Vietnam lags behind ASEAN neighbors in labor productivity

By VnExpress   November 27, 2016 | 08:47 pm PT
Vietnam lags behind ASEAN neighbors in labor productivity
Laborers work at TAL Apparel Vietnam Garments factory in Vinh Phuc province north of Hanoi Vietnam October 20, 2016. Photo by Reuters
The country needs to boost labor productivity to maintain its rapid economic growth.

Vietnam is lagging well behind neighboring countries in Southeast Asia in terms of labor productivity growth, the Ministry of Industry and Trade said at a workshop last Friday.

Statistics show Vietnam’s overall labor productivity growth in 2015, in terms of purchasing power parity, rose by 6.4 percent from 2014.

Overall labor productivity grew by 3.9 percent annually from 2006-2015.

Experts said Vietnam needs to boost its overall labor productivity growth by more than 50 percent if the economy is to meet the government’s target of 7 to 8 percent in annual growth by 2020.  Without this lift, Vietnam’s growth is likely to decline to between 4.5 and 5 percent.

The McKinsey Global Institute said that between 2005 and 2015, an expanding labor pool and the structural shift away from agriculture contributed two-thirds of Vietnam’s gross domestic product growth. The other one-third came from improving productivity within sectors. Vietnam has enhanced competitiveness on the global market by strengthening productivity across the economy from textiles and footwear and coffee and rice to tourism.

However, Vietnam still lags behind neighboring countries in the Southeast Asian region. The difference between labor productivity between Singapore and Vietnam, in 2005 purchasing power parity terms, increased from $62,052 in 1994 to $92,632 in 2013; similarly Malaysia from $21,142 to $30,311; Thailand from $7,922 to $9,314; and Indonesia from $4,104 to $4,408.

The trade ministry also said although labor productivity in the agricultural sector in the past 10 years has grown at the fastest pace, it remains significantly lower than other sectors, equal to about 39.2 percent of the average labor productivity of the overall economy. Official data shows that average labor productivity in the sector is estimated at around VND31.1 million ($1,379).

Labor productivity growth in the manufacturing sector has been the slowest. The average output per worker in the sector of VND68.8 million is equal to 87 percent of the average labor productivity of the overall economy.

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