Total Workforce Index 2019 – 3 Challenges for Vietnam’s Labor

Vietnam Briefing is produced by Dezan Shira & Associates

• In 2019, the Total Workforce Index (TWI) ranked Vietnam’s labor force 57th out of 76 for regulation, skills availability, cost efficiency, and productivity.
• The report highlighted three deficiencies: low English proficiency, low minimum wages and widening gender pay gap.
• While improvements have been made, more will need to be done as Vietnam becomes more integrated into the global economy.

In the latest 2019 Total Workforce Index (TWI) report by ManpowerGroup, Vietnam ranked 57th out of 76, a slip from its 43rd ranking in 2018. The index evaluates 100 factors in four key categories including regulation, skills availability, cost efficiency, and productivity. The report highlights three major challenges in Vietnam’s labor force: low English proficiency, low wages, and a widening gender pay gap.

Read the complete article here.

India Briefing is produced by Dezan Shira & Associates

India has seen some significant changes in its human resources (HR) industry over the last five years.

New priorities have included creating a diverse workforce, establishing gender parity and pay equality, providing mentorship, and assuring safety at the workplace.

Moreover, companies and start-up enterprises alike now view hiring in more holistic terms while job seekers choose their employers based on a wider criterion than salary growth, particularly in the initial stages of their career.

Also, as India enters 2020 amid an ongoing economic slowdown, HR departments across its corporate landscape will be expected to ensure the most efficient utilization of resources through increasing reliance on technology for recruitment, onboarding, and performance management.

Read the complete article here. 

China Briefing is produced by Dezan Shira & Associates

Minimum wages in China continue to grow.

Last year, seven regions in China increased their minimum wage.

The first six months of 2019 saw Chongqing, Shaanxi, Shanghai, and Beijing raise their minimum monthly and hourly wage. This was then followed by a minimum wage boost in Hebei, Fujian, and Qinghai in the latter half of 2019.

In 2018, 15 out of the 31 regions in mainland China increased their minimum wages, while 20 provinces did so in 2017.

Local governments in China are required to update their minimum wages at least every few years but have the flexibility to adjust wages according to local conditions.

Read the complete article here. 

Vietnam Briefing is produced by Dezan Shira & Associates

Labor code 2021

This year, the Labor Code has two major changes in retirement age and overtime hours limit.

The retirement age for men has been increased from 60 to 62, and from 50 to 55 for women. The increase is inevitable to avoid labor shortages in the next decade and to address an unbalanced social insurance fund. Companies can introduce a more flexible retirement scheme whereby senior workers can choose to be freelancers, independent contractors or part-time workers.

The new code also limits overtime to 40 hours a month (300 hours a year). The cap is higher than that of other Asian countries, such as China’s 36 hours a month.

Read the complete article here.

Interview with Christian Tegethoff, Managing Partner, CT Executive Search, published on Expatriant

What are the differences between executive search firms, recruiters, and head hunters in Russia?

In recruitment, there are two different business models: the “contingent” model and the “retained” model. 

“Contingent” means that the searching company only pays the agency a fee in case it hires a candidate proposed by the agency. 

“Retained” means that the fee agreed at the start of the search is paid in installments, which are charged when project milestones are reached. Three installments are usual, with one being invoiced at the start of the assignment, the second upon presentation of the candidate shortlist and the third one upon placement of a candidate. 

The retainer fee model ensures that the executive search firm receives a major part of their fee regardless of whether a placement actually happens. This allows the search firm to conduct a deeper market analysis, more in-depth candidate evaluation and generally a higher level of service. 

The retainer model is mainly applied for senior management searches, other positions are usually filled according to the contingent model.

Read the complete interview here.

ASEAN briefing is produced by Dezan Shira & Associates

• Employers in the Philippines should understand the obligations around the 13th month pay and Christmas bonuses.
• The 13thmonth pay is exempt from tax, up to a limit of PHP 90,000 (US$1,778) and is mandatory, while the Christmas bonus is at the discretion of the employer. 

