Viet Nam
Industrial Park Situation
Text by Saito Hiroshi
The 25th: Worker Welfare
The health of workers is one of the most important matters for manufacturers. When injuries or illnesses occur among workers, it is necessary to consider participation in workers’ compensation insurance to cover damages. In Japanese companies operating in Vietnam, many have completed the enrollment of their workers in workers’ compensation insurance. Even otherwise, for individuals working at Vietnamese companies, there is personal workers’ compensation insurance available, providing peace of mind.
Allowances
It is common to provide the following benefits:
- Commuting Allowance: This is a welfare benefit that provides allowances for commuting workers, such as taxi fares or motorcycle fuel costs. Most local workers commute by motorcycle. Therefore, the allowance amount may change due to fluctuations in fuel prices. For Japanese expatriates, commuting is generally done by taxi or company car.
- Housing Allowance: This benefit provides allowances for workers’ rent and other housing costs. For expatriate employees, the company may have contracts with apartment owners. This is often done because it results in lower personal income taxes compared to cash payments. On average, allowances range from 250,000 to 300,000 VND (approximately 1,500 to 1,800 JPY), and it is common to provide up to 600,000 VND (approximately 3,600 JPY) at most.
- Meal Allowance: There are cases where workers might switch to neighboring factories due to the quality of the lunches provided by the company, so it is important not to compromise on lunch. While there are direct cash allowances, many companies also provide in-kind benefits or set up cafeterias. Meal allowances can vary in different patterns, such as providing lunch only, breakfast and lunch, a flat rate for all, or based on the days worked.
Workers' Compensation Insurance / Health Checkup
Workers’ health is one of the most important matters for manufacturers. When injuries or illnesses occur among workers, it is necessary to consider enrolling in workers’ compensation insurance to cover damages. In Japanese companies operating in Vietnam, many have already enrolled their workers in this insurance. Even in cases where this is not done, there is personal workers’ compensation insurance available for individuals working at Vietnamese companies, providing peace of mind.
Health checkups for workers are also important. Just like in Japan, companies in Vietnam are required to provide health checkups for their employees, so most Japanese companies bear the costs associated with these health checkups for their workers.
Welfare Benefits Implemented by Companies
In addition to the aforementioned benefits, each company may implement its own unique benefits. The number and types of benefits also vary widely from one company to another. Here, we will introduce some of the relatively common benefits implemented by Japanese companies.
- Attendance Allowance: Particularly in Vietnam, where the turnover rate is high, attendance allowances are often established. Workers receive this allowance for working without taking any days off. Similarly, there are welfare benefits like seniority allowances that are awarded for working continuously for several years, and some companies even provide recognition for this. Temporary workers also have similar systems, where a bonus is awarded for working continuously for 100 days, encouraging longer employment.
- Employee Trip: When the company has the budget, it is common to organize an employee trip or leisure trip to a nearby resort about once a year. This is not limited to regular employees; families are often allowed to join, and the company may cover a portion of the expenses. Additionally, some companies hold several gatherings each year, such as social events or barbecues, emphasizing the importance of building relationships among employees.
- Qualification Allowance: This allowance is granted upon obtaining a qualification. For example, there may be language allowances for passing the Japanese Language Proficiency Test. The amount of the allowance can vary depending on the difficulty of the qualification, and it should be designed to motivate employees’ desire for growth.
Additionally, benefits such as maternity allowances for when a child is born, maternity and parental leave, and seasonal events like Tet are also implemented, similar to those seen in Japan. These benefits can be effective in encouraging workers to stay longer. For example, giving gifts on workers’ birthdays and maintaining regular communication are important for increasing employee retention.
Summary
The implementation of benefits plays a significant role in increasing employee retention rates. In Vietnam, at the worker level in manufacturing, it is not uncommon for up to 100 workers to resign in a month, with fluctuations of several dozen workers also happening frequently. To encourage talented individuals to stay longer, implementing such benefits can be considered essential. Furthermore, if the necessary details for providing these allowances are carefully outlined, potential issues can be prevented. Therefore, it is crucial to clearly define the benefits in detail.
齊藤公(Saito Hiroshi)
Business Advisor
G.A. Consultants Vietnam Co., Ltd
After graduating from university, he joined a PHP research institute and served as the head of the New York office. He then worked on the “Nagoya Port Redevelopment Project” at a subsidiary of the Chubu Nippon Broadcasting (CBC) company. He later shifted his base to Asia, where he was involved in the launch of “FM96.3” in Singapore, and the creation of “Hello Vietnam” and “Invest Asia” magazines in Vietnam. He then joined BW Industrial Development JSC, Vietnam’s largest rental factory development company, where he was responsible for attracting Japanese manufacturing companies. Currently, he is active as a consultant for the entry of Japanese companies at “G.A. Consultants”, one of the longest-standing Japanese HR consulting firms in Vietnam.
