Labor market to continue facing difficulties in H2: consultancy

Vietnam's labor market in the second half of 2023 will continue to face difficulties with few positive signs from employers, said recruitment consultancy Adecco Vietnam.

In the first six months of 2023, Vietnam did not see much improvement, according to the Vietnam talent market update H1 report released by Adecco Vietnam. Overall hiring demand decreased by more than 30% compared to the same period last year when economic activities resumed after the pandemic.

Some sectors, such as consumer finance, real estate and retail, have experienced significant declines in recruitment due to restrictive policies and tightened consumer spending. Other sectors such as pharmaceuticals, healthcare and technical sales saw a more resilient demand for skilled professionals.

Gloominess in the job market

According to the General Statistics Office, the labor force and the number of employed persons in Q2/2023 increased compared to the previous quarter and compared with the same period last year, but the unemployment rate and underemployment in the working age also rose over Q1/2023.

Hundreds of thousands of employees have been forced to take leave, severance packages and job losses since Q4/2022, and have shifted to informal employment, showing that the labour and job markets have recovered but are not sustainable.

At the same time, recruitment demand among businesses is limited and has fallen significantly. Nguyen Thu Phuong, director of permanent recruitment services in Hanoi for Adecco Vietnam, commented: "As the domestic and international economies still inherit many potential risks, enterprises are gearing towards promoting lean personnel structures, focusing on recruiting replacement positions and adopting a more selective approach to filling vacancies rather than expanding to new positions.

"The new vacancies mainly belong to projects that have been planned in the previous phase and are in progress. This trend affects many industries, causing a significant disparity between oversupply and limited labor demand, resulting in an extremely competitive job market."

Technological innovations navigating the market

The report states that although the number of vacancies at IT companies decreased by 35% compared to the same period in 2022, the requirement for IT skills is gradually becoming more common in most fields. Companies are increasingly looking for professionals with expertise in software development, cybersecurity, artificial intelligence, digital development, and data analytics to meet their transformation needs.

Truong Thien Kim, associate director of permanent recruitment services at Adecco Vietnam, said: "A significant drop in sales orders in industrial manufacturing led to a big lay-off, especially in electronics/semiconductors, textiles, furniture, and chemicals.

"As factories have been leaning towards digitalization/automation, lean manufacturing and zero-carbonization policies, there is a shift in labor requirements, with a decreasing demand for low-skilled and repetitive manual labor. Instead, they are increasingly seeking workers with expertise in robotics, process automation, and advanced manufacturing technologies."

Experiencing similar falling sales orders, some sourcing offices have gone bankrupt or closed their Vietnam branches, while others are more hesitant to recruit new staff.

"Global clients expect to build the Vietnam sourcing team which helps headquarters to find alternative suppliers with more competitive prices and better standards in the local market. However, there are some categories that Vietnamese suppliers cannot compete in terms of quality and price with other markets such as stainless steel, plastics, injection molding, etc. As a consequence, the talented sourcing candidate pool with experience in these categories is extremely limited," Kim added.

Regarding the retail industry, due to a shift in consumer buying preferences, many businesses are focusing on optimizing their online presence, leading to less need for traditional in-store positions.

While the marketing and communications industry still maintains stable demand, traditional forms of media has seen a decrease in job opportunities. Instead, positions related to digital marketing, search engine optimization (SEO), search engine marketing (SEM), social media, content creation, and data analysis are highly sought-after by employers.

The recovering market will facilitate stability in recruitment demand in finance and banking. Highly sought-after positions are related to finance, accounting, risk management and investment analysis. Moreover, the emergence of fintech companies has created more job opportunities in this sector.

The healthcare and pharmaceutical industry is anticipated to see sustained demand for professionals in light of the government's goal of improving healthcare infrastructure and increasing consumer demand. This field seeks professionals in a variety of roles, including physicians, brand managers, and medical information specialists. Applying technology to upgrade medical examinations and treatment is also a trend that affects the industry's hiring requirements.

Meanwhile, the construction and real estate industries have not shown any signs of recovery with very low recruitment demand.

Seize the chance amid turbulent outlook

Nguyen Hoang Thanh Chuong, head of permanent recruitment services at Adecco Vietnam, predicts that the labor market in H2/2023 will continue to face many difficulties without positive signs from employers. Several industries are expected to drive the job market such as technology, healthcare, e-commerce, renewable energy and digital services with increasing demand for skilled professionals.

"Opportunities will open for domestic laborers when large corporations in Vietnam change their recruitment strategies. Open positions for expats are decreasing sharply, mainly focusing only on important functions in the early stages of their investment plans. More specifically, roles for expat vacancies mainly involve training and technology transfer, and domestic candidates with high professional skills will be prioritized by businesses to take on these roles," Chuong said.

Technological transformation is taking place in various industries and is expected to continue to thrive in H2/2023. Job seekers need to accelerate updating their skills in digital technology and utilizing the application of artificial intelligence, digitalization, and automation into their current fields to seize opportunities during this turbulent period, with most strategies geared towards technology reform and cost optimization.