnel is getting fierce, many companies may lose their best employees just because their rivals offer higher salaries.

Source: VNE