Vietnam's FDI boom faces a bottleneck: skilled labor shortage

For the past month, Nguyen Phuong Thao, human resources director at a battery manufacturing company in the province, has been trying to hire 150 technical workers. So far, she has found just 60.

"At this point, the only solution is to keep raising costs," Thao said, referring to higher wages, referral fees and sign-on bonuses aimed at attracting labor.

The company, which produces lithium-ion batteries, recently opened an additional factory and needs both technicians and production workers. Despite offering instant bonuses and even recruiting through TikTok livestreams, it has filled only about 40% of its demand. Positions requiring technical skills, team leadership or foreign-language ability have drawn almost no applicants.

Labor turnover is compounding the problem. At some factories, as many as 40% of new hires quit within three days, forcing companies to recruit two or three times their actual staffing needs. Competition has intensified as many manufacturers simultaneously increase hiring toward the end of the year.

According to a labor market report by recruitment platform TopCV, nearly 70% of companies have increased hiring, with half reporting a sharp rise. At the same time, 47% of employers say they struggle to find experienced workers, while 42% report shortages in basic skills.

Bac Ninh has emerged as a northern industrial "growth star," attracting $5.5 billion in foreign direct investment in 2025, ranking third nationwide. The province hosts nearly 3,400 industrial projects, mainly in electronics, components, garments and logistics, employing about 830,000 workers, most from outside the province. With industrial land more than half occupied and factories expanding, labor shortages have become increasingly common, especially around the Lunar New Year.

The Bac Ninh Employment Service Center estimates labor demand in the second half of 2025 at around 191,000 workers, with recruitment expected to remain strong after the holiday period as companies expand and replace departing staff.

To compete, employers are offering increasingly generous incentives. At Thao’s company, new hires who stay for four months receive a VND9 million (US$342) bonus, while employee referrals earn VND4 million. The amounts are more than double those offered a year ago, though some firms are paying even more.

The garment sector faces similar pressures.

Crystal Martin Vietnam, which employs more than 10,000 workers at Quang Chau Industrial Park, needs to recruit thousands of workers as orders rise. Nguyen Van Chi, chairman of the company’s labor union, said recruitment has been continuous but applicant numbers remain low.

Garment work requires precision and manual skill, and training a new worker takes two to three months. Most factories also avoid hiring new workers over 40, further shrinking the labor pool. To widen its reach, the company has turned to Facebook and TikTok livestreams to answer questions about wages and benefits and attract applicants.

While recruitment bonuses help draw new workers, they can also create resentment among existing staff. To retain long-serving employees, some companies now offer additional bonuses of VND5-8 million for workers with five to ten years of service, up from VND 2-3 million previously.

The Korean Chamber of Commerce in Vietnam (KOCHAM) says South Korean manufacturers are also struggling to recruit skilled workers and mid-level managers, particularly in industrial provinces such as Bac Ninh and Thai Nguyen. Frequent job-hopping has driven up training costs and retention expenses.

"Competition for human resources will become more intense as foreign investment continues to grow," said Ko Tae Yeon, chairman of KOCHAM.

Pham Ngoc Toan, director of the Center for Strategic Information, Analysis, Forecasting and Public Services under the Institute on State Organizational Sciences, said the labor shortage is seasonal and concentrated in major FDI hubs, reflecting both global market fluctuations and persistent reliance on human labor in electronics and garment manufacturing.

Rising bonuses and wages help stabilize production and boost local spending in the short term, he said, but higher labor costs could weaken the competitiveness of domestic firms. Frequent job-hopping also risks creating a workforce that fails to build long-term skills and is more vulnerable as automation expands.

"If skills are not upgraded, the gap between what workers have and what the market needs will continue to widen," he said.

With a decade of experience navigating labor shortages, Thao said her company is shifting its focus from aggressive hiring to retaining skilled staff. Instead of pouring money into short-term recruitment, it maintains monthly incomes of VND13-15 million and pays an additional monthly bonus to employees who complete a full year and meet performance targets.

"That way, our production lines don't have to be constantly rebuilt," she said.