Vietnam Labor Market Toward Int’l Standards

10:25:20 AM | 11/4/2022

The Vietnamese labor market is considered to be gradually approaching international standards in a proactive and positive manner.

Developing in terms of scale, quality and structure

According to Dr. Bui Sy Loi, former Vice Chairman of the National Assembly's Social Affairs Committee, after more than 35 years of national renewal, the labor market in Vietnam has made remarkable progress in terms of scale, quality and structure, this is a significant step forward on the path of development, innovation and integration.

In particular, the legal system has been completed relatively synchronously and comprehensively, the Labor Code 2019, the Law on Occupational Safety and Health 2016, the Law on Vocational Education 2014, the Employment Law 2013, the related laws and the guiding documents for implementation have been amended and supplemented to ensure suitability with practical requirements for human resource quality development.

The supply of labor in the labor market has been constantly developing in both quantity and quality. The labor force increased from 27.874 million people (1986) to 38.64 million (2000) and 51.4 million (the second quarter of 2022); the rate of trained workers increased from 49% (2014) to 67% (the first six months of 2022). The rate of wage workers increased from 34.5% in 2010 to 52.93% in the second quarter of 2022, more than 27 million people are working in economic, administrative and public non-business establishments. In the period 2011-2019, on average, 1.5 - 1.6 million jobs were created each year; the overall unemployment rate always remained below 3% and below 4% for the urban unemployment rate. In 2020 and 2021, due to the impact of the COVID-19 pandemic, about 1.3 million jobs were created each year; the unemployment rate of the working age was 3.22% (up 0.54%); the urban unemployment rate was 4.42%, but the labor market continued to recover strongly in the first eight months of 2022.

In particular, the labor market has become a driving force to promote the transformation of labor structure in line with economic restructuring in the process of industrialization and modernization of the country, strongly shifting agricultural labor to working in commodity production, economic sector and labor relations. According to a report by the General Statistics Office, by 2020, the labor force working in the agricultural sector decreased to only 32.8%; the proportion of workers working in industry and services accounted for about 77.2%. Workers had many job opportunities.

However, despite achieving remarkable results, the Vietnamese labor market still has many limitations. According to Dr. Bui Sy Loi, the labor market has not developed synchronously; the labor market policy is incomplete and not strong enough to fully release all resources for investment in economic development, creating many jobs in a sustainable direction. There are still barriers in management and administrative procedures that have not created a fair and equal playing field.

In addition, the labor market has fragmentation among regions, areas and industries and occupations leading to an imbalance in labor supply-demand. Especially, during the COVID-19 pandemic, the labor market was disrupted due to social distancing, workers returning to their hometowns caused the supply-demand relationship of labor to be partially unbalanced, and the number of employed workers fell to the lowest level in many years and tended to have a negative shift in employment structure. The labor supply-demand relationship in the labor market is not suitable in terms of quantity, quality and structure to meet the labor demand of the flexible, modern and integrated economy. The mechanism for dialogue, negotiation and agreement of parties in enterprise-level labor relations has not been completed; the institution for the settlement of labor disputes and strikes is not consistent with reality, so most of the strikes are not in accordance with the provisions of the law. The systems of social insurance and unemployment insurance are incomplete and not closely linked with the social security system, have not yet adapted to the aging process of the population and the emergence of new economic forms, such as circular economy, sharing economy, free economy on online platforms.

National management science on the labor market

To develop a flexible, sustainable, modern, integrated and effective labor market, suitable to the characteristics of each region and each locality as the basis and driving force for the country's socio-economic development, according to Dr. Bui Sy Loi, Vietnam needs to continue to improve institutions, policies and laws in a synchronous and unified manner, creating a labor supply to meet the market demand in terms of quantity, quality and industry structure, especially the trained labor rate. It is important to increase labor demand through business development, production and services in all economic sectors.

“It is necessary to develop the science of national management of the labor market, towards building a comprehensive, synchronous and completely integrated model of labor market management. It is important to modernize human resource management, build a national-level database on employees aged 15 and over, as a basis for determining human resource training needs, connecting supply and demand in the labor market is essential to optimize the use of labor resources,” said Dr. Loi.

Besides, Dr. Loi said that it was necessary to improve the effectiveness and efficiency of state management of labor relations, formalize the labor market in the informal sector in order to gradually move labor from the informal sector to the formal sector; support to create income-generating jobs for disadvantaged groups such as migrant workers, workers with difficult circumstances, poor workers, ethnic minority workers, people with disabilities, people affected by environmental natural disasters, epidemics, climate change in accordance with the context of the industrial revolution 4.0. At the same time, it is crucial to develop mechanisms and policies to import labor to meet the requirements of high-quality human resources and the aging trend of population; adjust labor export policies toward maintaining and expanding developed and high-income markets.

Quynh Chi (Vietnam Business Forum)