Vietnam faces skilled labour struggle


  • ASEAN+
  • Saturday, 12 Oct 2019

Eye on the future: Students working in a lab at an industrial vocational training college in Hanoi. — Reuters

HANOI: A new front has opened in the US-China trade war as companies shifting manufacturing to Vietnam engage in a fierce battle for skilled labour, aggravating an existing shortage and prompting calls for education reforms.Vietnam has emerged as one of the largest beneficiaries of the trade spat between Washington and Beijing.

Exports to the United States were up 21.5% in the first eight months of this year and several companies, including Google parent Alphabet Inc and Nintendo, have announced new plans to open facilities here.

Hanoi’s trade deals, including its recently signed Free Trade Agreement with the European Union, have also become a draw.

“Fresh, unskilled people are plentiful but even basic sewing workers will need training for at least six months, so patience is the key, ” said Jef Stokes of Maxport, a Vietnam-based garments manufacturer, highlighting a lack of reform in the education system as part of the problem.“It’s adequate but not graduating enough highly qualified candidates. This is the choke point.”IT workers, engineers and managers were already in tight supply, but additional demand from trade war refugees is increasing turnover among highly skilled workers,

factory owners, consultants and recruitment firms say.

The lack of capacity should come as no surprise: Vietnam’s population is just 7% that of China’s, the country still lacks investment in infrastructure and according to the World Bank, needs to spend about US$6.7bil (RM28bil) a year to expand its annual power generation capacity by 10% between 2016 and 2030.Accelerating investment in the high-tech sector and companies re-considering their regional supply chains due to the trade war have re-ignited concerns about high-skill labour availability in Vietnam, said Michael Sieburg of consultancy firm YCP Solidiance.

Only 12% of Vietnam’s 57.5 million-strong workforce are highly skilled, according to recruitment firm ManpowerGroup.

This has created rising competition for talent among new investors, said Sieburg.

Nguyen Quang Anh, a 28-year-old software developer from Hanoi, said he was approached by headhunters before he even graduated.

Since leaving university, he has switched jobs four times, each time for at least a 50% pay rise.

“Because of the shortage, employers are willing to pay us at much higher rates, ” he said.

When Vietnam’s biggest listed company, Vingroup, began its push into industrial manufacturing, it had to look elsewhere to fill top talent jobs.

At the launch of its foray into automobiles, Vinfast, at least five members of the founding leadership team were veterans from General Motors.

“Our foreign experts have helped train our Vietnamese staff, ” Vingroup said. “This model has been applied among large Vietnamese companies in the face of rapid process of globalisation.”

Another solution has been to expand vocational training.

In 2016, Vietnam announced a strategy to develop a skilled workforce to meet domestic and international demand.

Much of the problem stems from a lack of educational reform, analysts say.

At the secondary level, Vietnamese schools score highly in Programme for International Student Assessment (Pisa) scores, an Organisation for Economic Co-operation and Development study which assess the reading, mathematic and scientific skills of 15-year-olds around the world.In 2015, Vietnam ranked eighth out of 72 countries in terms of science performance, and was 21st overall – ahead of the United States and most European nations.

But at higher levels, the results differ. Around 28% of the 18-29 age group attend university in Vietnam, compared to 43% in Thailand and 48% in Malaysia.

“Studies show that educational curricula in Vietnam are outdated, teachers overwhelmed and underpaid, and graduates lack the job ready skills sought by the private sector, ” said Adam Sitkoff of the American Chamber of Commerce in Hanoi. — Reuters


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