Vietnamese productivity lags behind Asian neighbors

By Bach Duong, Bui Hong Nhung   April 25, 2016 | 04:04 pm GMT+7
Vietnamese productivity lags behind Asian neighbors

Vietnam’s annual average labor productivity has increased since 1992, but it has proven difficult for the country to catch up with other countries in Asia.

A report from the Central Institute for Economic Management shows that Vietnam’s average labor productivity was VND79.3 million ($3,500) in 2015, up 6.4 percent from the previous year. Over the 10-year period since 2005, the average growth rate of Vietnam’s productivity was 3.9 percent each year.

The institute said that the country’s labor productivity index was low and its growth rate was also slow. They explained some reasons behind the problem, include low-quality labor, outdated technology and an uncompetitive business environment. In addition, the fact that most employees working in the agricultural sector, which is a low-productivity area, is also a factor.

In 2014, Vietnam’s labor productivity calculated based on Purchasing Power Parity (PPP) was $9,138.6 per person, equivalent to 6.41 percent of Singapore, 13.56 percent of Korea and 40.36 percent of China.

The institute added that large firms have higher average labor productivity than small and medium enterprises. However, the proportion of employees working in large enterprises is on a downward trend. Should this trend continue, it will slow down labor productivity growth in Vietnam.

To raise Vietnam’s labor productivity, the institute said the country should introduce polices to enhance labor quality, shift employees from the agricultural sector to the industrial and service sectors, and spur on the development of small and medium enterprises