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Jan 30, 2019 / 10:31

Foreign firms in Vietnam face skilled workforce shortage amid FDI wave

The US-Sino trade spat puts more pressure on the country and businesses to develop human resource.

Vietnam’s demand for highly-skilled workers will continue growing steadily in the wake of increasing foreign investment inflow, causing a severe shortage of highly-qualified human resources in the time to come, expert have warned.
Vietnam needs to work on productivity to further attract foreign investors
Vietnam needs to work on productivity to further attract foreign investors
FDI firms are in dire need of highly-qualified human resources, especially after the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) took effect and more firms are choosing Vietnam to relocate their production bases in China to avoid the US-China trade spat.
Simon Matthews, country manager of Vietnam, Thailand and Middle East at innovative workforce solutions firm ManpowerGroup, said recruiting senior personnel is now an urgent consideration in IT, manufacturing, engineering, retail and sales, and marketing. Demand for senior staff is growing 10-15 percent each year, with 27 percent of total current recruitment being in finance, 36 percent in manufacturing, 21 percent in retail, and the remainder in other industries.
According to Berly D. Alvarez, chairman of the Philippines’s Kaunlad Lending Investors Corporation, more companies could set up factories in Vietnam due to the US-China trade war, but the country’s generally low-skilled workforce and technological capacity could be a big hurdle.
The Vietnamese workforce over the age of 15 is 53.5 million, but only 9.99 million people or 18.6 percent are skilled workers, meaning unskilled workers make up 81.4 percent of the country’s total workforce. The local workforce also lacks many necessary skills, like problem solving, IT, especially foreign language proficiency, and adaptability. Moreover, the levels of innovation and creativity among skilled local employees are still low.
Meanwhile, experts said reacting to the huge potential of the CPTPP, Vietnam needs to work on efficiency and productivity if it wants to attract more foreign investors. Now is the era of a highly-skilled, knowledgeable workforce, not a low-cost workforce as in the past.
According to Colin Blackwell, chairman of the Human Resources Committee at the Vietnam Business Forum, some time ago, foreign investors were attracted to Vietnam partly because of its low-cost labor, but that’s no longer the case for two reasons.
Firstly, Vietnam is now a middle-income country able to compete internationally based on possessing a highly-skilled workforce. Secondly, Industry 4.0 has already replaced many low-skilled repetitive roles with automation and robotics. Multinational companies (MNCs) now need the cleverest employees to compete and succeed globally.
Sharpen the workforce
Pham Hong Hai, CEO of HSBC Vietnam, said he sees potential trade diversion as US import demand shifts away from China to other ASEAN markets like Vietnam. While this trend is a good sign for the development of the country, it also puts more pressure on the country and businesses to develop human resource.
“So improving labor productivity through better education and vocational training, I think, should thus be a priority for the government,” Hai said.
To improve the country’s human resource, the Ministry of Labor, War Invalids and Social Affairs (MoLISA) has so far signed a Memorandum of Understanding (MoU) with ManpowerGroup in developing a skilled workforce and effective regulatory frameworks for the digital age.
Under the MoU, between 2018 and 2021, the cooperation will focus on raising awareness of labor trends, employment and workforce development, international labor commitments in the context of international integration and Industry 4.0.
The focuses are also on developing workforce through improving the knowledge and professional experience to adapt to the requirements of automation and digitization. As well providing the labor market information, analyzing and orientation, while sharing experience of international labor markets, connecting and enhancing Vietnam's cooperation with other countries on labor, employment and human resource development are the center of attention.