An insight into Vietnam’s labor productivity
An insight into Vietnam’s labor productivity
According to the Ministry of Planning and Investment, Vietnam’s labor productivity has increased steadily. The economy’s productivity in terms of 2018 GDP prices is estimated at VND102.2 million per worker, while the figure in 2010 is only VND44 million. However, when it comes to the current GDP prices, Vietnam’s labor productivity is higher than only Cambodia’s and is lower than Laos’.
Statistics on the website of the General Statistics Office (GSO) show that the productivity of economic sectors is calculated by dividing the added value in basic prices by the number of laborers, while the total productivity of the economy is calculated by dividing the gross domestic product (GDP) by the number of laborers.
Under the international principle and norm, to better reflect the labor productivity of the economy, the productivity should be calculated by dividing the gross value added (GVA) in basic prices by the number of laborers. With the calculation method of the GSO, does it mean that the product tax also creates productivity?
A re-calculation of statistics available on the GSO website shows that the actual labor productivity of Vietnam is even lower. For example, the 2017 labor productivity as published by the GSO is VND93.2 million per laborer, but it is only VN84 million per laborer as calculated by the GVA. The respective figures for 2018 are VND102.2 million per laborer and VND91 million per laborer.
Further, in terms of productivity by sector, there are four sectors which have productivity much higher than the average productivity in the economy. In specifics, the productivity of the mining sector in 2010 is 19.3 times higher than the average productivity, and in 2017 22.2 times higher. The productivity of the electricity and gas production and distribution sector in 2010 is 13.1 times above the average productivity and in 2017 nearly 17 times. The productivity of the finance, insurance and banking sector in 2017 is 8.5 times above the average and the real estate trading sector 12.7 times.
It should be noted that the value added in basic prices comprises two main components, namely the income of laborers (salaries and salary equivalents) and the gross surplus (including fixed asset depreciation). The two sectors of mining and electricity and gas production and distribution, which are run mainly by Vietnam Coal and Mineral Industries Group and Vietnam Electricity Group respectively, have productivity tens of times higher than the average productivity because they always claim losses and then raise prices. So, is it true that the high productivity of these two sectors results from raising prices at the expense of consumer losses? The high productivity of “half-hearted market oriented” sectors, which makes the overall productivity higher, is in essence meaningless.
In 2017, the real estate trading sector had productivity 12.7 times higher than the average productivity in the economy. The gap versus the productivity in 2010, which was 34 times above the average, was narrowed. Is it due to the shrinking land fund and the loss of “golden” land funds?