The 13th month pay and Christmas bonuses in the Philippines are an important aspect of HR policy that employers need to understand.

A key topic that often prompts questions is the distinction between the two systems and the tax rules surrounding them. Though both bonus payments are distinct, they can interact to create diverse tax outcomes. 

Read the complete article here. 

ASEAN briefing is produced by Dezan Shira & Associates

• The Indonesian government introduced Regulation 78 of 2019, offering a variety of income tax incentives for investments in specific industries and provinces.
• These incentives include tax deductions, the accelerated depreciation of fixed tangible assets, and the accelerated amortization of intangible assets, among others.
• The development bodes well for businesses as the tax allowance schemes have been expanded to 183 from 145 sectors.

Indonesia’s government on December 13, 2019, issued Government Regulation 78 of 2019 (GR 78, 2019), which sets out a variety of income tax incentives for businesses investing in specific industries and provinces in the country.

These incentives come in the form of tax deductions, the accelerated depreciation of fixed tangible assets, and the accelerated amortization of intangible assets. The regulation also increases the period for fiscal loss compensation, in addition to setting the income tax rate on dividends for foreign taxpayers at 10 percent.

Read the complete article here. 

Vietnam Briefing is produced by Dezan Shira & Associates

• Vietnam’s National Assembly approved a new Labor Code which will take effect in January 2021.
• The amended code offers greater protection for employees and is viewed as better aligned with international best practices.
• Businesses should review their labor practices and prepare themselves to be compliant when the labor code takes effect.

Vietnam has approved an amended Labor Code which will come into effect in January 2021. The amendment to the labor regulations are a step towards aligning with international labor standards particularly as Vietnam integrates into the world economy as noted by the International Labor Organization (ILO).

Most of the code remains the same however, changes have been introduced to probationary employment, mandatory work rules, notice requirements, and other provisions generally suited to employees.

Read the complete article here. 

India Briefing is produced by Dezan Shira & Associates

• Income tax for foreign nationals in India is determined based on their level of residency.
• Foreign nationals who are employed in India are liable to income tax.
• Only foreign nationals who qualify as non-residents are not liable to income tax.

In India, an individual’s income is taxed at graduated rates, depending on his/her residential status in India and income level. Non-employment income is taxed at a variable rate according to income type. 

In this article, we outline the rates and calculation methods for both income sources, and summarize common tax deductions and inclusions in income for foreign nationals working in India.

Read complete article here. 

Vietnam Briefing is produced by Dezan Shira & Associates

• Vietnam will increase minimum wages by approximately 5.7 percent from January 1, 2020.
• The increase varies from US$6 to US$10 depending on living expenses in a particular region.
• Businesses should prepare and incorporate the increase in their budgets for the next year.

Vietnam will increase the minimum wage by an average of 5.7 percent in 2020. The government issued Decree no 90/2019/ND/CP which will take effect on January 1, 2020.

In addition, salaries that are paid to employees who have had vocational training must be paid at least 7 percent higher than the minimum salary level.

Read the complete article here.

Interview with Christian Tegethoff, Managing Director, CT Executive Search

The Hungarian HR market is considered very competitive. How do you find suitable candidates for executive roles?

The labour market is indeed fiercely competitive, especially in production-related management positions. In view of the large number of production sites of international companies in Hungary, Plant Managers, Production Managers and other technical executives are in demand. Recruitment for such positions therefore requires some effort, especially for more remote locations.

Job postings currently have little chance of success in Hungary. We work exclusively through direct search, i.e. through the targeted identification and addressing of potential candidates.

Read the complete interview here. 

Interview with Rainer Tom, Partner, international law firm bnt

To what extent is legal certainty given to companies in Hungary?

