Vietnam is emerging as a prime destination for foreign direct investment (FDI), driven by low labor costs, a growing talent pool, and strategic supply chain location. Yet, hiring in Vietnam is not without its challenges. The APAC Talent Shortage Report states that 74% of employers in Asia-Pacific struggle to find skilled talent, and Vietnam is no exception.

This guide explores the importance of a skilled workforce, key hiring considerations, and the strategies for setting up modern factory in Vietnam’s growing manufacturing industry.

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Vietnam has become a leading destination for foreign manufacturers due to its young workforce, cost-effective labor and high-skilled labor force. These are the key advantages of hiring in Vietnam for FDI businesses looking to set up modern factories and production hubs.

Vietnam’s workforce is large and expanding, with a total of 52.53 million workers spanning multiple generations. Half of the labor force consists of Gen Y (Millennials) and Gen Z, known for their digital adaptability, technical skills, and eagerness for career growth. This demographic ensures a steady flow of young, trainable workers, facilitating adoption of automation, AI, and Industry 4.0 technologies across various sectors.

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Vietnam consistently ranks among the world’s most affordable manufacturing hubs. According to US New, it is 3rd globally for low manufacturing costs, making it ideal for labor-intensive industries such as electronics, textiles, and automotive production.

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Vietnam is rapidly developing its workforce, particularly in high-tech manufacturing, ESG (Environmental, Social, and Governance), and digital transformation. Vietnam with a 95% net secondary education rate, ensuring that the workforce is highly trainable and ready for specialized roles, thanks to a strong foundation in literacy, numeracy, and technical skills.

Government-backed programs are helping train engineers annually in fields such as mechanical, electrical, and software engineering. Additionally, the country is investing in green workforce development in ESG compliance, renewable energy, and carbon management to support Net-Zero goals. These initiatives ensure that companies investing in Vietnam have access to a future-ready workforce with expertise in emerging industries.

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While Vietnam presents numerous advantages for foreign direct investment (FDI), hiring skilled labor for a modern factory in Vietnam comes with challenges that businesses must strategically address.

A significant challenge is the misalignment between academic programs and the evolving needs of the industry. Although the country has a strong educational foundation, universities often fall short in equipping graduates with the practical skills required by high-demand industries. A study of Research Gate involving 257 university graduates and 525 final-year students found that many fresh graduates lack essential skills required by employers, highlighting a skills gap between academic training and job market needs.

Many graduates struggle with critical thinking, problem-solving, and digital literacy, making it difficult to compete in fast-evolving fields like AI, cybersecurity, and automation.

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Employee turnover remains a major issue in Vietnam, particularly in manufacturing, retail, and customer service. Vietnam's manufacturing sector is grappling with significant employee turnover and talent retention challenges. A recent survey by Reeracoen Vietnam reveals that nearly two-thirds of Vietnamese workers plan to switch jobs within the next six months, making talent retention a critical concern for businesses operating in Vietnam.

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While improving, English proficiency remains a challenge, particularly for technical roles and international business communication. Vietnam currently ranks #63 in the EF English Proficiency Index, below countries like Malaysia and the Philippines, with only 5% of total Workforce proficient in English.

While urban professionals in Ho Chi Minh City and Hanoi are more likely to be proficient in English, many workers in manufacturing and logistics roles have limited exposure to English-language business communication. This can create challenges in training, management, and cross-border collaboration.

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Understanding what Vietnamese workers prioritize in their careers is essential for companies looking to attract and retain top talent for their modern factory in Vietnam. According to the What Vietnamese Workers want report and the Meaning Work: A Vietnam Report, employees in Vietnam seek competitive salaries, career growth opportunities, work-life balance and job security. As the job market evolves, businesses must align their strategies with these expectations to stayattractive to skilled professionals.

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While flexible working model and purpose-driven careers gain attention, salary and job stability remain the top concerns for Vietnamese workers. Rising living costs drive employees to seek stable employment with financial security and career longevity. A survey by Jobs that make sense Asia and Manpower revealed that 40% of Vietnamese respondents prioritize salary and job security when seeking new employment opportunities. It is also cited that "significantly, the pursuit of a high salary is not driven by the quest for material wealth but rather by the aim to provide comfort and security for one's family" from the same report.

