Vietnam's labor market still faces significant challenges, with 37.8 million workers lacking formal vocational training. This shortfall hampers the nation's ability to meet the demands of a modern, sustainable, and integrated labor market.

Labor market recovery and wage policies

The Ministry of Labor, Invalids, and Social Affairs (MOLISA) reported that 2024 saw an average 6% increase in minimum wages as part of efforts to reform salary policies in businesses.

Industrial relations remained stable, with constructive dialogue and collective bargaining gaining traction.

Workers’ living standards improved, with average wages and incomes rising by VND 1.9 million (USD 78) compared to 2020.

Labor markets in industrial zones and key economic regions maintained stability, supported by measures to restore and develop the labor market following the disruptions caused by the COVID-19 pandemic.

According to the General Statistics Office, the labor market in 2024 has returned to pre-pandemic trends.

However, MOLISA noted that between 2021 and 2024, the labor supply faced severe disruptions due to the pandemic, leading to widespread job losses, reduced working hours, and a sharp decline in employment rates.

In response, the government implemented various initiatives, including programs to attract migrant workers back to cities and projects to develop and stabilize the labor market by 2030.

Persistent challenges

Despite rapid recovery, labor shortages persist in key areas such as industrial zones and export processing areas, particularly in sectors like textiles and electronics assembly.

A survey by MOLISA revealed that these shortages are mainly due to increased holiday season orders from large enterprises, coupled with a lack of proactive labor sourcing strategies.

The majority of the unmet demand is for unskilled labor.

Informal employment remains prevalent, accounting for 64.6% of total employment in the first nine months of 2024 - a slight decrease from the previous year.

This high proportion of informal labor reflects the market's fragility and the need for more sustainable development strategies.

The quality of Vietnam's labor supply remains a major bottleneck. Only 28.1% of the workforce has undergone formal training and obtained certifications, leaving a significant portion of workers ill-prepared for the demands of a dynamic, integrated economy.

Vu Diep