Low-cost labor in Vietnam is a magnet for foreign manufacturers. However, with the rapid development of Vietnam’s economy, the Vietnamese labor market is changing. To unleash the full potential of the labor market, businesses need to truly understand these changes.
During the two years of the pandemic, the changes in of Vietnam’s human resources have posed numerous challenges for workers and their livelihoods. So far, however, the turbulent nature of the labor market seems to have somewhat stabilized.
One of the biggest changes in the labor market in 2022 is to increase the retirement age of men to 60 years and 6 months, and of women to 55 years and 8 months. This regulation has contributed to an increase in the number of people of official working age in Vietnam.
The General Statistics Office of Vietnam (GSO) informs that as of October 2022 the number of Vietnamese people of working age was 51.9 million, of which 50.5 million were employed. According to the above statistics, Vietnam’s unemployment rate in 2022 will reach 2.3%, equivalent to the unemployment rate before COVID-19, and significantly lower than the rate of 3.9% in 2021.
Vietnam is in the ‘golden population age’, with more than 70% of the population of working age. It is estimated that around 2038, Vietnam’s golden population period will end, when the proportion of the population over 60 years old accounts for 20% of the population. Until then, however, the young workforce remains a major driver of national development.
Workforce in the manufacturing sector
In 2022, both employers and employees in the manufacturing sector have faced a series of challenges and difficulties.
In early 2022, many factories had to deal with backlogs from the COVID-19 lockdowns in 2021. Meanwhile, workers did not want to return to work in big cities.
The shortage of qualified workers was short-lived at the beginning of the year, but reversed at the end of the year, when Vietnam had a surplus of workers but not enough orders. This is largely due to the slowdown of the global economy, especially the rising inflation in key markets of Europe and the United States.
In October, Vietnam’s purchasing managers index (PMI) dropped to 50.6 points (down 1.9 points compared to September). This is reflected in lower-than-expected orders later this year, mainly in the textile sector. Some factories have laid off workers and some have even closed completely.
However, the GSO still recorded job growth in the manufacturing sector. In the third quarter, the number of newly hired workers increased by 156,000 people compared to the second quarter of 2022, bringing the total number of workers in Vietnam’s manufacturing sector to nearly 12 million.
Lack of trained human resources in tourism
Tourism and hospitality are perhaps the industries hardest hit by COVID-19. Due to the prolonged border closure, in the past time, many workers have left the tourism industry permanently.
The Ministry of Culture, Sports and Tourism said that in 2020, tourism businesses had cut up to 70-80% of their workforce and this trend continued in 2021.
On May 15 of this year, Vietnam’s borders reopened and although the number of foreign visitors entering Vietnam is increasing, the tourism industry is still struggling to be able to recruit a sufficient workforce.
Although the shortage of qualified workers in the tourism industry has been exacerbated during the COVID-19 pandemic, this is not a new situation for Vietnam’s tourism industry. Before the pandemic, only 42% of workers in the tourism industry were trained, more than 38% moved from other industries and the remaining 20% worked in the industry without any training.
The information technology industry is lacking in one third of high-quality workers
During the pandemic, Vietnam became one of the most active startup markets in Southeast Asia.
The demand for highly skilled technology human resources in Southeast Asian countries has created a huge investment wave in the region. In 2021, Vietnamese startups received a total investment of up to USD 1.4 billion, significantly higher than the record of USD 874 million in 2019.
Meanwhile, according to Adecco’s Vietnam labor market update in the third quarter of 2022, information technology businesses need 530,000 workers. However, in reality, the industry lacked 150,000 such workers in the same period. According to Adecco’s forecast, in 2024, the information technology industry will also lack about 195,000 workers compared to the market’s demand.
Henry Tran – VietnamCredit