Vietnamese productivity falls short of regional counterparts

By Ha Phuong   April 27, 2016 | 08:03 am GMT+7

Despite Vietnam's increasing productivity, it is still not enough for Vietnam to compete with larger Asian countries. 

Labor productivity is a marcoeconomic indicator, calculating the efficiency of the labor force. Labor productivity is one of the most important objectives to assess a country's competitiveness, especially in the recent context of globalization. Increasing labor productivity helps boost socio-economic development.

To compare labor productivity among countries, GDP by Power Purchasing Parity (PPP) is needed. Chart 1 shows GDP by PPP in billions of USD using 2011's PPP.

Source: Asian Productivity Organization data, 2015

Over 60 percent of Vietnamese work in the agricultural sector (chart 2). Chart 3 shows that as of 2015, productivity in this sector was $892 per person, about five times less than in the industry and construction ($4289) sector and approximately four times lower than the services sector ($3258).

Source: Asian Productivity Organization, databook 2015.

Source: Asian Productivity Organization, databook 2015.

Productivity in Vietnam has risen in the last decade, starting at $1081.06 and reaching $3551.28 last year. Yet in comparison to other Asian countries, this rise is not significant and Vietnam’s productivity is still below the regional average (chart 5). As of 2013, according to the Asian Productivity Organization, the productivity of a Vietnamese worker was $5440, whereas the figure in China was 2.8 times higher, and Singapore recorded productivity of $98,720 (18 times higher).

Source: Vietnam National Productivity Institute, Ministry of Science and Technology

Source: Asian Productivity Organization data, 2015

Vietnam ranked 52nd in the overall labor market effciency rankings, ranked 85th in labor market flexibility and 42nd in efficient use of talent, according to the Global Competitiveness Report 2015-2016 compiled by the WEF. 

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Though Vietnam is in 56th position out of 140 countries in the competitiveness index, techonology and creativity continue to drag Vietnam down.

it-takes-18-vietnamese-workers-to-achieve-what-only-one-singaporean-needed-though-productivity-of-vietnam-increases-consistently-over-year-it-is-not-enough-for-vietnam-to-surpass-other-countries-in-region-6

Productivity growth has fluctuated over the last ten years. However, from 2012, it has witnessed a steady increase in labor productivity.

Source: Vietnam National Productivity Institute, Ministry of Science and Technology

This chart shows average productivity growth based on working hours.

Source: Asian Productivity Organization data, 2015

The chart below demonstrates a comparison of average annual hours worked per person, relative to the level of the US. Prolonged working hours are common in Asian countries. Workers in Japan are likely to work shorter hours than other regional countries.

Source: Asian Productivity Organization, databook 2015.