The root of the problem

(Baonghean) - What creates the difference and disparity between economies and countries in today's world is labor productivity. And the fact that our national economy is facing a situation where revenue doesn't cover expenses, forcing us to borrow and leading to high public debt, is partly due to low labor productivity. This is because our labor productivity is too low compared to the global and regional average, leading to a situation where we consume more than we produce.

This is not to say that our people are lazy; on the contrary, the amount of time Vietnamese people spend working is among the highest in the world, yet the results are not high. This low productivity is due to the prevalence of manual, simple labor, relying on human strength instead of machinery. Currently, agricultural and informal labor in Vietnam still accounts for over 60% of the total employed workforce. Meanwhile, the number of workers in high-value-added manufacturing and service industries in Vietnam remains low. The percentage of trained workers with professional technical qualifications and certificates is less than 20% of the total workforce. Workers lack the knowledge and skills to use new technologies and equipment. Most workers in our export processing zones and industrial parks go directly from the fields to factories and enterprises. Workers in rural areas tend to follow the example of others, with virtually no formal training, so low labor productivity is inevitable.

Recently, a comparison of Vietnam's labor productivity with that of other countries in the region has shown that we rank at the bottom. This is not surprising, as workers in other countries work with machinery, while our workforce is largely manual labor. It's like comparing a person walking on two legs to someone traveling by motorbike or car. Naturally, the person using mechanical means will achieve greater speed and efficiency than someone without such means. Calculations have shown that a country's labor productivity is influenced by three factors: capital density per unit of labor, labor quality, and total factor productivity. Capital density per unit of labor refers to the tools, equipment, machinery, and machinery provided to workers. A worker with more machinery and equipment will create more added value than a worker with fewer tools...

In 2012, Vietnam's capital density was only about 1/17th of Singapore or the US, 1/10th of South Korea, and 2/5th of China. Therefore, it's obvious that our labor productivity lags far behind theirs. Lack of access to modern equipment and machinery means that the skills, abilities, and health—three key elements of labor quality—cannot be high. Consequently, our labor quality is still considered low compared to many countries in the region. However, the difference in labor quality only contributes partially to the difference in labor productivity between Vietnam and other countries. The more decisive factors are capital density and total factor productivity. Total factor productivity refers to the level of technology and other factors affecting economic efficiency such as laws, economic institutions, coordination capabilities, the business environment, macroeconomic stability, economic restructuring, and urbanization.

Regarding this point, I would like to quote Mr. Vu Khoan, former Deputy Prime Minister, in an article on this issue: “At the 4th Party Congress nearly 40 years ago, the scientific and technological revolution was identified as the key factor, but it seems that this is still not the case; economic growth in our country still mainly relies on injecting more capital and labor. Furthermore, while there is much discussion about “institutional reform,” we rarely hear insightful ideas about fundamentally and comprehensively reforming the institutions related to science and technology to ensure that scientists and producers/businesses are closely interconnected and mutually supportive, with both sides wanting and being able to introduce modern machinery and scientific and technological achievements into production and business. That being said, while various institutions have already been established, and numerous “strategies” for developing certain industries and products have emerged, it seems that the mechanisms and policies introduced have not yet become a sufficiently strong impetus to achieve this.” "It can generate a lot of cash and real money..."

From this, it can be seen that low labor productivity is the fundamental weakness of our country's economy. Therefore, to enhance the strength of the economy, it is essential to improve labor productivity, because "Ultimately, labor productivity is the most important and crucial factor for the success of the new social system" (Lenin). Referring to the current situation, it can be understood that the success of the country's reform, industrialization, and modernization, and whether our country becomes a modern industrialized nation, depends on whether labor productivity can be improved and increased. A rather inconsistency is that in the National Assembly and other forums, there is much heated discussion about solutions to public debt and bad debt, but very little discussion about how to improve labor productivity. Meanwhile, improving labor productivity is the most optimal and effective solution to address public debt and bad debt.

Therefore, at this National Assembly session, the people's representatives should dedicate time to thoroughly discuss this issue in order to come up with practical measures to revive "the most important, the most crucial" aspect! Because labor productivity is the root of solving all problems of the economy.

Duy Huong