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Low labor cost no more an advantage

Update: December, 24/2016 - 10:07

Vũ Tiến Lộc, Chairman of the Việt Nam Chamber of Commerce and Industry, talks to the newspaper Thời báo Kinh tế Việt Nam (Việt Nam Economic Times) about the high demand for skilled workers to meet new requirements of national economic development.

Do you think that low labor cost remains Việt Nam’s advantage?

I don’t think so. A young, inexpensive labor force was our country’s biggest advantage in the initial period of the country’s economic development. But now we have integrated deeper into the world economy while adapting to the fourth revolution of science and technology. In such circumstances, we have to adopt a comprehensive strategy to upgrade our economy and to improve the quality of our human resources. I should say that a creative labor force has the most advantage points nowadays, not low-skilled, cheap labor as in the past.

It is indisputable that the revolution of science and technology has strong impact on the world’s industrial sector, including Việt Nam, and we have gradually introduced automation in most production to replace workers. In my opinion, this will continue in the next five to 10 years, when Việt Nam’s economy is in the period of mid- and long-term development.

What strategy should we adopt to upgrade our economy?

The only way to cope with these challenges while still providing jobs is to quickly switch our economic structure from assembling to higher added value areas, like research, design or establishment of distribution systems, and others.

In my opinion, we should take a step forward in restructuring our entire economy, as well as each economic sector.

To do that Việt Nam must reform its vocational training system, a key element in the course of restructuring the national economy. The International Labor Organisation (ILO) has projected that up to 86 percent of Vietnamese workers in the textile sector and 75 percent of those working in the electronic industry are likely to lose their jobs due to automation technology. This requires Việt Nam to develop a comprehensive and synchronous strategy.

More recently, we have talked quite often about start-ups by young entrepreneurs. The spirit of renewal is a key to success for start-ups. As I have mentioned above, the time for cheap labor is over as wprkers will be replaced by robots or automation. In addition, the least developed countries may offer much lower labor costs than ours. So, for us, there is no other way than to take a step forward by restructuring our economy.

You have mentioned that we should focus on the development of the private sector in restructuring our national economy. Why?

What I mean is to help private enterprises develop in all national economic sectors, including agriculture, tourism, services and others. For example, high technology will become a central component in agricultural development.

However, we should only focus on sectors in which we have advantages, like the development of small and medium enterprises, in order to provide jobs to those who have been made redundant in the course of economic restructuring.

Another point I want to raise is that job training nowadays should be shared between the State and private sectors, particularly in the field of high skills training.

Of course, if any enterprises want to offer job training they must follow certain criteria laid out by the Government, particularly the following requirements:

They must be able to forecast the labor market demand;

They have to assume responsibility for developing training curricula, building workshops, recruiting teaching staff. The Government will only give advice to the enterprises to ensure the teaching curricula meet national standards. - VNS

 

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