The Central Institute for Economic Management (CIEM) recommended developing the labor market to facilitate economic restructuring, gradually shifting from growth based on production inputs to growth based on increased productivity, labor quality and scientific and technological application and innovation.

Low labor quality

According to a report released by CIEM, Vietnam's labor market has shown certain improvements. Labor has shifted from agriculture to industry and services, from the informal sector to the formal sector, from simple to sophisticated jobs that require expertise and high technology. In addition, workers’ awareness of social insurance and unemployment insurance has improved significantly. The rate of employees with social insurance and voluntary unemployment insurance has increased significantly.

Nevertheless, according to CIEM, Vietnam's labor market is still revealing a lot of shortcomings. In general, the labor market is still redundant; job quality is not high; and there is uneven development, serious imbalance in labor supply and demand among regions, regions and economic sectors.

Ms. Le Thi Xuan Quynh, Deputy Director of the Sector Economic Research Department, CIEM, said, Vietnam’s labor quality is low and there is a weak linkage between training and practice. Therefore, Vietnam's worker skills are limited, reaching only 46 points on a 100-point scale (ranked No. 103 in the world), far behind the ASEAN-4 Group, only higher than Indonesia and Laos.

In addition, although trained workers increased by 20 percentage points, from 40% in 2010 to 64.5% in 2020, this was behind the target of 70% set in the human resource development strategy. In addition, regarding workers with certificates valid from three months onward, the rate in 2020 was just 24.5%, failing to reach the target of 25%.

Furthermore, the workforce in Vietnam is aging, with a rising number of aging workers and a falling number of younger workers, which are not enough to replace the aging ones.

Giving explanation to this reality, Ms. Quynh said that the labor market development policy of Vietnam still has many limitations: The monitoring mechanism for program or policy implementation is ineffective; there is not enough legal framework to deal with responsibilities and interests of enterprises in vocational education.

Completing labor market institutions

According to Dr. Bui Sy Tuan from the Office of the Ministry of Labor, Invalids and Social Affairs, the labor market is a decisive input to economic growth and development. In the coming time, information for employees and employers needs to be further specified rather than currently generalized - difficult for workers to access and grasp real career opportunities. 

In addition, there is a need to clearly define policy priorities and necessary resources for improving and developing the labor market, thus enabling the acceleration of economic restructuring. 

Besides, in the context of the unpredictable and volatile world economy, more requirements are needed for Vietnam to accelerate economic restructuring and growth model change. The country needs to change its resource allocation by shifting production resources to more competitive and more productive sectors and fields that better help economic development in Vietnam, including labor resources. 

In the coming period, the labor market development should focus on perfecting institutions and policies on human resource training, salary, intermediary development, welfare and social insurance for workers to boost labor market development.

In addition, the business sector's participation in labor training should be promoted. Businesses are encouraged to employ older workers, provide career opportunities for people vulnerable as a result of economic restructuring, integration, new technological application/transfer and disease impacts. 

Notably, it is necessary to innovate employee performance assessment by building Key Performance Indicator (KPI) standards for each position.