Human resource management in Vietnam is becoming increasingly critical as the country solidifies its position as a top destination for foreign direct investment (FDI). Attracted by competitive labor costs, a rapidly expanding talent pool, and Vietnam’s strategic role in global supply chains, international investors are flocking to establish operations here. However, managing human resources effectively remains a challenge. According to the APAC Talent Shortage Report, 74% of employers across Asia-Pacific face difficulties in sourcing skilled labor, and Vietnam is no exception.
This guide delves into the evolving landscape of human resource management in Vietnam, highlighting the challenges and insights for a successful human resource management strategy.
Challenges for human resource management in Vietnam
Despite Vietnam’s economic growth and young workforce, employers face several human capital challenges that hinder long-term business performance.
High employee turnover
One of the most pressing HR issues in Vietnam is high employee turnover, especially in the manufacturing and retail sectors. Workers frequently move between companies in search of better wages, benefits, or working conditions. This volatility increases recruitment costs and disrupts productivity.
A recent survey by Reeracoen Vietnam reveals that nearly two-thirds of Vietnamese workers plan to switch jobs within the next six months, making talent retention a critical concern for businesses operating in Vietnam.
Skill gaps and limited talent readiness
One of the key challenges inhuman resource management in Vietnam is the mismatch between market demand and workforce capabilities. The most critical skill gap, for instance, is witnessed in the IT & Data sector, with 32% of employers struggling to fill roles, followed by Engineering (27%) and Sales & Marketing (24%. )As the country shifts toward digitalization and advanced manufacturing, these shortages highlight the urgent need for upskilling, technical training, and strategic talent development.
Risk of non-compliance
Operating in Vietnam comes with strict labor laws and regulatory obligations that businesses must adhere to. However, navigating Vietnam’s labor code, payroll tax regulations, and social insurance requirements can be complex, especially for foreign companies or SMEs with limited HR capacity.
Common compliance risks include:
Misclassification of employee types
Errors in social insurance and PIT (personal income tax) contributions
Failure to register labor contracts correctly
Not adhering to working hour limitations or overtime caps
These mistakes not only lead to fines and audits but can also damage employer reputation and erode employee trust.
How to overcome challenges for human resource management in Vietnam
Understanding what Vietnamese workers prioritize in their careers is essential for Effective human resource management in Vietnam According to the What Vietnamese Workers want report and The Quest for Meaning at Work: A Vietnam Report, employees in Vietnam seek competitive salaries, career growth opportunities, work-life balance and job security. As the job market evolves, businesses must align their human resourcestrategies with these expectations to stay attractive to skilled professionals.
Offer competitive salaries and strengthen job stability
One of the most effective ways to overcome challenges in human resource management in Vietnam, particularly high turnover, is by addressing the top priorities of Vietnamese workers: salary and job security.
As living costs rise, employees are increasingly seeking stable employment that offers long-term financial security. A joint survey by Jobs that Make Sense Asia and ManpowerGroup reveals that 40% of Vietnamese workers prioritize salary and job stability when evaluating new opportunities. Notably, this drive for higher pay is less about luxury and more aboutensuring comfort and security for one’s family.
To meet these expectations and reduce attrition, companies should:
Provide clear salary frameworks with performance-based growth
Offer long-term financial incentives such as bonuses, insurance, or profit-sharing
Ensure transparent contracts and job continuity, especially in manufacturing roles
By creating a compensation model that balances fairness, growth, and security, businesses can build greater employee loyalty and minimize disruptive workforce churn.
Tackle the skill gap with targeted talent development
Vietnam is facing a growing mismatch between workforce capabilities and evolving business needs. Many employers report increasing difficulty in finding candidates with the right skills, especially in areas requiring technical expertise and adaptability. This talent gap presents a significant challenge for organizations looking to expand, modernize, or remain competitive in a rapidly changing labor market.
To effectively tackle this issue, providing career growth opportunities and investing in talent development is crucial. Meaningful Work: A Vietnam Report states that "One third of respondents place a high value on learning, finding profound significance in their work with each new method and technique they acquire for their professional toolkit". Employees prefer companies that provide structured career paths, mentorship, and technical training. By equipping employees with new skills and clear pathways for advancement, companies can build a more capable, loyal, and future-ready workforce.
Promote work-life balance and flexible work models
Work-life balance is becoming a major factor influencing job preferences, especially in the Asia Pacific. Employees are no longer just looking for competitive salaries, they seek better work conditions that support their well-being and long-term career satisfaction. That is the reason why56% employers select work-life balance as the top priority to increase worker retention.
Alongside this shift, the demand for hybrid and remote work models is also rising. The What Vietnamese Workers Want Report highlights that 42% of employees in Vietnam prefer hybrid and remote work models, reflecting a growing need for flexible work arrangements that accommodate both productivity and personal well-being.
Companies implementing hybrid models, flexible scheduling, and mental health support will better retain employees. Offering childcare assistance and stress management programs can further enhance workplace well-being.
To support employee well-being, businesses should:
Offer hybrid or flexible scheduling where operationally feasible
Provide mental health support, wellness programs, and stress management resources
Introduce family-friendly policies, such as childcare assistance or caregiver leave
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With over 77 years of global operations and 17 years of recruitment expertise in Vietnam, Manpower Vietnam provides data-driven and award-winning workforce solutions, including Permanent recruitment, Executive search, Mass recruitment, Recruitment Process Outsourcing (RPO) and Staffing and Outsourcing services across varied industries.
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