Despite experiencing recent growth regarding its average labor productivity, Vietnam still struggles to compete with its ASEAN neighbors.
According to Dan Tri, the Vietnam Institute for Economic and Policy Research (VEPR) has found that the country's average labor productivity grew from VND38.64 million per laborer in 2006 to VND60.73 million in 2017, accelerating at a rate of 5.3% per year during that period.
However, Vietnam is not performing well on the international stage and its productivity remains at a low level compared to other East Asian and ASEAN countries. The country's labor productivity is only 1/14 of Singapore’s, 1/6 Malaysia's and a third of Thailand's, as cited by the General Statistics Office of Vietnam in the article.
Vietnam's sector-based labor productivity also ranks among the lowest in ASEAN, especially in the three main industries of processing, construction and transportation-warehousing. Additionally, in other economic sectors including agriculture, electricity and gas, and wholesale and retail, Vietnam's labor productivity only beats that of Cambodia.
There are some positive notes, however. Labor productivity in low value-added industries such as mining, real estate, and financial services is considered to be higher compared with other countries in the region. Those Vietnamese sectors have been receiving increased investment resources. But while the data seems optimistic, Dr. Nguyen Duc Thanh, the director of VEPR, cautioned that this has caused an imbalanced shift in the economy.
Reports on the subject dampen some bullish predictions regarding Vietnam's exploding economy. Despite Vietnam's continuous economic growth in the first half of 2018, experts have noticed that labor productivity has not been fueling this progress.
Inefficient labor structure is another source of concern. Professor Tran Van Tho, a member of the Economic Advisory Group to the Prime Minister, said that since Vietnam has a surplus of labor in the agricultural and private sectors; it needs to focus on the industrial and service sectors to attract and reallocate workers in the labor force, enhancing labor productivity and mobility.
Improvements in labor productivity must also come from innovative technological production methods. Pham Dai Duong, deputy minister of science and technology, added that along with the development of infrastructure, Vietnam needs to reform educational institutions and encourage creative technological advancement through investments in scientific research.
[Photo via Straits Times]
