VietNamNet Bridge – Labor costs in Vietnam are considered cheap. The minimum salary only covers 60-65 percent of basic living costs for workers and 20 percent lower than the must-paid salary.

According to experts from the Ministry of Labor, War Invalids and Social Affairs (MoLISA) and the International Labor Organisation (ILO), Vietnam’s labor market has an excess supply. If a large number of workers was withdrawn from the market, output would not reduced.

There is still a large gulf of labor that exists between rural and urban areas, as well as between different economic sectors.

Holding the key role in the economy, the state-owned economic sector contributes only 34 percent of gross domestic product (GDP) and uses 10 percent of the labor force. In comparison, the non-state sector contributes 47 percent of GDP and uses and 87 percent of the labor force.

In 2008, 1.43 million people lacked jobs, and up to 1.4 million were rural laborers.

The quality of Vietnam’s human resources is still low. In 2009, up to 18.3 percent of the workforce was illiterate and didn’t have a primary certificate, according to the MoLISA.

The labor market of Vietnam also exposes weaknesses in terms of legal frameworks, dialogue mechanism, security, flexibility, and social welfare.

ILO’s senior expert Lin Lean Lim said at a recent workshop in Hanoi that the competitiveness of Vietnam’s labor market is dinimishing due to the labor quality not improving while economic, scientific, and technological development is occurring very rapidly.

The MoLISA estimates that from 2011 to 2020, Vietnam will have an additional 500,000 workers annually. By 2020, the country will have 53.14 million workers, with 31 percent being rural workers. The number of unemployed workers in 2020 will be an estimated 1.72 million.

PV