Increased Labour Productivity: Economic Growth Driver

With the assessment that the labour productivity in Vietnam is the lowest in the region, Mr Nguyen Ngoc Phi, former Deputy Minister of Labour, Invalids and Social Affairs said that the low labour productivity in Vietnam was due to 47 percent of workers in the agricultural sector which contributed only 18 percent of GDP.

 

Currently the world puts the emphasis on increasing productivity in the industry; every country has assigned agencies in charge of productivity promotion. The productivity of a nation has great influence on international treaties, international economic integration, and international technology. Productivity has great influence on the relationship between employees and employers.

 

According to Nguyen Anh Tuan, Director of Institute of Productivity, General Directorate for Standards and Quality, for the project of the Ministry of Science and Technology, in recent times, we have built around 200 models applying advanced management solutions to help improve productivity, reduce the time taken, and reduce costs and waste. Through these solutions, enterprises can achieve productivity gains of 15 to 20 percent or more. In addition, we also support 500 other businesses in applying these solutions.

 

Mr Tuan analysed that to increase labour productivity of the economy, we have to increase the productivity of each sector of the economy: agriculture; industry - construction and services. Therefore, it is necessary to lift the knot for the sustainable development of agriculture, income and labour productivity of farmers.

 

Labour productivity of Vietnam is considered to be low, while the minimum wage continues to increase, while limited allowed overtime has forced many businesses to close their factories. At the conference on labour productivity and increasing the minimum wage organised annually by Vietnam Chamber of Commerce and Industry (VCCI), many industry associations such as textiles and footwear proposed amending the Labour Law. Particularly, they proposed increasing allowed overtime to 60 hours / month as Japan, for overtime hours to compensate for labour productivity which is still too low, to offset costs which continue to increase, and improve the income of the employee.

 

Chairman of Vietnam Association of Energy Investors Tran Viet Ngai affirmed that Vietnam has achieved important results in job creation as well as significant improvements in labour productivity. But there are still limitations that it needs to be overcome so labour and labour productivity do not become a "blockage" of growth. Labour and labour productivity play their important role because they generate income and purchasing power of solvency, increase in domestic consumption - the driving force of economic growth, the "finality" of economic to the economic turmoil outside. The labour productivity is very low in electricity sector. Many people say it was due to outdated electrical technology but it was not. Equipment of EVN is also not bad, but workers in this industry are many, especially in the branches of power. Payrolls in the power plant are also very crowded; it surpassed conventional power plants in the world. In the world, 1 MW is managed by 1.5 to 2 people. But in Vietnam, there are about 15-20 people.

 

Low labour productivity is a hindering factor to economic growth, particularly in terms of quality; the underlying factor which creates unbalanced macroeconomics; and the resistance of income due to low professional qualifications of the workforce.

 

The problem of yield contributes significantly to the problem of the overall growth of the economy, and Vietnam soon has to address this to move forward on its growth path.