Vietnam’s labour productivity gap widening

VOV.VN - The gap between Vietnam worker competitiveness and productivity with that of other nation’s around the globe has continued to widen throughout 2015, says the International Labour Organization (ILO).

In a recently released report, the ILO said Vietnam’s labour productivity is now among its lowest ranked tier in the ASEAN region.

Worker productivity in Vietnam is just one-fifteenth that of Singapore, one-fifth that of Malaysia and two-fifths that of Thailand, resulting in the workers being grouped in the lowest tier alongside three other nations.

Citing World Bank (WB) statistics the ILO said, the competitiveness of Vietnam’s work forces has continually lagged behind other countries in both the ASEAN and Asian region since 1990.

The WB scored the productivity of Vietnamese workers at 3.39 on a 10-point scale, its lowest level over the past 15 years.

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In order to counter this trend, it will be key for Vietnam to put in place strategies to strengthen its competitiveness and productivity, said the ILO report.

A series of measures have been implemented to stimulate economic growth since 1980. However, despite the success of businesses in achieving growth, productivity and competitiveness have dropped significantly.

The report reveals there are pressing challenges emerging, with too many employees in Vietnam receiving a low wage as a result of poor productivity. There are also indications of skills mismatch and need for more investment in education and training.

Meanwhile a report prepared jointly by the World Bank (WB) and the Vietnam government, has been released that points out in early 2000s the nation’s labour productivity surpassed that of China.

However, now Vietnam’s labour productivity and competitiveness has sunk to just half that of China.

According to a research report conducted by the Vietnam Chamber of Commerce and Industry (VCCI) in other nations – labour productivity, competitiveness and wages often benefit from economies of scale of the larger businesses.

The fact that many of Vietnam’s businesses are very tiny with few if any funds to invest in higher technologies tends to skew the picture of labour productivity making it appear unrealistically lower than it actually is for larger businesses operating in the country.

According to the VCCI report if businesses in the nation were scaled up, this would result in marked increases in the nation’s productivity and competitiveness statistics brought about by the application of state-of-the art technologies.

Minister of Planning and Investment Bui Quang Vinh suggests the nation shift employees out of low value added jobs in agriculture to manufacturing to raise the nation's labour productivity.

Vinh also said many of the reforms called for in the Vietnam 2035 Report are specifically aimed at improving productivity and economic competitiveness and should be implemented post haste to turn the declining trend in productivity around.

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