Vietnam will face challenges if it does not make the most of its golden population structure. To ensure future development, human resources or talent must be nurtured, so they become “a pillar of the country” in the upcoming decades.
To develop an international financial center in Vietnam, economic experts believed that investment banks and their human resources would matter much more than the advantages of time zones and preferential policies on infrastructure. It requires human resources to mobilize billions, even tens of billions of U.S. dollars, in a short time and capital for projects in Vietnam and worldwide.
If the domestic talent cannot fulfill this requirement, the country will need cooperation from overseas Vietnamese people with remarkable achievements in the fields of economy, finance and investment around the world. Moreover, their support will be needed for the training of domestic laborers.
However, it is sad that the Vietnamese labor market has been short of high-quality human resources. In 2008, a leader of Intel Products Vietnam said the company found it hard to find suitable candidates for leadership, main engineers and skilled technician positions.
After nearly 15 years, Vietnam’s economy attracted dozens of large technology enterprises, including Samsung, Apple, Foxconn and Luxshare.
Currently, the number of employees in the electronics industry has reached some 1.3 million people. However, the majority of laborers participate in the lowest stage of the supply chain, such as product processing and component assembly, according to Tran Thi Hong Lien, deputy director of the VCCI’s Bureau of Employer Activities.
Given the appearance of international technology corporations in Vietnam recently, the current situation of domestic human resources sparks concern.
There is a huge gap between labor demand and supply in strategic projects, especially in the segments of skilled workers and senior personnel.
Perhaps, youths have yet to receive adequate professional and intensive training to satisfy the requirements of the labor market. That partly explains why many foreign direct investment (FDI) projects still use a large number of unskilled workers instead of high-quality human resources. Despite the increasing skilled labor demand from those projects, Vietnam has been short of adequate education and training programs.
Another reason is the laborers. Currently, the “learning before working” model seems to be the best choice for generations X and Y (born from 1956 to 1999). Once they fail to set a goal to become skilled workers, their current jobs may be temporary. In this case, they cannot focus on improving their skills and knowledge.
Moreover, things must be changed to facilitate strong economic growth, take advantage of natural resources and geographical locations, as well as satisfy the requirements of the labor-intensive and capital-intensive industries.
“The golden population structure” is not just a blessing
The ManpowerGroup’s Total Workforce Index™ 2022 report details the shortcomings of the Vietnamese labor market. For example, despite the high rate of universalization of education (around 88%), only 11.67% of the employees are highly skilled or specialized. The ratio has not changed much from three years ago. Moreover, human resources training and the educational process, in general, are not fully effective.
Up to 70.3% of Vietnamese people can use the Internet, yet the employees who can work remotely only account for 9.05% of them. This fact forces those who are optimistic about the development of Vietnam’s digital economy to be more cautious. The ratio of Internet users, smartphones, and internet usage only ensures that Vietnamese people have quickly become “the customers” in the digital economy. It neither indicates nor guarantees the ability to integrate and co-create anything based on globally popular technology platforms.
Meanwhile, the trend of replacing unskilled labor with robots will have a heavy impact on labor markets similar to those in Vietnam.
With the current income of US$275/month, equivalent to US$3,300/year, the income per capita must increase by nearly US$800 for Vietnam in the next seven years to join the upper middle-income countries (from US$4,046/person to US$12,535/person according to the World Bank’s Data in 2020) by 2030.
The solution is to increase productivity in a fully developed and digital economies. The problem here is to reach that solution, the workforce quality must be improved accordingly.
Reaching the high-income level economy (over US$12,536/person) will be a difficult task. According to the current goal, Vietnam’s income per capita will have to increase by more than US$8,000 within 15 years after the 2030 mark. It requires a breakthrough in both productive forces and production methods. Perhaps, discussions and constructive criticism about this problem are needed for specific solutions.
It is also an urgent requirement for the country. Many sociological studies indicate that Vietnam will enter the population aging stage in 2040. From this point, the population aging problem will pressure the economy, such as economic growth, social security infrastructure, and pension funds. To make things worse, based on Ministry of Health data released in August 2022, Vietnamese enjoy only 64 healthy years on average compared with their current life expectancy of over 73 years.
This burden may become even bigger because the same report of ManpowerGroup indicates that the proportion of informal employees, with no proper labor contracts and little to no opportunity to participate in the compulsory social insurance program, account for 55% of the total workforce. Creating the economic foundation and institution for people to achieve higher incomes is the only key to the prosperity, stability and sustainability of a nation.
How to improve our workforce quality
In the current circumstance, the shortcut may be to strategically train the workforce to fit the development goals of the economy while identifying and making the best of our comparative advantages to improve the quality of the workforce simultaneously.
Vietnam is aiming for the stars with ambitious projects, such as building the international financial center and becoming a logistics center of the region and the world. Henceforth, preparing the workforce for top management positions is an issue that needs to be handled right from the start.
Appropriate solutions will be worked out to develop this type of workforce and use a well-trained, high-quality workforce, domestically and internationally. The country can even invite overseas Vietnamese and foreign experts to work as consultants or supervisors to train our laborers.
Attracting talented people from the state-owned sector will stimulate the domestic training process and become the driving force to nudge the socialization resources in education in the right direction. In layman’s terms, well-off families can convince their children to pick the majorities that fit the needs of our country so that they will return to work for our country.
The salary and the working environment would be an inherent hindrance. However, once Vietnam aims to catch up with the world, human resource management can no longer function the old way.
FDI technology enterprises expanding investment and setting up R&D centers in Vietnam is an opportunistic trend for the labor market.
However, it needs national-level commitments from the enterprises, along with the monitoring of the implementation of these commitments from the government agencies.
The vicious circle of international technology transfer and the responsiveness of Vietnamese enterprises and workers will end if this process is carried out according to a specific roadmap. The Government will provide maximum support in technology and training to receive the above transfer.