Unemployment in surprise rise, but no cause for alarm

An estimated one million workers were unemployed in the second quarter, up 16,400 against the previous quarter, the highest unemployment level in recent years, said Dao Quang Vinh from the Ministry of Labour.

Mr Vinh, who heads up The Institute of Labour Science and Social Affairs, noted incomes also deteriorated for the quarter with the average monthly wages falling by US$10 (VND230,000) to US$210 (VND4.85 million).

The drop in jobs and wages comes as the country’s economy has started to show signs of slipping, with the Ministry of Planning and Investment saying that GDP growth could come in at 6.27% for 2016 after a first half at around 5.5%.

That slip reflects in part, said Mr Vinh, a sluggish mining industry, which covers offshore fossil fuel exploration. The government is now eyeing a boost in exploration for crude oil and natural gas, volumes of which fell in the first half of the year due to falling crude oil prices.

Mining overall lost 2.2% in growth in the first half of 2016.

Vietnam with its 91.7 million people strong population has built economic growth, which reached a seven-year high of 6.7% in 2015, said Mr Vinh, mainly on opening of the gates to export manufacturing.

Factories have been invested by tech high-giants such as Hon Hai Precision, Intel and Samsung who have joined with more traditional plants pumping out fabrics, furniture and auto parts.

These factories are hardly going away, he said, as its pretty much understood by everyone that the economy in general and manufacturing in particular is on a sound and sustainable future.

As jobs move from agriculture to manufacturing, a slowdown is fully expected, but the slowdown (growth and jobs) in mining and farming dwarf in their contribution to the economy when compared to manufacturing.

Dao Quang Vinh said the rising unemployment figures are attributable to a skills mismatch between training and market demand – excessive numbers in some areas such as business management and economics, but a shortage in technological and technical engineers.

The figures showed 39% of those unemployed in the second quarter were well-educated, with over half of them possessing either junior college or full university degrees.

The number of unemployed young living in metropolitan areas was 11.3% of the total, while in rural areas it was 5.24%. Long-term unemployed – those registered as out of work for more than a year – stood at 22.6%.

We expect the labour market to deteriorate further with unemployment rising another 2% during the late months of the year, said Mr Vinh, which is fully to be expected and no cause for alarm as the economy shifts to a more industrial base.