VCCI President: Labor productivity improvement should start from industries and businesses

3:21:11 PM | 8/7/2019

In order to continue to promote productivity growth, it is necessary to improve the productivity of sectors/industries and enterprises, especially private enterprises, said Dr. Vu Tien Loc, President of the Vietnam Chamber of Commerce and Industry, Vice Chairman of National Council for Sustainable Development and Competitiveness Improvement, and Chairman of the Public-Private Partnership Committee. He said this during the National Labor Productivity Improvement Conference organized on August 7 and chaired by Prime Minister Nguyen Xuan Phuc and Deputy Prime Minister Vu Duc Dam.

According to Paul Krugman, the winner of Nobel prize for economics, productivity is not everything, but in the long run it is almost everything. This shows the importance of productivity and productivity growth. The only way to achieve the goal of sustainable growth is to get per capita income from US$15,000 to US$18,000/person by 2035 as set out in Vietnam Report 2035, said Dr. Vu Tien Loc.

According to the General Statistics Office (GSO), labor productivity of Vietnam has improved significantly over the years. It has a high rate of labor productivity growth in the ASEAN region. Labor productivity (at current prices) is estimated at VND102.2 million per labor (equal to US$4,521 per labor), the average growth rate of labor productivity in the period 2016-2018 is 5.77% per year.

In the 10-year period (2008-2017), Vietnam's labor productivity (by 2011 purchasing power parity - PPP 2011) increased by an average of 4% per year, higher than that of Singapore (0.9 %/year); Malaysia (1.1% / year); Thailand (2.6% / year); the Philippines (3.3% / year); Indonesia (3.4% / year).

However, the current level of labor productivity in Vietnam is still very low compared to that of other countries in the region. According to PPP 2011, Vietnam's labor productivity in 2017 is US$10,232, only 7.2% that of Singapore; 18.4% of Malaysia; 36.2% of Thailand; 43% of Indonesia and 55% of the Philippines. Notably, the gap in labor productivity between Vietnam and other countries continues to increase.

Labor productivity growth in the past period was mainly due to the shift of labor from the agricultural sector (low productivity area) to the industrial and service sectors (high productivity areas). However, in the current period, labor mobility will not contribute much to productivity growth. Therefore, in order to continue to boost productivity, it is necessary to improve the internal productivity of industries and businesses, especially private enterprises, Dr. Vu Tien Loc proposed.