Vietnam's labor market has taken on greater significance as more FDI flows into the country. Besides some advantages, skills shortages require attention to achieve long-term growth, writes Dr. Divya Juneja, RMIT lecturer in human resource management program.
Vietnam is a prime example of successful development. Over the past few years, Vietnam's economy has grown magnificently. GDP has shown significant growth, rising from $304.47 billion in 2018 to $430 billion in 2023, with a projected $657.28 billion in 2028. While the nation is expanding at its own pace, there are long-term concerns about the sustainability of the current economic paradigm.
According to the report, Vietnam is turning into one of Asia's hotspots when it comes to manufacturing. Its large and cost-effective workforce, easy tax policies, favorable political and trade environment and convenient geographical conditions are catching the attention of various countries. These foreign investments are likely to bring a large number of job opportunities for Vietnam. Vietnam's youthful, abundant labour population and global connectivity have helped it to remain a top destination for foreign direct investment (FDI).
The Vietnamese market has a huge demand for human resources in the field of automation and automotive technologies. Electronics, graphics, industrial, environmental technologies and manufacturing of semiconductors also have a large demand for a skilled workforce. IT, business administration and finance will hold their positions, however, industries like digital marketing, multimedia, supply chain, high technology agricultural sectors and e-commerce will attract a lot more employees. After Covid-19, the demand for healthcare and medical workers has increased globally, the same trend is also reflected in Vietnam.
As the country’s focus is moving towards sustainable development, the demand for manpower in renewable energy will also increase. Another hot area will be tourism and hospitality. Vietnam is expecting to host more than 17 million international tourists in 2024. Vietnam offers an abundance of tourism resources and products, which makes it an attractive destination for travellers. A higher need for skilled manpower in this field will be surely visible.
Dr. Jung Woo Han, senior program manager for human resource management and entrepreneurship at RMIT University believed that the world of work is changing rapidly. Owing to the disruption caused by technology, companies must create comprehensive and effective workforce strategies. That will be extremely critical in this digital age. However, the major issues most employers are facing are related to the skills available in the Vietnamese market.
According to a recent report, analytical and digital skills in Vietnam have improved a lot. Still, 61% of companies say they are unable to find the right skilled people at the right time. There are very few ready-to-hire candidates available in the country. According to the survey, firms prioritise employing top-notch staff while they are rebuilding their workforce following various changes. However, it is astounding to observe how tough it is for businesses to find skilled professionals.
Dr. Santiago Velasquez, interim associate program manager, management (MBA) at RMIT University Vietnam, said that outsourcing has been the main option to fill the skilled worker requirements. It is effective, but also costly and offers only a slow learning curve for Vietnamese employees.
Tran Thu Thao, talent acquisition and training executive, Navigos Group, said that according to Navigos Group's 2024 Salary and Labor Market Report, potential new jobs are inclined toward technology, artificial intelligence, and digital transformation. Therefore, occupational groups related to information technology, engineering, and computer science will continue to have a shortage of human resources, especially high-quality human resources.
In conformity with another report, the hospitality industry is facing the biggest challenge in hiring skilled workers. One of the reasons highlighted by experts in the report is the decline in students registering for tourism courses. Experts mentioned that this trend was evident before the pandemic as well because students are not attracted by this industry in Vietnam. Further, experts commented that hospitality firms are acquiring people from other industries to fulfill their demands, but the skills gaps remain constant. The tourism industry needs highly skilled people at all levels to satisfy customer expectations and serve them better.
Apart from this, reports also show that manufacturing and healthcare are other industries facing skills shortages. One of the primary causes of this disparity is that Vietnamese education continues to experience difficulties keeping up with the demands of the modern global economy. The growing demand for foreign languages is another challenge. Still a very small portion of Vietnamese workforce is fluent in English. Nguyen Hoang Phuong, head of AIMS International Vietnam, said that “as the country is attracting plenty of visitors and businesses from other parts of East Asia, the market not only needs people who are fluent in English but other foreign languages like Japanese, Chinese and Korean."
The nation's population is in its “Golden Age”, with a median age of 32.5 years. It is especially appealing to FDI because of its young, vibrant labour force. But there are some skills gaps that complicate matters. In one of his interviews, Prime Minister Pham Minh Chinh stated that in order to prevent economic instability and social unrest, the labor market's excess needs to be promptly addressed. This emphasizes how crucial it is to invest in workforce development initiatives, education programs, and vocational training to bridge the skills gap.
Nguyen Thi Bich Hong, general director of HR2B, added that “by collaborating, the government, business community, and educational institutions can essentially solve these issues and ensure the labor force is trained to meet the needs of the market. As students will be trained and equipped with the necessary skills and knowledge, it will create a more productive workforce to facilitate business growth”. Phuong further quoted, “establishing alliances with foreign businesses and organisations has become a popular way for enterprises to learn about global best practices and industry knowledge. This is especially useful for technology-intensive industries.”
Initiatives for upskilling and reskilling people in digital skills, programming languages, cybersecurity, and artificial intelligence offer chances for individuals to improve their employability and make a difference in these growing sectors.
Han added that applied and authentic training such as project-based and work-integrated learning are essential in the era of AI and advanced robotic technologies. Especially, it can help students shape people skills such as communication and resilience, which could be the most essential skills in the future job market impacted by the technology disruption.
Once that gap is closed, the private sector will have easy access to experts and highly talented human resources in a cost competitive form. Also, educational institutions will have more options for funding and ensuring their researchers and lecturers are aware of real-world challenges. By working together, these organisations may more precisely identify the competencies that sectors want, ensuring that training programs meet the demands of the labour market. The collaborative efforts will surely fill the skills gap and attract more foreign investors in the future.