Vietnam’s productivity rate remains lowest in the world

Vietnam’s productivity rate remains lowest in the world

Vietnam has one of the the lowest unemployment rates in the world, but it is also ranked as having one of the lowest labor productivity rates.

Tuoi Tre newspaper has quoted the Ministry of Labor, War Invalids and Social Affairs’ (MOLISA) as reporting that 871,800 laborers were unemployed in the second quarter of 2014, a decrease of 174,000 from the first quarter.

This means that the unemployment rate dropped to 1.84 percent, the lowest level in a year.

Though the number of newly created jobs has increased slowly, the increase was still higher than the labor force increase. This helped reduce the unemployment rate. The report showed that 52.8 million workers got jobs in the second quarter.

With these figures, Vietnam is recognized as one of the economies with the lowest unemployment rates in the world.

The Richest also listed Vietnam among the five countries with the lowest labor costs, with just $0.39 per working hour.

However, Cao Quang Dai from the Vocational General Directorate of MOLISA, warned that the unemployment rate may be higher once Vietnam joins AEC, the ASEAN Economic Community.

“If Vietnamese workers cannot improve their skills, they will lose their jobs to foreigners right in the home market,” he commented.

Dai has every reason to give the warning. The International Labor Organization (ILO), in a recent report, showed that Vietnamese workers’ productivity is the lowest in Asia Pacific, which is only equal to 1/5 of Malaysia’s, 2/5 of Thailand’s, and 1/15 of Singapore’s.

The report pointed out that less than 20 percent of Vietnamese workers take training courses, while many trained skills still do not allow them to meet the market’s requirements.

The Mekong River Delta has been cited as the area where the labor skills are the worst in Vietnam. Only one worker in every 10 workers is trained.

The two most important traits of the Vietnamese labor market – the low unemployment rate and low productivity – are attributed to the outsourcing-based economy.

Vietnam is a major apparel exporter, with annual export turnover growth rate of 12 percent. However, the income from the industry remains modest because Vietnamese companies mainly do outsourcing for foreign enterprises.

A report showed that 70 percent of garment products produced by Vietnam are under the mode of outsourcing, which means that Vietnam can pocket only 15 percent of the products’ value.

According to Truong Thanh Hoai, deputy director of the Ministry of Industry and Trade’s Heavy Industry Department, of the 170 phone parts and accessories Samsung wants to seek in Vietnam, Vietnamese companies can only make several products.

Vietnam’s automobile industry, which has experienced 20 years of development, is still near the starting point. Only 5-10 percent of car parts can be made in Vietnam, and most of these parts are simple ones.

vietnamnet