Việt Nam has many opportunities to improve labour productivity: expert

Dr. Nguyễn Bích Lâm , economic expert and former Director General of the General Statistics Office.

Dr. Nguyễn Bích Lâm, an economic expert and former Director General of the General Statistics Office, talks to Vietnam News Agency about the importance of labour productivity in the Vietnamese economy.

Could you please elaborate on the importance and the current situation of labour productivity in Việt Nam, given its deep integration into the global economy?

In the process of socio-economic development, labour productivity is a decisive factor in enhancing the capacity and competitiveness of the economy. Improving and promoting labour productivity is a core issue for Việt Nam's economy at present, representing the shortest path to rapidly and sustainably develop the economy, keeping pace with the development level of other countries in the region and the world.

In the context of globalisation and deepening international economic integration, fierce competition among economies necessitates an increase in labour productivity to ensure the sustainable development of the national economy.

Looking back at the period from 2016 to 2020, the average annual labour productivity increased by 6.05 per cent, higher than the 4.53 per cent annual growth rate of labour productivity during the period from 2011 to 2015, surpassing the target set in Resolution No. 05-NQ/TW, in the 12th term, which aimed for an annual average labour productivity growth rate during the period from 2016 to 2020 of over 5.5 per cent.

In the period from 2021 to 2025, in the first three years, the growth rate of labour productivity was lower than the annual targets set by the National Assembly. The average labour productivity growth rate for the three years from 2021 to 2023 was 4.3 per cent per year, which is 2.5 percentage points lower than the targets set in the socio-economic development plan for the period from 2021 to 2025 and the 10-year socio-economic development strategy from 2021 to 2030.

To achieve the target of labour productivity growth of 6.5 per cent during the period from 2021 to 2025, labour productivity must increase by 9.8 per cent in the two years from 2024 to 2025.

Given Việt Nam's deep integration into the global economy, what are the requirements for our labour market and considering the current state of labour productivity in Việt Nam, how likely is it that we'll achieve the target for productivity growth in 2024?

Labour productivity is an important indicator, but it's indirectly calculated, heavily influenced by Total Factor Productivity. Currently, outdated production processes and slow economic restructuring, especially in manufacturing, coupled with a low-skilled workforce, are hampering productivity growth.

As Việt Nam becomes more integrated globally, participation in global value chains demands skilled and adaptable workers. We need to adhere to international labour standards and modern market practices.

Regarding our targets, we need to reconsider metrics like the 'Proportion of trained labour'. Does it accurately reflect our goals? I propose focusing on the 'Proportion of trained labour with credentials' for better policymaking.

Even with GDP growth at 6 per cent-6.5 per cent in 2024, meeting the target for labour productivity growth (4.8 per cent to 5.3 per cent) approved by the National Assembly will be challenging.

Why is labour productivity in Việt Nam still low and what are the reasons behind it?

The low labour productivity in Việt Nam stems from several factors. Firstly, there are shortcomings in the labour force, with a large proportion engaged in agriculture and the informal sector, which does not meet the requirements for boosting labour productivity and driving socio-economic development.

Additionally, the distribution of labour across sectors is not optimal, with a low proportion of workers trained with certificates. The training structure is inadequate, resulting in a shortage of highly skilled labour. Both the supply and demand sides fail to meet the needs of a modern, flexible, and sustainable labour market and integration.

Furthermore, we have not fully leveraged the role of productivity within sectors; labour productivity within the business sector remains low, and the adoption of technology and techniques in production and business is limited, with machinery, equipment, and technological processes lagging behind.

Could you please explain how localities across the country have implemented vocational training programmes for rural and informal labourers?

Over the years, many localities have shown interest in implementing vocational training programmes for rural and informal labourers. However, rampant, directionless training, focusing on meeting quotas rather than quality or outcomes for trainees, has resulted in a surplus and deficiency of labour simultaneously, with a low proportion of trained labourers finding suitable employment. Additionally, many young and informal workers are not serious about vocational training.

As a result, the proportion of labourers trained with certificates is low, failing to achieve the approved targets. The lack of certified trained labour and the high proportion of labour in agriculture and the informal sector are putting significant pressure on creating sustainable employment and increasing labour productivity in the economy.

What should the Government do to enhance labour productivity in our economy to align with the changes in the global economy?

Given the current low labour productivity in our country, to gradually narrow the gap with that of other countries in the region and globally, I believe the Government, along with ministries and sectors, should implement several key tasks and solutions: Urgently develop and implement the National Strategy for Enhancing Việt Nam's Labour Productivity; regularly evaluate, supplement, and update this strategy to align with the rapid changes in the global economy; proactively anticipate events and trends in the global economy; identify and assess the impacts of these changes on our economy.

Furthermore, healthy competition in all markets is crucial for improving labour productivity. Therefore, the Government needs to carry out reforms and improve the institutional framework more rapidly and effectively to unlock and efficiently utilise all national resources. At the same time, mechanisms for allocating resources for research, management, and evaluation of research and development activities in the production process must be innovated, and an annual budget allocation of 2 per cent of GDP should be ensured.

The Government needs to adopt appropriate measures to accelerate the economy's restructuring, coupled with innovation in the growth model, especially in the manufacturing and processing industries, to establish and develop new industrial sectors and enhance the efficiency and competitiveness of existing industries. Economic restructuring must be in line with the changing trends in the global economy, with each sector restructuring to leverage comparative advantages and participate in global value chains.

The Government should urgently develop a comprehensive strategy with cohesive solutions, plans, and detailed implementation roadmaps to establish and develop some sectors and fields that will serve as new growth drivers for the economy, such as high technology, semiconductor chips, artificial intelligence, circular economy, and renewable energy.

The Ministry of Labour, Invalids and Social Affairs should promptly study the trends in global and regional labour demand; identify priority sectors and fields for development in the coming years for the entire economy, each region, locality, and area.

Improving labour productivity is currently a challenge for the Vietnamese economy. Việt Nam has many potentials, resources, and opportunities to enhance labour productivity. The Government needs to pay special attention to effectively develop and implement measures to improve labour productivity in the economy in the near future.