Việt Nam’s labour productivity needs to catch up with ASEAN

August 30, 2019 - 09:31

Việt Nam’s labour productivity has improved but is still low in comparison with other ASEAN members, according to a report by the Ministry of Planning and Investment.


Workers at Đức Giang Garment Company in Hà Nội. Labour productivity is a key factor to promote the country's economy. — VNA/VNS Photo Trần Việt 

HÀ NỘI — Việt Nam’s labour productivity has improved but is still low in comparison with other ASEAN members, according to a report by the Ministry of Planning and Investment.

The report shows that Việt Nam’s labour productivity index reached VNĐ102.2 million (US$4,400) per labourer in 2018, nearly double that of 2011. In the period 2011-18, the country’s labour productivity increased by an average of 4.88 per cent annually, in which the period of 2016-18 witnessed an average increase of 5.77 per cent annually.

However, in comparison with other countries in ASEAN, Việt Nam's labour productivity is still low. This means that Việt Nam’s economy is facing a huge challenge to catch up with other countries. If measured by purchasing power parity (PPP) value in 2018, Việt Nam’s labour productivity reached US$11,142, only 7.3 per cent of Singapore, 19 per cent of Malaysia, 37 per cent of Thailand, 44.8 per cent of Indonesia, and 55.9 per cent of the Philippines.

Minister of Planning and Investment Nguyễn Chí Dũng said improving Việt Nam’s labour productivity is an urgent task, playing an important role to promote growth, overcome the middle income trap, avoid falling behind and narrow the development gap with countries around the world.

However, this task should be solved in the long-term, he added.

Experts said it is necessary to understand the capacity of workers and why Việt Nam’s labour productivity is still low in order to find solutions, which must be radical, effective and comprehensive and capable of covering all causes.

Chairman of the Vietnam Chamber of Commerce and Industry Vũ Tiến Lộc said that Việt Nam’s competition has mainly been based on cheap labour and low costs of raw materials. This has occurred for a long time, making many Vietnamese private enterprises neglect improvements to strategic planning, management skills, and promoting the application of science and technology in production and business as well as increasing capital efficiency.

“In the context that Việt Nam has become a low middle-income country, while the traditional competitive advantages are gradually disappearing, the low labour productivity will be a major cause hampering the country’s investment attraction and international integration,” Lộc said.

Professor Kenichi Ohno from the Japan Policy Research Institute said that Việt Nam needs to build an overall strategy to increase labour productivity, moving sustainable labour productivity growth of 7-8 per cent.

He said it should focus on boosting labour productivity in industry first, then on other sectors such as agriculture and services. For countries that receive a large amount of foreign direct investment like Việt Nam, the strategy can target high-quality FDI projects and enhance the competitiveness of domestic manufacturing industries, setting up close links between these two areas.

Ohono said that despite many years of close economic co-operation, Việt Nam has not yet applied any Japanese productivity tools. Some productivity measures such as 5S (sort, set, shine, standardise and sustain) and Kaizen (changing for the better) have been tested at the enterprise level with the support of Japan International Cooperation Agency (JICA), but the scale is too small and only lasts a short time.

General Director of Đức Giang Chemical Joint Stock Company Đào Hữu Huyền said the State needs to have suitable policies, creating conditions for a number of "leading" enterprises to make breakthroughs and promoting small- and medium-sized enterprises for development.

“This will be an effective and practical way to promote labour productivity in enterprises,” Tuyền said.

According to Chairman of Thiên Phú Energy Investment Joint Stock Company Trần Anh Dũng, to increase labour productivity when Việt Nam and many countries in the region and around the world are catching up with Industry 4.0, businesses need to make efforts to raise their level, actively applying technology in production and business and encouraging creative ideas in every activity.

“In the Vietnamese business community, young businesses and start-ups need to raise awareness about technology and labour discipline, which is the most effective and practical solution to boost labour productivity,” Dũng said. — VNS