Clarifying the causes of low labor productivity in Vietnam

The National Assembly discussed the socio-economic situation at the 6th session.

Many National Assembly delegates reflected that there are still many issues with growth quality. Delegate Huynh Thanh Phuong - National Assembly delegation of Tay Ninh province, stated that growth still relies heavily on capital and foreign labor, labor productivity has not increased much, and total factor productivity (TFP) contributing to growth is still at a low level.

According to delegate Hoang Quang Ham - National Assembly delegation of Phu Tho province, human resources and labor productivity have increased rapidly in recent times compared to the previous period, and the labor structure has changed positively. However, the growth rate of labor productivity and the growth rate of total factor productivity (TFP) in 2018 decreased compared to 2017. Labor productivity growth still depends heavily on capital intensity. Vietnam's labor productivity is still very low compared to other countries in the region. The quality of human resources is still limited, including industries that are Vietnam's strengths such as textiles, tourism, seafood and even electronics. The labor force still mainly operates in the low segment of the value chain, where low added value and low labor productivity are created.

Delegates expressed concern that, along with the 4.0 revolution and the ongoing trend of population aging, improving the quality of human resources will increasingly face difficulties and obstacles. Without the right policies, growth will be affected and the number of unemployed workers will increase due to not keeping up with development.

Delegate Hoang Quang Ham said the quality of our country's human resources is still limited.

Proposing a solution to this problem, delegate Hoang Quang Ham said that restructuring the labor force must be linked to training, retraining in a substantial way right from the general education system. Policies are also needed to stream students according to their abilities and conditions to promote vocational training and university training in a reasonable way. In addition to training high-quality human resources, university and postgraduate training, vocational training, including for rural areas to develop agriculture, also needs more investment. Training must be linked to development needs and there must be a connection between businesses, economic organizations and training facilities, making the most of training, improving knowledge from FDI enterprises and considering this a condition that must be met when attracting foreign investment capital. Only by changing the quality of the labor force through appropriate education, training and vocational training policies can technological knowledge and labor productivity be improved.

Analyzing the issue of low labor productivity in Vietnam, why and what is the solution, delegate Nguyen Thien Nhan - National Assembly Delegation of Ho Chi Minh City stated that our labor productivity in 2017 was 4,019 USD, compared to Thailand's 11,633 USD, 3 times lower than Thailand. Malaysia's productivity is 5 times higher than ours, Korea's productivity is 14 times higher, Japan's is 18 times higher and Singapore's is 25 times higher. From this reality, there are also opinions that, after more than 40 years of innovation, Vietnam's labor productivity is 34% of Thailand's, which is 1/3, which is too low. Therefore, it is also an issue that must review the Government's direction of implementation in localities.

Delegate Nguyen Thien Nhan said that in fact, we have made significant progress in labor productivity compared to neighboring countries. Thailand's labor productivity was 5 times higher than ours, then 4 times higher in 2008 and 3 times higher in 2017, thus the gap has been narrowed continuously. Malaysia's labor productivity was 10 times higher in 1975, 7 times higher in 2008 and 5 times higher in 2017. Japan's labor productivity was 50 times higher in 1975, 30 times higher in 2008 and 18 times higher in 2017.

Delegate Nguyen Thien Nhan analyzed factors affecting labor productivity, on that basis, found solutions to improve labor productivity.

Through analyzing the factors that influence labor productivity, delegate Nguyen Thien Nhan proposed to handle 8 groups of issues. One is to improve the technological level of production because to increase labor productivity, we must increase investment to increase technology, then increasing capital will bring efficiency. Two is to determine a suitable production model, the subsidized economic mechanism, centralized production does not bring high efficiency, we must switch to a market mechanism. In agriculture, individual production households are still the majority, so we must switch to a collective and cooperative model that allows for high economic productivity. Three is the level of 3 production stages. That is production design, product consumption and brand building. Four is the credit market must be strong enough, suitable for all types of enterprises to serve the need for increased capital. Five is to pay attention to the product market both domestically and abroad. Six is ​​to improve the qualifications of workers. Seven is to invest in scientific research properly because currently, our science and technology expenditure in 2012 was 3 dollars/person on average, 7 times lower than Thailand, 29 times lower than Malaysia, and 43 times lower than Singapore.

Finally, it is to improve the effectiveness of state management, publicity, transparency, listening to the people for the people. Delegate Nguyen Thien Nhan cited statistics showing that there is no need to increase investment, but if the government is transparent, it will help businesses make investment decisions faster, more effectively and GDP can increase by 0.5% - 1.5%.

Delegate Bui Thi Quynh Tho requested the Government to have a correct analysis related to the total labor productivity factor.

Debating on this issue, delegate Bui Thi Quynh Tho - National Assembly Delegation of Ha Tinh province, suggested that the Government's report should have a more realistic assessment related to the factor of total labor productivity; clarifying the main reason for Vietnam's low labor productivity is that it is mainly performing the stages of processing, manufacturing, and assembly.

The delegate explained that in our report, Vietnam's labor productivity is only 7% of Singapore's, while some statistics have been consulted, people say that one Singaporean worker is equal to more than 14 Vietnamese workers or one Thai worker is equal to about 5 Vietnamese workers... Looking at these figures, it is easy to misunderstand, it is clear that Vietnamese workers are not working too poorly or have low productivity, but this is the capital conversion rate. The delegate also suggested that in the coming time, the Government needs to have more drastic solutions to rebalance the proportion of factors contributing to productivity of total factors, the proportion of labor productivity, scientific and technological progress and management level to promote the growth model more effectively.