Productivity and working conditions is key to Vietnam’s integration success

This is the main message of a conference co-hosted by the State Secretariat for Economic Affairs of Switzerland (SECO), the International Labour Organization (ILO) and the Ministry of Labour, Invalids and Social Affairs (MoLISA) on October 24 in Hanoi.

“Within a generation, Vietnam has transformed itself from one of the most isolated economies to one of the most connected ones, through various free trade agreements,” said ILO Viet Nam Director Chang-Hee Lee.

While acknowledging the benefits the open economy can offer in terms of investment, opportunities in the global markets and job creation, he warned of the risks accompanied, as enterprises face tougher competitions, and workers and their families are exposed to the volatility of global market forces.

“For an open economy to remain competitive while ensuring stable livelihood for its working population, it requires an environment for sustainable enterprise development, and also resilient labour market institutions to mitigate negative impacts of external shocks on the lives of working women and men,” he said.

The Trans-Pacific Partnership (TPP) and EU-Vietnam Free Trade Agreement (EVFTA), to which Vietnam is a party of, requires Labour Code and industrial relations reform in respect of the 1998 ILO Declaration on Fundamental Principles and Rights at Work.

“It is a challenge,” said the ILO Vietnam Director.

Other concerns include the middle income trap that Vietnam has been warned about – the country may not be able to move beyond labour intensive manufacturing, with little added values and low wages for unskilled workforce.

“Given that context, strengthening social dialogue, enhancing productivity and improving working conditions are critically important to respond to the requirements of globalized production processes, and ultimately to contribute to sustainable and inclusive economic growth,” said Swiss Ambassador to Vietnam Beatrice Maser Mallor.

According to MoLISA Vice Minister Doan Mau Diep, this is “the right time” for the Government, together with ILO, business communities, workers’ organizations and other partners to review the country’s legal and institutional framework to improve productivity and working conditions, and to design and implement more effective policies in this area.