Improving labour productivity critical for businesses

Improving labour productivity is vital for Vietnamese businesses in the context of the Fourth Industrial Revolution, with rapid increases in digitalisation, robotisation and intelligent automation, experts said.

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(Illustrative photo: VNA)

Labour productivity was the core factor in the competitiveness of the economy and every enterprise.

However, labour productivity of Vietnam remained low compared to other countries in the region, according to Nguyen Chi Hai and Huynh Ngoc Chuong from the University of Economics and Law under the Vietnam National University, HCM City.

In a publication on the online newspaper of the Government baochinhphu.vn, they cited statistics from the Asian Productivity Organisation showing that the per-hour labour productivity level of Vietnam was 5.2 USD, higher than Cambodia and Myanmar, but lower than Laos.

Vietnam’s labour productivity was equivalent to eight percent of Singapore and 35.86 percent of Thailand.

In addition, most private firms of Vietnam (98 percent) were of micro, small and medium sizes, meaning that labour intensity, limited technology and management capacity and low product quality remained common, they pointed out.

Inadequate investment for research and development also limited the competitiveness of Vietnamese private companies. Most private firms were using technologies about two generations more outdated than the global average. Only 15 percent invested in research and development.

Foreign-direct-investment (FDI) companies remained dominant in exports.

Improving labour productivity is vital for Vietnamese firms to improve competitiveness, the experts said.

Vietnam needs policies to increase labour productivity by 7- 8 percent per year, with a focus on productivity in industry first, then agriculture and service sectors.

For firms, it was necessary to select the products of their competitive advantage, renovate technologies and improve management capacity – the key to boost labour productivity.

The experts said that in the context of Industry 4.0, promoting the development of knowledge economy, sharing economy and digital economy was important to improving competitiveness, which would help Vietnam to narrow the gaps with other countries.

Focus should also be placed on improving quality of human resources and attracting talents.

While the US-China trade war remains unpredictable, Vietnamese firms were facing significant pressure.

“There will be many approaches to offer solutions for businesses. However, it can be affirmed that internal factor will be the decisive factor. Improving competitiveness will be the key to sustainable development of businesses in particular and the Vietnamese economy in general,” the experts wrote.

The increase in automation in Industry 4.0 triggered worries about huge job losses.

However, Nguyen Duc Thanh, Director of the Vietnam Institute for Economics and Policy Research said that this is the time to improve labour productivity.

“This will be an unprecedented development era of human beings in labour productivity,” Thanh said, because automation would force people to learn to create new value.

VNS/VNA