Labor turnover rate in southern Vietnam higher than northern region: EuroCham exec

High turnover rate is one of the biggest challenges for employers, EuroCham vice chairman Thang Nguyen pointed out while analyzing the labor market in Vietnam's northern and southern regions.

An issue is the high turnover rate among factory workers in southern provinces such as Dong Nai and Binh Duong. It is not uncommon to see 15-20% of employees leave within their first year in those provinces, he said. This is largely because about 80% of the workforce in this region are people who have moved there from other provinces, hoping to find better jobs and earn more money.

This strong desire for improvement means that many workers change jobs frequently as a way to get ahead, Thang Nguyen said.

This constant movement of workers disrupts production and can affect the quality of the products being made, he stressed. While the salary difference between the northern region and southern region is generally small, the turnover rate in the south is much higher.

In the north, factory work is often seen as a desirable career path, offering stability and advancement opportunities compared to traditional farming, according to Thang. Additionally, many northern factories foster a close-knit, family-like atmosphere, promoting employee loyalty and reducing turnover.

Northern workers often prioritize job security and the convenience of working near their families and communities, making them more likely to stay with a company long-term even with slightly lower wages.

Besides, the EuroCham executive pointed out issues related to the tendency for workers to prioritize short-term rewards over long-term career development. To attract and retain talent, companies often engage in a “bidding war,” offering slightly higher salaries than their competitors, especially during orders fulfilment campaigns.

Smaller companies also try to tempt employees away from larger corporations by offering them higher salaries and more prestigious job titles, even if those employees do not have experience to match those positions. This can lead to confusion about what different job titles actually mean and what skills a person truly possesses.

This focus on short-term rewards can be problematic. This lack of stability hurts companies and limits opportunities for workers to learn and grow in their careers, Thang emphasized.

Besides, Thang offers a positive note on the labor market in Vietnam. The Vietnamese workforce in general has a clear advantage: they are quick learners and very willing to learn new things. With the right training, coaching, and development programs in place, Vietnam has strong potential to build a robust, high-quality workforce to support the country’s economic growth ambition.

Over time, the more developed, more established generations will become role models for the newer generation to learn from, then the Vietnamese workforce will be progressively more professional, he said.

Vietnam’s unemployment rate is estimated at 2.27% in the first half of this year, unchanged from the same period last year, according to the General Statistics Office (GSO). The GSO estimates the jobless rate at 2.68% and 2% in urban and rural areas, respectively.

At the end of June, the country’s workforce aged 15 and above is estimated at 52.5 million people, up 196,600 year-on-year. This includes 27.86 million males and 24.6 million females, up 110,100 and 86,500 year-on-year, respectively.

The GSO estimates the H1/2024 average monthly income of contracted workers at VND7.5 million ($295), up VND519,000 ($20.4) year-on-year.