One of the greatest bottlenecks in Vietnam’s public sector reform is the persistently low wages of civil servants and public employees - an issue that continues to erode motivation and weaken service quality.

When low pay is no longer ‘a given’

The World Bank’s latest report, Vietnam 2025: Institutional Breakthrough for a High-Income Future, reveals a troubling reality: Vietnam’s public sector - despite being larger than those in most comparable countries - offers significantly lower pay than the private sector. This pay disparity threatens public service quality, demotivates employees, and makes it difficult to attract and retain high-caliber talent.

In many countries, public sector jobs come with slightly higher salaries than private sector roles, meant to compensate for strict integrity requirements and the stability of government work. However, this is no longer the case in Vietnam. While employees in state-owned enterprises earn close to their private-sector counterparts, those working in specialized agencies - such as education, healthcare, and judicial or executive branches - are left far behind.

Private companies in Vietnam pay up to 42% more for legal and administrative roles, and in some regions, the gap reaches 80%. Public education and healthcare workers also face income gaps ranging from 14% to 40%, depending on location.

This gap is widening. Fifteen years ago, the public sector sometimes offered better pay than the private sector. The shift stems mainly from faster private sector wage growth, while public wage reform remains slow and cautious.

Diminished work motivation

Wages are a key driver of workplace motivation. When income fails to meet basic needs or match job performance, public workers may lose their drive, seek side jobs, or leave the sector altogether. This leads to a “brain drain” and raises the risk of misconduct - from petty corruption to budget mismanagement.

Even as Vietnam intensifies anti-corruption efforts, the lack of synchronized institutional reform - particularly in public salary policy - may produce adverse consequences. When pay is low, rules are vague, and legal risks are high, civil servants tend to avoid making decisions for fear of mistakes. The result: sluggish bureaucracy and declining performance, especially in areas like public investment that require decisive leadership.

Wage reform must be faster and more flexible

Vietnam’s 30% public sector pay raise in 2024 is a welcome step. However, according to the World Bank, this increase merely narrows the gap with private sector wages - it does not eliminate it. The wide disparities across regions and professions underscore the need for a more flexible wage system, rather than the current flat-rate structure.

Pay must reflect job roles, skills, and performance, alongside selective staff reduction. In key areas such as education, healthcare, justice, and public finance - where public service quality and public trust are directly at stake - there must be clear incentive structures to attract and retain talent.

Wage reform and staff streamlining must go hand in hand

Vietnam is restructuring its public administration, aiming to reduce staffing levels by 20% to improve efficiency and cut costs. While necessary, this move risks backfiring if not coupled with quality improvements - especially wage reform. A leaner workforce without competitive pay could drive away capable staff and overload those who remain, reducing policy effectiveness.

Therefore, salary reform is not just a matter of budget or HR - it is central to building a capable, transparent, and competitive state that can match the private sector in talent acquisition.

Low wages in the public sector are a reality that Vietnam can no longer ignore. Unless the issue is resolved at its core, it will continue to erode the strength of state institutions, weaken public service delivery, and create openings for unethical behavior.

Salary reform must go hand in hand with organizational and institutional reform and public sector modernization - this is the only path if Vietnam is to build a professional, efficient, and ethical administrative system.

Lan Anh