Expectations muted for holiday bonus
Expectations muted for holiday bonus
Businesses are facing varying levels of pressure to maintain traditional Lunar New Year cash bonus plans for their workforce.
Thousands of employees at Taiwan-owned shoemaker Pouchen Vietnam in the southern province of Dong Nai last week returned to work after a 4-day strike when the company announced lower bonuses.
They requested that the company should offer the same bonus as last year, but Pouchen said they could only stretch to offering gift packages this year and increasing the bonus next year if better revenues are achieved.
Employees who work for one year will receive a one-month wage, which will steadily increase with seniority. For individuals who have worked for 12 years, they will receive a 1.54-month salary for the bonus. Meanwhile, it was 1.9 months of income in 2021 and even up to 2.2 months in prior years.
Pouchen Vietnam said it was unable to offer the same Lunar New Year bonus level as last year due to the pandemic, with the company failing to meet its business targets with shrinking earnings.
Other groups fared better. Nguyen Phuong Chi, chief strategy officer of Century Synthetic Fiber Corporation, said that like many others, the company had to maintain production bubbles and scaled-down operations last year. “Thanks to the company strictly applying preventive measurements, coupled with aggressive sale-boosting activities for existing customers, the company successfully maintained operations and incomes for employees during this period.”
Century fulfilled 87 per cent of its 2021 revenue target and 104 per cent of the year’s profit target. Given the budget achievement and the vision of further market recovery in 2022, the company was able to pay a Lunar New Year bonus and aims to raise salaries for staff this year, according to Chi.
Century Synthetic Fiber is planning to raise the monetary bonus policy to employees which could be even higher than the average 2-month salary (the fiscal year 2020 bonus) for those who have been serving the company for at least 12 months.
Nguyen Thu Ha, director of the Hanoi Office of consultancy firm Adecco Vietnam, noted, “Because the impact of COVID-19 on each industry is different, the pressure to pay Lunar New Year bonuses varies among industries. For sectors that are still recording growth in the past year such as banking, real estate, or technology, this is not a big deal. But on the contrary, businesses in hospitality, entertainment, or education will face more pressure when it comes to these bonuses.”
Ha said that the majority of employees still working in the hardest-hit industries understand the difficulties that businesses have been facing, and do not set high expectations for the coming bonuses.
“For businesses struggling to pay them, in addition to budget issues, the main challenge is communicating clearly about the impacts of the pandemic and getting employees to sympathise with limitations in the compensation policy. Employers also need to build trust in employees for future strategies so that they stay, perform well, and contribute to the business,” Ha said.
Businesses can also consider a leaner organisational model, Ha added. With this model, workforces can be reduced but the top talent will be retained and trained to ensure both service quality and customer satisfaction.