On what foundations does Hungarian law rest? Hungary has been a member of the European Union since 2004. There is a separation of powers, the executive, legislative and judiciary are independent. The legal system is stable and reliable. Even though court proceedings tend to take a very long time compared to Western Europe (not least due to the fact that numerous court dates are set before a judgement is passed even in simple cases), they are conclusively justified and comprehensible, especially in the higher courts.

Read the complete interview here. 

Interview with Jürgen Schreder, Business delegate, Wirtschaftskammer Österreich, AußenwirtschaftsCenter Budapest

How is the Austrian economy represented in Hungary today?

Austrian companies were the first to invest in Hungary after the fall of the Iron Curtain. Austria has also been one of the most important investment partners in Hungary since then, currently ranking third behind Germany and the Netherlands.

According to the Austrian National Bank (ÖNB), the total stock of direct investment amounted to 5.7 billion euros in 2018, which represents a slight decline compared to 2017 (6.3 billion euros). A look behind the figures shows that Austria has built up a strong presence in Hungary: Austria has the second largest number of branches in Hungary, just behind Germany and well ahead of the US, and Austrian companies are the third largest foreign employer (behind Germany and USA), having created over 69.000 jobs.

Read the complete interview here. 

A report by africon and partners

By 2035, Africa will have the largest workforce worldwide. This is where the global markets, the customers and the employees of the future are growing.” The Federal Ministry of Education and Research (BMBF) has also been pursuing a focused “Africa strategy” since 2018. The “Mittelstandsindex Afrika” aims to support the German “Mittelstand” (SME sector) in its own quest to expand in Africa by raising awareness about opportunities, creating transparency at an early stage by providing a guideline for a structured approach to the African markets.

The “Mittelstandsindex Afrika” draws its information from 55 input factors consisting of specifically gathered primary data and existing secondary data sources. These are summarized in 16 “indicators” for SMEs, which in turn are condensed into three “key indicators”. These “key indicators” – “Scale and Scope of Opportunities”, “Getting into the Market” and “Navigating inside the Market” – give rise to a country rating that allows a mid-sized company a quick overview of each country’s business appeal. 

Read the complete report here. 

A report by BEITEN BURKHARDT

Executive employees

Executive employees (leitende Angestellte) are accorded a special role in Germany. They are at the top of the operational hierarchy, below the senior management, but are at the same time employees. Their status is unique because they are subject to direction as employees on the one hand but also exercise the functions of employers with respect to the rest of the workforce (management functions) on the other. The German legislator takes this special role into account in a number of ways:

• The law on public working hours is not applicable to executive employees.
• The regulations on the protection of employment apply less strictly to executive employees.
• Under the works constitution, executive employees are not represented by the works council, but can elect their own representative bodies (executives’ representative committees).

Read the complete report here. 

SOTM by africon

The real estate industry in South Africa has been growing steadily in the last few years. Looking at the industry’s three main segments, i.e. residential, commercial, and additions/alterations, it is apparent that South Africa residential developments have increased the most in value, at a growth rate of 11.37% between 2015 and 2018. Similarly, additions and alterations have increased at a growth rate of 7.92% in the same period. The growth in these two segments can however be accredited to the country’s growing urban population.

Read the complete article here.

India Briefing is produced by Dezan Shira & Associates

When establishing human resource (HR) polices in India, foreign companies need to strike a balance between their own best practices and local norms in the country.  

Foreign companies should seek to establish a strong understanding of laws and regulations that inform HR administration as a basis for their HR policies in the country. This is particularly important in country like India, where federal, state, and industry-specific regulations govern labor laws.

Read the complete article here. 

ASEAN briefing is produced by Dezan Shira & Associates

• Personal income tax in Indonesia is determined through a self-assessment system, meaning resident tax payers need to file individual income tax returns.
• Resident tax payers are subject to progressive tax rates ranging from 5 percent to 30 percent.
• Given the consequences of non-compliance, foreign workers should seek help from registered local tax advisors to better understand their tax liabilities.

Expatriate workers need to know that personal income tax (PIT) in Indonesia is determined through a self-assessment scheme.

