Hoa Lu, Red River delta, Vietnam. It is easy to see how the Vietnamese have been coaxed away from the paddies. Source: Flickr
Vietnam’s workforce has improved productivity levels significantly in the last 15 years, according to an Institute of Chartered Accountants in England and Wales (ICAEW) event in Hanoi.
According to the ICAEW, “pure productivity” rose by 2.3 per cent and sectoral shifts made up for 1.7 per cent of productivity growth.
Deputy Prime Minister Trinh Dinh Dung has also called on China to create more favourable conditions for transport and to alleviate the importation of Vietnamese goods, especially agricultural, forestry and fishery produce, in order to improve their bilateral trade balance.
Asean’s workforce has had an impressive track record, with productivity growing 3 per cent per year between 2000 and last year surpassing Latin America by 2 per cent and Africa by 1.44 per cent. People moving from agriculture to manufacturing or into the service industries, urbanisation and increasing numbers within the key 25 to 54 age group have driven productivity growth. Singapore is an exception within Asean.
Priyanka Kishore, an ICAEW economic adviser, said, “Vietnam’s productivity grew at an impressive 4 per cent per year in the last 15 years and should accelerate to 5 per cent in the next five years, outpacing its neighbours.
“This will be powered by sectoral shifts, urbanisation and a growing number of workers in the prime working age. Pure productivity growth, however, ranks below its neighbours except Singapore. This highlights an opportunity for Vietnam to invest in productivity measures to improve output per worker,” she added.
Sizeable household savings helped to enable sectoral shifts with a supply of finance to invest. The bulk of financing for business investment comes from domestic savings and lending. This partly accounts for Asean’s productivity quicker than other “middle-income” regions.
Mark Billington of the institute said: “Training, development and skill upgrading must play an essential role if Vietnam wants to maintain its growth path and improve the productivity and output of its workforce. As its economy continues to diversify, it will need a highly skilled workforce; one which has moved closer to a global standard of technical knowledge, business skills and innovation.”
Associate Professor Tran Dinh Thien of the Vietnam Institute of Economics argued that the nation needed to continue shifting to higher-labour productivity sectors so as to maintain labour productivity and boost skills.
He added that increasing domestic demand and foreign investment were creating GDP growth of 6.5 per cent despite the challenging international business environment. The academic called on Hanoi to push for export diversification away from oil and coffee to textiles, electronics and other manufacturing to protect the nation from low commodity prices.