Vietnam has numerous opportunities to improve labor productivity: expert
Dr. Nguyen Bich Lam, an economic expert and former Director General of the General Statistics Office under the Ministry of Planning and Investment, talks to Vietnam News Agency about the importance of labor productivity in Vietnam’s economy.
Dr. Nguyen Bich Lam, an economic expert and former Director General of the General Statistics Office under the Ministry of Planning and Investment

Dr. Nguyen Bich Lam, an economic expert and former Director General of the General Statistics Office under the Ministry of Planning and Investment, talks to Vietnam News Agency about the importance of labor productivity in Vietnam’s economy.

Could you please elaborate on the importance and the current situation of labor productivity in Vietnam, given its deep integration into the global economy?

In the process of socio-economic development, labor productivity is a decisive factor in enhancing the capacity and competitiveness of the economy. Improving labor productivity is a core issue for Vietnam’s economy at present, representing the shortest path to rapidly and sustainably develop the economy, keeping pace with the development level of other countries in the region and the world.

In the context of globalization and deepened international economic integration, fierce competition among economies necessitates an increase in labor productivity to ensure sustainable development of the national economy.

Looking back at the 2016-20 period, the average annual labor productivity increased by 6.05 percent, higher than the 4.53-percent annual growth rate of labor productivity during the 2011-15 period, which surpasses the target of 5.5 percent set in Resolution 05-NQ/TW issued in 2016 by the 4th Plenum of the 12th Party Central Committee.

In the first three years of the 2021-25 period, the labor productivity growth rate was lower than the annual target set by the National Assembly. The average labor productivity growth rate for the three years from 2021 to 2023 was 4.3 percent per year, which is 2.5 percentage points lower than the target set in the 2021-25 socio-economic development plan and the 2021-30 socio-economic development strategy.

To achieve the target of labor productivity growth rate of 6.5 percent during the 2021-25 period, labor productivity must increase by 9.8 percent in the two years 2024 and 2025.

Given Vietnam’s deep integration into the global economy, what are the requirements for our labor market and considering the current state of labor productivity in Vietnam, how likely is it that we’ll achieve the productivity growth target in 2024?

Labor productivity is an important indicator, but it’s indirectly calculated and heavily influenced by total factor productivity. Currently, outdated production processes and slow economic restructuring, especially in manufacturing, coupled with a low-skilled workforce, are hampering productivity growth.

As Vietnam becomes more integrated globally, participation in global value chains demands skilled and adaptable workers. We need to adhere to international labor standards and modern market practices.

Regarding our targets, we need to reconsider metrics like the “‘Proportion of trained labor”. Does it accurately reflect our goals? I propose focusing on the “Proportion of trained labor with credentials” for better policymaking.

Even with GDP growth rate at 6-6.5 percent in 2024, meeting the target for labor productivity growth (4.8 to 5.3 percent) approved by the National Assembly will be challenging.

Why is labor productivity in Vietnam still low and what are the reasons behind it?

The low labor productivity in Vietnam stems from several factors. Firstly, there are shortcomings in the labor force, with a large proportion engaged in agriculture and the informal sector, which does not meet the requirements for boosting labor productivity and driving socio-economic development.

Additionally, the distribution of labor across sectors is not optimal, with a low proportion of trained workers possessing certificates. The training structure is inadequate, resulting in a shortage of highly skilled labor. Both the supply and demand sides fail to meet the needs of a modern, flexible and sustainable labor market and integration.

Furthermore, we have not fully leveraged the role of productivity within sectors; labor productivity within the business sector remains low, and the application of technology and techniques in production and business is limited, with machinery, equipment and technological lines lagging behind.

An electric motorcycle-assembling chain of the Lang Son province-based Roma Life Co. Ltd.__Photo: Anh Tuan/VNA

Could you please explain how localities across the country have implemented vocational training programs for rural and informal workers?

Over the years, many localities have shown interest in implementing vocational training programs for rural and informal workers. However, rampant, directionless training, focusing on meeting quotas rather than quality or outcomes for trainees, has resulted in a surplus and deficiency of labor simultaneously, with a low proportion of trained laborers finding suitable employment. Additionally, many young and informal workers are not serious about vocational training.

As a result, the proportion of laborers trained with certificates is low, failing to achieve the approved targets. The lack of trained laborers possessing certificates and the high proportion of labor in agriculture and the informal sector are putting significant pressure on creating sustainable employment and increasing labor productivity in the economy.

What should the Government do to increase labor productivity in our economy to align with the changes in the global economy?

Given the current low labor productivity in our country, to gradually narrow the gap with that of other countries in the region and globally, I believe the Government should, along with ministries and sectors, implement several key tasks and solutions, namely: urgently develop and implement the National Strategy for Enhancing Vietnam’s Labor Productivity; regularly evaluate, supplement and update this Strategy to align with the rapid changes in the global economy; proactively anticipate events and trends in the global economy; and identify and assess the impacts of these changes on our economy.

Furthermore, healthy competition in all markets is crucial for improving labor productivity. Therefore, the Government needs to carry out reform and improve the institutional framework more rapidly and effectively to unlock and efficiently utilize all national resources. At the same time, mechanisms for allocating resources for research, management, and evaluation of research and development activities in the production process must be innovated, and an annual budget allocation equal to 2 percent of GDP should be ensured.

The Government should also adopt appropriate measures to accelerate the economy’s restructuring, coupled with changing the growth model, especially in the manufacturing and processing industries, establish and develop new industrial sectors and enhance the efficiency and competitiveness of existing industries. Economic restructuring must be in line with the changing trends in the global economy, with each sector restructured to leverage comparative advantages and participate in global value chains.

The Government should urgently develop a comprehensive strategy with cohesive solutions, plans and specific implementation roadmaps to establish and develop some sectors and fields that will serve as new growth drivers for the economy, such as high technology, semiconductor chips, artificial intelligence, circular economy and renewable energy.

The Ministry of Labor, Invalids and Social Affairs should promptly study the trends in global and regional labor demand; identify priority sectors and fields for development in the coming years for the entire economy as well as each region, locality and area.

Improving labor productivity is currently a challenge for Vietnam’s economy. Vietnam has many potentials, resources, and opportunities to enhance labor productivity. The Government needs to pay special attention to effectively developing and implementing measures to improve labor productivity in the economy in the near future.-

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