Hiring and retaining the right talent is a make-or-break factor for FDI companies in Vietnam. The demand for both blue-collar and white-collar workers is rising, and recruitment is becoming increasingly competitive – especially in manufacturing hubs. Foreign companies must manage cost structure to ensure the balance between cost-effectiveness and competitive salary to attract talent. In general, total workforce cost consists of salary and allowance, mandatory cost, and recruitment cost.
A breakdown of Workforce Cost in Vietnam for Foreign Businesses
Total workforce cost = Salary & Allowance + Mandatory cost/employee benefits + Recruitment cost |
1. Salary & Allowance: What You’ll Pay for Key Roles
New companies coming to Vietnam typically focus on hiring key positions to kick-start their operations, ensuring smooth setup and compliance with local HR regulations. In new factories with fewer than 100 employees, the four key positions typically required, along with their respective salary expectations are:
HR Manager: US$1,900 - US$2,800 / month
Finance Manager: US$2,100 - US$3,000 / month
Production Manager: US$2,000 - US$3,000 / month
Operations Manager: US$2,500 - US$4,000 / month
Salaries on the rise: The annual pay rise for manufacturing and industrial jobs was 5-10%. Foreign companies must stay competitive with attractive offerings that are benchmarked against the market.
Cost of Bringing in Foreign Experts: Expatriate management and leadership positions are generally paid significantly higher salaries than local talents. To ensure timely visas and work permits, it’s advisable that companies rely on expatriate services to ensure a smooth transition for foreign experts.
2. Mandatory cost and Employee Benefits in Vietnam
When setting up operations in Vietnam, foreign companies must account for compulsory costs, and monthly direct/indirect costs. These expenses are essential for legal compliance and employee well-being.
2.1. Compulsory cost
In addition to salaries, employers must contribute to Vietnam’s mandatory social security system, which is calculated based on the employee’s gross monthly salary (with salary cap). These contributions include:
Social Insurance (17.5%)
Health Insurance (3%)
Unemployment Insurance (1%)
Trade Union Fees (2%)
2.2. Monthly Direct cost
Monthly Direct Cost refers to variable workforce expenses such as Overtime Payments and Business Travel or Expense Claims, which can fluctuate based on the employee’s workload, seasonal projects, or changing operational requirements.
For instance, Overtime pay ranges from 130% to 300% of the regular hourly wage, depending on the type of extra work performed, including weekday overtime, weekend overtime, night shifts, and work on public holidays or paid leave. Employees working overtime at night receive an additional 20% on top of their overtime pay.
2.3. Monthly Indirect cost
Monthly Indirect Cost covers benefits that enhance employee well-being and satisfaction, this includes:
Annual Health Check (required by law)
Depends on the company policy.
On average, this cost may vary from US$20 to US$200 per person.
13th Month Salary (common practice in Vietnam)
Equal to 1 month of gross salary/year
Example: For VND 35.000.000/month (~ US$1.365)=> Monthly equivalent: VND 2.916.667 (~ US$113.8).
Performance Bonus
Typically varies by company policy and industry.
Some companies budget 1–3 months of base salary annually as a bonus.
Social Activities
Often includes team building, year-end parties, workshops, etc.
Typical budget: VND 1.530.000 (~US$60/person/year).
While these mandatory costs form the bulk of labor expenses, businesses may also offer other optional benefits such as KPI-based incentives, training or transportation allowances, or premium healthcare insurance to attract and retain talent in Vietnam’s competitive labor market.
To better understand workforce cost, here is a step-by-step example of breaking down the cost components and calculating the total salary and mandatory cost.
