VietNamNet Bridge - Skilled workers may leave Vietnam for other markets where they can get higher pay, while those who stay may not find jobs because they are less competitive than workers from TPP (Trans Pacific Partnership) countries.

 

Vietnam’s labor productivity is at the bottom of the list of 12 TPP countries. 

According to the World Bank (WB), Vietnam has a 3.79/10 scores for its labor force quality, ranking 11th out of 12 Asian countries in WB’s ranking.

A report of the International Labor Organization (ILO) showed that Vietnam’s productivity is 15 times lower than Singapore’s, 11 times lower than Japan’s and 10 times lower than South Korea.

Nearly 18 percent of Vietnamese workers in 2013 did not undergo any training course, while the figure has been 19.5 percent in 2015.

“It will be a blunder for Vietnam if it considers the low labor cost as its competitive advantage,” said Hoa Huu Lan from the Hanoi Institute for Socio-Economic Development.

Vietnam is now at the ‘golden population’ period with the labor cost 1-12 times lower than that other TPP countries, which is seen as greatly appealing to foreign investors.

However, Lan pointed out that the low labor cost means low qualification and income. At present, when the unemployment rate and the job demand are high, it is necessary to take full advantage of the low labor cost to attract foreign investment.

However, low-cost labor must not be the competitive edge for Vietnam in the long term.

The TPP Agreement which has been signed by 12 member countries allows a vast labor market where workers of the 12 countries can move freely to places where they can have best working conditions. 

This means that Vietnamese workers can leave Vietnam for other TPP member countries, while workers from the other countries can move to Vietnam to seek their opportunities.

“I am really concerned that Vietnam would see a brain drain. How will Vietnam develop with low-qualified labor force?” Lan said.

A labor expert said he is sure of the movement of Vietnamese good workers fleeing to other TPP countries. In the US, the labor cost is 40 times higher than in Vietnam. The US now lacks 10,000 highly qualified nurses, while a nurse can earn $4,000 a month. It also needs primary school teachers with pay of $2,800 a month.

Nguyen Tien Dung, president of the Economics & Law School of the HCM City National University, warned that the unemployment rate in the TPP period may increase for two reasons. First, many Vietnamese enterprises may go bankrupt because their products are less competitive, which would lead to employee layoffs.

Second, the workers from neighboring countries will put pressure on Vietnam’s labor force.

Kim Chi