To attract talent, companies must offer structured salary growth, long-term financial incentives, and clear career progression. 

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Beyond salary, career growth and skill development are highly valued for Vietnamese professionals. Meaningful Work: A Vietnam Report states that "One third of respondents place a high value on learning, finding profound significance in their work with each new method and technique they acquire for their professional toolkit". Employees prefer companies that provide structured career paths, mentorship, and technical training.

To stay competitive, businesses should invest in upskilling, certifications, and on-the-job training while fostering leadership development and career progression to boost retention.

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Work-life balance is becoming a major factor influencing job preferences, especially in the Asia Pacific. Employees are no longer just looking for competitive salaries, they seek better work conditions that support their well-being and long-term career satisfaction. That is the reason why 56% employers select work-life balance as the top priority to increase worker retention.

Alongside this shift, the demand for hybrid and remote work models is also rising. The What Vietnamese Workers Want Report highlights that 42% of employees in Vietnam prefer hybrid and remote work models, reflecting a growing need for flexible work arrangements that accommodate both productivity and personal well-being.

Companies implementing hybrid models, flexible scheduling, and mental health support will better retain employees. Offering childcare assistance and stress management programs can further enhance workplace well-being.

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Beyond financial stability and career growth, Vietnamese workers are increasingly looking for jobs that align with their personal values and contribute to society. A striking 99% of employees say they seek purpose in their careers, and 85% consider a company’s reputation for social responsibility when choosing an employer, according to Meaningful Work: A Vietnam Report.

In order to successfully build a skilled workforce for the modern factory in Vietnam, businesses must integrate sustainability into their core strategies, engage employees in ESG efforts, and enhance corporate transparency. Manpower’s ESG Practices can help companies develop impactful ESG initiatives, drive corporate responsibility, and improve employer branding to attract purpose-driven talent.

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In today’s competitive labor market, promoting Diversity, Equity, Inclusion and Belonging (DEIB) is essential for building a strong and sustainable workforce. According to recent insights from Meaningful Work: A Vietnam Report, 87% of employees believe that companies should actively implement DEI initiatives to address social inequalities and foster an inclusive workplace.

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Drive Sustainability Through Top Green Talent

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Vietnam’s booming manufacturing sector offers vast opportunities for FDI manufacturers to set up a modern factory in Vietnam, but talent shortages, rising labor demand, high turnover, and complex labor laws create significant hiring challenges. Companies must decide between self-recruitment and partnering with a professional recruitment agency.

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While self-recruitment provides direct control, it presents major hurdles:

• Limited Talent Access – Finding skilled labor in automation, high-tech manufacturing, and green production is difficult without strong networks

• Time-Consuming & Resource-Intensive – Managing job postings, screening, interviewing, and onboarding strains internal teams.

• Compliance & Legal Risks – Vietnam’s evolving labor laws require expert handling to avoid violations and penalties.

• High Turnover – Employees prioritize career growth, job security, and work-life balance, making retention a challenge without a structured approach.

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A recruitment agency provides access to skilled talent, reduces hiring risks, and ensures compliance.

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Foreign companies entering Vietnam may struggle to navigate the local labor market, facing obstacles such as understanding regulatory requirements, accessing qualified candidates, and competing with other firms for top talent. Additionally, the fast-growing industrial landscape has led to talent shortages in certain regions, making it even more challenging for businesses to meet their workforce needs.

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Manpower Vietnam offers tailored workforce solutions to help businesses overcome these challenges and build a strong, efficient workforce. With extensive experience in Vietnam's industrial sectors, Manpower provides services that address every stage of the recruitment and workforce management process, including Mass recruitment, Staffing and Outsourcing, Headhunting, etc. By partnering with Manpower Vietnam, businesses can confidently navigate the complexities of the labor market, ensuring they have the right talent to drive their industrial success.

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If you are looking for a recruitment, staffing, and outsourcing service provider in Vietnam to grow your business, reach out to Our Services page or input your contact information in the form below and we will get back to you soonest:

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