No | Description | Rate | Monthly Cost (USD) | Monthly Cost (VND) |
1 | Salary and Allowance | | 1,372,55 | 35,000,000 |
| Monthly Gross Basic Salary | | 1,372,55 | 35,000,000 |
| Other Allowances | | - | |
2 | Mandatory Cost and Employee Benefits | | 337,55 | 8,607,500 |
2.1. | Compulsory Cost | | 322,55 | 8,225,000 |
| Employer’s Social Insurance | 17,5% | 240,19 | 6,125,000 |
| Employer’s Health Insurance | 3% | 41,18 | 1,050,000 |
| Employer’s Unemployment Insurance | 1% | 13,73 | 350,000 |
| Trade Union | 2% | 27,45 | 700,000 |
2.2. | Monthly Direct Cost | | 0 | 0 |
| Overtime Payment | | - | - |
| Business Travel and Expense Claim | | - | - |
2.3. | Monthly Indirect Cost | | 15 | 382,500 |
| Performance Bonus | | - | - |
| 13th Month Salary | | - | - |
| Annual Health Check | ~US$120/person/year | 10 | 255,000 |
| Social Activities | ~US$60/person/year | 5 | 127,500 |
| 24/7 Accident & Medical Insurance | Depends on salary bracket | - | - |
| Total Workforce Cost (1 + 2) | | 1,710,10 | 43,607,500 |
*Note: USD to VND exchange rate stands at 25,500 (updated March 2025)
3. Recruitment Cost in Vietnam: What It Takes to secure the right talent fast
Hiring the right people in a limited window of time is critical for foreign companies entering Vietnam. While companies can recruit independently, partnering with a trusted recruitment firm with local expertise will ensure speed, access to a large talent pool, and hiring efficiency, especially for key leadership roles and mass recruitment needs.
3.1. In-house recruitment team
Building an internal recruitment function is another option. However, this approach involves both direct and indirect cost:
Internal recruitment cost = TA personnel + job board/job posting + CV database + Opportunities cost |
Talent Acquisition personnel salaries: This is a fixed cost of hiring and maintaining a recruitment team, including recruiters, coordinators, and TA managers.
Job board subscriptions / paid job postings: To attract candidates, companies often pay to post jobs on digital platforms (e.g., VietnamWorks, TopCV, LinkedIn). However, Manpower Vietnam offers free job posting which allows businesses to reduce their recruitment cost.
CV database or sourcing tool package: Access to candidate database or sourcing tools (like LinkedIn Recruiter, CareerBuilderResume Search, or other ATS platforms) often requires monthly or annual fees. These tools help recruiters search and filter potential candidates but add to ongoing operational costs.
Opportunity costs: Instead of focusing on recruitment logistics, internal HR teams could be channeling time and resources into strategic HR functions like Employer Branding, Employee Relations, HR policy development, training, and workforce engagement.
While in-house hiring may work for long-term or culture-centric talent strategies, it often requires more time and internal coordination, especially in competitive or high-volume talent market like Vietnam.
3.2. Partnering with Recruitment Agency
a. Cost for headhunt service
Recruitment firms typically charge fees based on a percentage of the hired position’s annual salary. For recruitment services by Manpower Vietnam, fees are only charged once the employee commences its work with the company and there is no deposit or advance retainer fee required. It means, you can screen, interview and even offer the potential candidates with zero cost.
The cost varies depending on:
Hiring volume
The role’s seniority: mid-to-senior management, executive, etc.
Industry demand
Complexity of the search: higher investment and efforts will be required for specialized roles, such as bringing in overseas professionals.
Type of recruitment contract: exclusive or non-exclusive.
b. Staffing & Outsourcing: Scaling a Factory Workforce Efficiently
For mass hiring - factory workers, engineers, technicians, and operational staff, it’s increasingly common for foreign companies to turn to staffing & outsourcing services. These provide a ready-to-go workforce while reducing the burden of payroll, handling HR compliance in-house, and managing employee relations and labor law complexities.
Outsourcing fees are generally structured as a monthly management fee based on a percentage of each worker’s total labour cost, offering flexibility and cost control while ensuring workforce stability. This approach allows businesses to scale operations quickly without administrative bottlenecks.
Need to scale your workforce fast? Access a qualified, outsourced workforce while we handle the complexities of HR and compliance.
Navigating Workforce Cost in Vietnam for Foreign Companies
Vietnam continues to emerge as a prime destination for foreign manufacturers, offering competitive labor costs, strategic access to global markets, and a skilled workforce. However, navigating the complexities of Vietnam’s labor market is crucial for optimizing operational efficiency. Factors such as regional variations in labor cost, and mandatory contributions to social insurance and health insurance, can significantly impact overall workforce expenses.
Every business has unique workforce needs, and labor costs can vary depending on industry, location, and hiring strategy. To gain a clearer picture of workforce cost tailored to your business, reach out to Manpower Vietnam to explore customized insights and strategic workforce solutions.