Young and abundant labor force, competitive costs, more welcoming visa policies etc. are some of the main characteristics of Vietnam's labor market in 2022
According to ManpowerGroup's Total Workforce Index™ 2022 report, Vietnam ranks 47th out of 60 global labor markets, and 11th among 11 countries in the Asia-Pacific region. The top highest ranking markets include the US, Singapore, Canada, Ireland, Australia, the UK, Israel, the Philippines, Mexico and Malaysia.
Abundant workfoce but limited in skills proficiency
Vietnam currently has an abundant workforce of about 50.74 million people of working age. Millennials and Gen Zers make up nearly one third of the country's workforce — about 65 percent. Owning a young and abundant labor supply when many countries are struggling to solve the problem of aging population is one of the reasons why the Vietnam’s labor market is well considered by foreign investors.
Another notable fact of Vietnam’s labor market is that the proportion of informal workforce accounts for 55% of the country’s total labor force. Informal workers often do not engage in employment contracts and their ability to benefit from social insurance is very limited. [1] According to the General Statistics Office, 2020 and 2021 witnessed an increase in the proportion of informal workforce. [2] Transitioning the workforce from informal to formal sectorwhich helps them ensure job security and harness their full potential will be a major challenge faced by the local government.
Skill level is one of the areas of improvement for Vietnamese workers to catch up with other markets. Despite the high rate of net secondary education (about 88%), the highly skilled workers make up only 11.67%, almost unchanged from three years ago.
Soft skills, including foreign language skills, are increasingly important in most professions, even in technically inclined fields such as manufacturing. Besides English, some other foreign languages such as Chinese, Japanese, and Korean are highly sought-after by many companies. However, according to the Vietnam Total Workforce Index 2022, the proportion of Vietnamese workers who are proficient in English accounts for only 5% of the total workforce. The rate is quite low compared to other non-English speaking countries in the region such as Indonesia (10%), Malaysia (21%), and Thailand (27%).
Regulations on the use of labor are relatively open with many welcoming policies to foreigners
It can be said that the current provisions of Vietnamese law on the management and use of labor are relatively flexible. Vietnam allows enterprises to sign labor contracts with a maximum tenure for single term contract of 36 months, and hiring sub-contractors is also legal.
The Vietnamese government is increasingly facilitating international trade, by promoting welcoming policies. Currently, Vietnam is exempting visas on arrival for 63 countries, an increase of 15 countries compared to 2021. This policy creates great conditions for foreign enterprises planning to operate in Vietnam, as well as domestic companies that desire to invite foreign experts to work in Vietnam.
Attractive labor costs do not necessarily attract foreign investors
The report revealed that the average monthly income of Vietnamese workers is currently 275 USD, equivalent to 6,545,000 VND. This is a relatively attractive labor cost and brings many benefits to employers, contributing to attracting foreign investors. However, if compared between the two markets, one is Vietnam with cheap costs (average monthly wage of workers is USD 275) but a low skill level (11.6% is highly skilled workers) and another market, for example, the Philippines with an slightly higher average monthly salary of workers (USD 283 ) but a much higher skill level (18.5% is highly skilled workers), it is clear that our labor is less attractive to foreign investors.
With 15 years of experience in providing human resources services in Vietnam, ManpowerGroup Vietnam is currently providing staffing and outsourcing services for nearly 500 businesses of all sizes and fields. In particular, we have helped many foreign companies and corporations learn about the labor market, support the completion of legal procedures, work permits for foreigners and related processes so that foreign businesses and experts can conveniently set foot in the Vietnamese market.
In addition to the mission of accompanying businesses to win in a changing world of work, ManpowerGroup Vietnam has cooperated with the Ministry of Labor, Invalids & Social Affairs, professional organizations and educational units for years in the journey to improve working skills and provide sustainable and meaningful employment opportunities for generations of Vietnamese workers. Through many forms such as seminars, workshops, 1-on-1 consultation, etc. ManpowerGroup Vietnam wishes to help employees constantly update, improve skills, access more job opportunities, thereby enhancing the position of the Vietnam’s labor market on the world’s ranking.
About this report
Total Workforce Index™ 2022 – an annual report on global labor markets has recently been introduced by Talent Solutions – a brand of ManpowerGroup. First launched in 2013, the Total Workforce Index™ measures relatively ease of sourcing, hiring and retaining a workforce in competitive labour markets around the world. This report compiles more than 200 key factors related to Availability, Cost Effectiveness, Regulations, and Workforce Productivity in each market.
[1]https://www.ilo.org/hanoi/Informationresources/Publicinformation/newsitems/WCMS_579925/lang--vi/index.htm
[2]https://kinhtevadubao.vn/lao-dong-phi-chinh-thuc-o-viet-nam-truoc-tac-dong-cua-cptpp-23232.html
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