Raising labour productivity crucial for higher incomes

Would you brief us on the status of the current labour market?

The per capita average income of workers currently comes to around VND7.6 million ($315), up about $23 on-year overall.

This average income hike takes place across the board, with few sectors, including real estate, finance-banking and insurance, eyeing a remarkable hike. Other sectors have had an insignificant rise, after taking inflation into account, particularly jobs in the non-official sector, which accounts for nearly 65 per cent of total labourers nationwide.

Currently, Vietnam has around 51.3 million people aged from 15 and above in employment, up more than 174,000 people compared to a year ago. However, each year around 600,000 become of working age, so it is important to introduce more policies on job creation, particularly those enhancing the skills and engaging trained labourers.

Such promotion often only occurs in labour-intensive sectors such as textile apparel, and with businesses who have secured export orders, and take place in pivotal areas for economic development such as Binh Duong, Dong Nai, or Ho Chi Minh City.

These businesses are common in that they only lack common workers without certification to perform seasonal work. After firms complete their orders and fail to sign new ones, these labourers would reach contract termination.

This practice shows that the current labour market lacks sustainability as more than 930,000 labourers are jobless, up 26,400 people compared to the end of 2023, and 47,200 people more than the same period last year.

With chronic problems in the labour market, what difficulties do the domestic economy currently face?

As of now, the labour market is home to about 37.8 million of untrained labourers. About 8 per cent of the youths are jobless, and 4.3 per cent of total labourers, equal to 2.3 million people, are yet to avail of their full potential in time and capacity. These limitations have existed for years, yet little improvements have been posted.

In 2023, we teamed up with the United Nations Population Fund in Vietnam to conduct the Vietnam National Transfer Accounts report, with a view to providing key updated information and findings about the impacts of demographic changes on Vietnam’s economic development.

The study shows that population aged from 22 to 53 have incomes bigger than spending, in which the golden period spans from ages 25 to 49.

For ages outside this period, people have income smaller than their spending. Hence, it is essential to solve the puzzle by raising labour productivity, helping labourers aged 22-53 to have extra incomes, from there increasing their personal spending, accumulating savings for retirement and indirectly hiking spending for those having posted fewer incomes than spending.

How can we boost productivity?

For couples of years now, Vietnam’s labour productivity growth pace was among the lead regionally, however, the absolute value of Vietnam’s labour productivity was much lower compared to that in the region, and shortening the gap proves quite challenging.

The Vietnamese government is committed to narrowing this gap, and set a goal that by 2030 labour productivity shall become a key driver to fast and sustainable growth, effectively availing of opportunities from Industry 4.0; in which improving the quality of market economy institutions, improving human resource quality, promoting regional links, sci-tech development, innovations and digital transformation are key pillars.

From now until 2030, the average labour productivity growth must surpass 6.5 per cent annually, in which that in the processing and manufacturing sector needs to grow from 6.5-7 per cent annually; in the agriculture-forestry and fisheries sector from 7-7.5 per cent; and in the service sector also from 7-7.5 per cent per year.

The government has assigned specific tasks to each sector and ministry in improving labour productivity. The Ministry of Planning and Investment (MPI) is tasked to study and propose the establishment of the National Productivity Committee, and ensure effective implementation of the tasks and solutions enacted in the overall strategy on the service sector development. It will also preside over the implementation of policy dialogues and experience sharing about raising labour productivity in new circumstances.

The prime minister also assigned the MPI to study mechanisms for the establishment of international financial centres at potential metropolises, the development of innovation centres, and the completion of a statistical index system to make assessments of labour productivity at all levels.

Vietnam’s labour productivity has improved but is still low in comparison with other ASEAN members, according to a report by the Ministry of Planning and Investment.

There is a critical need in Vietnam to enhance skills for workers. Nguyen Chi Truong, director of the Occupational Skills Department at the Ministry of Labour, Invalids, and Social Affairs, spoke to VIR’s Thai An on preparing properly for the recovery of the labour market after the pandemic threat drops.