The World Bank’s latest report, "Vietnam 2045 – Breaking Through: Institutions for a High-Income Future," highlights a concerning reality: Vietnam’s public sector, despite being larger than in most comparable countries, pays significantly lower wages than the private sector. 

In many countries, the public sector often offers slightly higher salaries than the private sector to compensate for the stability and integrity required in public service. However, this trend doesn’t hold true in Vietnam. While employees in state-owned enterprises earn incomes close to or equivalent to those in the private sector, those working in specialized agencies, such as education, healthcare, legislature, executive, and judiciary, are significantly outpaced in terms of income.

The salary gap between the public and private sectors in Vietnam is stark. For instance, private enterprises pay up to 42 percent higher for positions in legal and executive roles, with this figure reaching 80 percent in some localities. Public healthcare, education, and specialized agencies face similar disparities, with salary gaps ranging from 14 percent to 40 percent depending on the region.

Notably, this wage gap has widened compared to 15 years ago, when the public sector could still offer slightly higher salaries than the private sector. The main reason is that the private sector has increased wages much faster, while public sector salary reforms have been slow and cautious.

Work motivation eroded

Salary is a key factor in determining work motivation. When income is insufficient to cover basic living needs or match one’s capabilities, civil servants lose their drive to contribute, often seeking side jobs or leaving the public sector entirely. 

This not only causes a “brain drain” but also creates risks of negative behaviors in public service, from petty corruption and harassment to mismanagement of budgets and public investments.

Even when Vietnam intensifies its anti-corruption efforts with strong deterrent measures, the lack of synchronized institutional reforms, particularly the failure to improve salary policies, could lead to serious consequences. 

Low salaries, unclear regulations, and high legal risks make civil servants hesitate to act or make decisions, fearing mistakes. The result is a sluggish bureaucracy with reduced efficiency, especially in areas like public investment, where decisiveness and responsibility are critical.

Salary reform needs more flexibility

The 30 percent salary increase in 2024 is a noteworthy effort. However, according to the World Bank’s analysis, this increase only narrows the gap between public and private sector wages, and does not closes it. Additionally, disparities across regions and sectors indicate the need for a more flexible salary policy, rather than the current uniform, one-size-fits-all system.

Paying based on job position, capability, and performance needs stronger implementation, alongside selective staff streamlining. Particularly in critical sectors like education, healthcare, judiciary, and public finance, where the quality of public services and societal trust are directly affected, clear preferential salary mechanisms are needed to attract and retain talent.

Apparatus streamlining and salary reform

Vietnam is restructuring its administrative system, aiming to reduce the public sector workforce by 20 percent. This is a necessary step to improve efficiency and reduce operational costs.

However, simply reducing headcount without improving quality, especially without addressing the salary issue, could backfire. The system may become leaner but lose talent, leading to a situation where “fewer people do more work” and policy implementation becomes less effective.

Thus, salary reform is not just a financial or personnel policy issue but a core component of building an efficient, transparent public sector capable of competing with the private sector for talent.

Low public sector salaries are a reality that can no longer be ignored. If not addressed fundamentally, this issue will continue to erode state capacity, weaken public service quality, and create opportunities for negative behaviors.

Salary reform must go hand in hand with organizational reform, institutional reform, and modernized public governance, a necessary path if Vietnam aims to build a professional, effective, and integrity-driven administration.

Prime Minister Pham Minh Chinh said at a conference in late February 2025 that the average salary of workers in 2024 reached nearly VND9 million per month, an increase compared to 2023. The average bonus for the 2025 Lunar New Year is VND7.72 million per person, up 13 percent from the bonus for the 2024 Lunar New Year.