Read the complete article here. 

Vietnam Briefing is produced by Dezan Shira & Associates

• Vietnam ranks high globally in terms of its female labor participation rate, but more will be required to bring equal access job opportunities to women.
• Challenges faced by Vietnamese women include societal and cultural notions of women being homemakers.
• Government policy reforms and the public sector can take practical action to develop favorable policies and regulations to create equal opportunities for women.

Vietnam has consistently outperformed ASEAN countries, as well as Western ones, with its female labor participation rate, as reported by the Asian Development Bank (ADB) and the Organization for Economic Co-operation and Development (OECD).

Read the complete article here. 

Interview with Christian Tegethoff Managing Director CT Executive Search

What kind of mandates are you currently working in Ukraine?

In Ukraine, we are predominantly working for medium-sized companies who want to strengthen their local teams or make a change at the head of the Ukrainian subsidiary. Typical positions are Country Manager or Managing Director, Representative or Sales Director.

Read the complete interview here. 

An interview with Heiko Kreisel Managing Director of Zeppelin Ukraine, Kiev

After the crisis years of 2014 and 2015 with the sometimes civil-warlike conditions, we are now back on track for growth. At the height of the crisis, we reduced our workforce to 300, and now employ more than 550 people - more than ever before in Ukraine. Today, we are represented at fourteen locations between Lviv and Dnipro, Kiev and Odessa.

Around 50% of our sales are generated by the mining segment, 20% by construction and road construction machinery, 15% by drives and gas engines. The agricultural machines achieve 15% of the sales volume.

Read the complete interview here. 

An interview with Andreas Schwabe Senior Economist CEE, Raiffeisenbank International AG, Vienna

Ukrainian economic growth has clearly exceeded expectations. We had assumed that in the double election year 2019, due to the political uncertainties, there will be a subdued growth of 2-3%. However, consumer confidence in the population has improved this year and expectations of many Ukrainian companies remain positive. As a result, growth for the full year 2019 should exceed 3%. Among other things, the strong growth is due to the significant increase in real wages of around 10% year-on-year, which is leading to a strong increase in retail sales and increased construction activity.

Read the complete interview here.

SOTM by africon

Over the last five years, Africa has been recording a trade deficit when it comes to total annual imports and exports of goods. Data trends also show that imports to and exports from Africa started increasing in 2017 after the decline in 2015. Also, China, France, USA, Germany, and India have remained Africa’s top export partners in these past years.

In 2018, Africa’s total imports was worth approximately 549 billion USD, and the largest imported product (using the 4-digit category) was petroleum and mineral oils which was valued at approximately 60 billion USD, that is, 11% of Africa’s total imports in 2018.

Read the complete article here. 

China Briefing is produced by Dezan Shira & Associates

Following the announcements made in the annual Work Report delivered at the Two Sessions, the Ministry of Finance, State Taxation Administration, and General Administration of Customs have jointly issued a series of new policies on value-added tax (VAT).

The new polices, which took effect on April 1, 2019, aim to enhance economic activity in certain sectors by lowering VAT rates and increasing VAT credits.

The latest changes mark the final stages of China’s overhaul of its VAT system, and come as part of a larger RMB 2 trillion (US$298.3 billion) cost cutting package intended to boost China’s economy.

Read the complete article here. 

ASEAN briefing is produced by Dezan Shira & Associates

• Indonesia offers tax deductions of up to 200 percent for businesses that invest in human resources development activities.
• A mismatch between labor force skills and the needs of foreign investors is a primary reason why the country is failing attract manufacturers shifting their supply chains as a result of the US-China trade war.
• The government hopes these incentives will enable its labor force to upgrade their skills and become more competitive.

On September 6, 2019, the Ministry of Finance issued Regulation No. 128 of 2019 (GR 128, 2019), which sets out tax incentives for businesses that invest in developing talent in Indonesia.

Read the complete article here.