In the first half of 2015, Vientam’s economy grew by 6.28%
Political and economic reforms have helped transform Vietnam from one of the poorest countries in the world with per capita income below $100 to a lower middle income country with a per capita income of over $2,000 in 2014
According to the Vietnam Ministry of Labor, by the end of 2014, 6.3% of youths between the ages of 15 and 24 were out of work, and 20.75% of new graduates aged 20-24 were unable to find jobs
In the first half of 2015, Vietnam’s economy grew by 6.28 percent, its fastest rate since 2008. Economists attribute the higher GDP to recent efforts by the central government and cities in revenue and tax collection. The country has been considered a success story, where political and economic reforms launched in 1986 have helped to transform Vietnam from one of the poorest countries in the world with per capita income below $100 to a lower middle income country with a per capita income of over $2,000 in 2014.
Over the past few decades, Vietnam has made significant strides in reducing poverty, with the percentage of people living in poverty dropping from almost 60 percent in the 1990s to less than 3 percent today. The external sector is considered the country’s engine of growth, with export value growing by 11.6 percent in 2014, outperforming other countries in the region. Vietnam’s traditional labor-intensive manufacturing exports such as garments, furniture, and footwear, continue to grow at a fast pace. Additionally, recent additions in export such as hi-tech and high-value products including cell phones, computers, electronics, and automobile parts, have also maintained rapid growth.
According to the Ministry of Planning and Investment’s National Center for Socio-Economic Information and Forecast (NCSEIF), the country’s economic growth might hit 6.48 percent by the end of 2015, due to low input prices, push from foreign direct investment companies, and an increase in external demands. Among industries, construction and manufacturing are predicted to be the main drivers of growth. The services sector is expected to see some improvements, though agriculture, forestry, and fisheries will probably experience slower growth.
Vietnam’s Employed Population by Economic Activity
Vietnam has a relatively low unemployment rate when compared to other countries in Southeast Asia. However, the country faces tough challenges with its younger workforce. According to the Vietnam Ministry of Labor, by the end of 2014, 6.3 percent of youths between the ages of 15 to 24 were out of work, and 20.75 percent of new graduates aged 20-24 were unable to find jobs. Meanwhile, 62 percent of companies in Vietnam stated difficulties in filling jobs in 2014. Labor experts believe that this talent mismatch will cause damage to the economy, leading to poor prospects for millions of citizens, missed opportunities for innovation, and slowed economic growth.
Vietnam’s Labor Force
The Need for a Skilled Workforce
A report released by the International Labour Organization (ILO) revealed that Vietnam’s productivity was at 1/15 of that of Singapore and 1/6 of Malaysia. One of the main reasons for Vietnam’s low productivity is that less than 20 percent of the workforce is properly trained, and thus unable to meet the requirements of the labor market. In a separate survey of 200 businesses in Central Vietnam, it was revealed that most graduates from vocational school do not meet the requirements of existing vacancies. As per a report by Vietnamworks, the top employment and recruitment website in Vietnam, the demand for workers in the first half of this year rose 34 percent compared to the same period last year. Most vacancies were found in architecture, interior design, consultancy, retail and wholesale, public relations, and production.
Employment analysts state that in order to be competitive for talent, Vietnam needs more investment in formal education. While enrollment at the tertiary level has increased dramatically in the past ten years, the number of teachers remains unchanged.
A study by the World Bank reveals that employers in Vietnam identify job-specific technical skills as the most important capability when hiring. They are also looking for candidates with cognitive skills such as problem-solving and critical thinking, and behavioral skills such as team work and communication.
Vietnam’s Skills Gap and Skills Shortage
Source: The World Bank
“Vietnamese universities are not producing the educated workforce that Vietnam’s economy and society demand. Surveys conducted by government-linked associations have found that as many as 50 percent of Vietnamese university graduates are unable to find jobs in their area of specialization, evidence that the disconnect between classroom and the needs of the market is large.” ~ Ash Institute at Harvard Kennedy School