Although having a relatively low unemployment rate compared to other countries in Asia, Vietnam is facing a tough challenge with its younger workforce. By the end of 2014, 6.3 percent of youths between the ages of 15 to 24 were out of a job; which is even more alarming when 20.75 percent of fresh graduates (aged 20 to 24) are unable to find work.
However, 62 percent of companies in Vietnam stated difficulties in filling jobs in 2014. This talent mismatch will continue to damage the economy, leading to poor prospects for millions of families, missed innovation and a shortfall in growth. Urgent actions by both the government and business are needed to address these issues.
In the latest release of the Global Talent Competitiveness Index 2014, produced by Adecco Group, INSEAD and Singapore’s Human Capital Leadership Institute, Vietnam is ranked 75 out of 93 countries. Measuring each country’s performance in six areas, or ‘pillars’, the GTCI focuses on how countries produce and acquire talent (input), and the quality and type of skills that are available for the labour market as a result (output). Though it has a high score in innovation and entrepreneurship, Vietnam performance in developing its own talent via formal education and lifelong learning is quite low. This can create a wider skills gap for the country in the future.
Issues with formal training are also reflected in the productivity of the Vietnam workforce. A report released by the International Labour Organization in 2014 put Vietnam’s productivity at 1/15 of Singapore and 1/6 of Malaysia. Proper training is one of the main reasons for Vietnam’s low productivity as less than 20 percent of the workforce is properly trained, thus unable to meet the requirements of the labour market.
In another survey of 200 businesses in Central Vietnam, the respondents revealed that most graduates from vocational schools did not meet their requirements.
The Role of Education
As growing talent is critical to being talent-competitive, Vietnam needs more investment in formal education. Despite its dramatic growth for enrolment at tertiary level over the past decade — from 10 percent in 2000, to 16 percent in 2005 and 25 percent in 2013 — the number of teachers remains essentially unchanged. This is despite recent increases in budgetary allocations, liberalised private sector involvement and the encouragement of foreign participation in education and training services.
Foreign provision will not, however, solve the problem of under-capacity or poor teaching standards. A report by Harvard Ash Institute at Kenney School also pointed out that “Vietnamese universities are not producing the educated workforce that Vietnam’s economy and society demand. Surveys conducted by government-linked associations have found that as many as 50 percent of Vietnamese university graduates are unable to find jobs in their area of specialisation, evidence that the disconnect between classroom and the needs of the market is large.”
As such, in developing its own talent, Vietnam also needs to expand beyond formal education into boosting life-long learning and growth opportunities linked to professional experience. This is essential to ensure that employers have access to the skills they need. Previous research by Adecco found that countries with established systems of work-based vocational training, such as Switzerland, Germany and Austria, have been most successful in tackling youth unemployment, a key indicator of the talent mismatch. The current rate of youth unemployment in Germany stands at 7.6 percent, compared to the European average of 23 percent.
Temporary work and internships can help young people to take their first step onto the career ladder or into a permanent position. In companies like Adecco, young people are being exposed to higher-level job skills through programmes like one-month work placements in large companies across the world. In Adecco’s experience, 52 percent of these placements received job offers at the end of the period.
Nicola Connolly is the general director of Adecco Vietnam and chairwoman of the European Chamber of Commerce in Vietnam