It is expected that Klaus Schwab, the founder of the World Economic Forum (WEF), will pay a visit to Vietnam by the end of the year to discuss how the forum can support Vietnam in implementing Industry 4.0 and boosting digital transformation.

Earlier in June, Vietnam and the WEF inked an MoU on promoting cooperation in many key sectors, including innovation in food, skills development for innovation, and green transformation and zero-emission industrial clusters.

Other sectors for cooperation also include plastic action, finance for renewable energy transition, and digital transformation cooperation and the establishment of an Industry 4.0 centre.

Domestic workers cannot be left behind digital upheaval, illustration photo/ Source: Shutterstock

In 2018, Schwab paid a visit to Vietnam with some novel ideas about how the country can move forward sustainably in Industry 4.0. The ideas were laid out in the Vietnamese-language version of his book Shaping the Fourth Industrial Revolution, which has been translated into about 30 languages.

The book draws on contributions by more than 200 of the world’s technological, economic and sociological experts to present a practical guide for citizens, business leaders, and policymakers.

It outlines the dynamics of today’s technological revolution, highlights important stakeholders that are often overlooked in discussions of the latest scientific breakthroughs, and dives into 12 different technology areas key to the future. “Vietnam should not miss Industry 4.0 opportunities, and one of the biggest jobs it must do is to ensure domestic workers will not be left behind due to digital transformation,” Schwab said.

Preparing for the future

Tran Bao Tran is a fourth-year student of the Hanoi University of Science and Technology. She also works as a part-time technological programmer for a private company near her university to earn money, which would be used to join an English course and another course on designing using digital technologies.

“Finding a job is quite difficult now, and I don’t want to be jobless after graduation. Almost everyone is now using digital technology which is changing our life very fast, so we must learn to adapt to digital transformation,” Tran said. “I have to prepare for my future. I don’t want to earn my living as my parents are in the countryside – working on the rice fields just to earn enough to live on.”

Her brother, Tran Minh Duc is now studying computer science at Germany’s Heidelberg University where he won a scholarship in 2021.

“I am thinking about coming back to Vietnam to work as computer science is strongly developing in this country, with massive employment opportunities here,” Duc said.

“In Germany, I can learn much knowledge about the digital transformation, with a big focus placed on industrial development critically needed by Vietnam.”

Vietnam’s shift from a centrally planned to a market economy has transformed the country from one of the poorest in the world into a lower middle-income country. Vietnam now is one of the most dynamic emerging countries in the East Asia region.

The country is experiencing rapid demographic and social change. After years of growth, the nation’s population reached about 100 million now (up from about 60 million in 1986) and is expected to expand to 120 million before tailing off around 2050.

At present, about 70 per cent of the population is under 35 years of age, with a life expectancy of close to 73 years. But the population is rapidly ageing. There is an emerging middle class, currently accounting for 13 per cent of the population, but expected to reach 26 per cent by 2026.

However, it is forecast that 56 per cent of all employment in Cambodia, Indonesia, the Philippines, Thailand, and Vietnam is at high risk of being replaced with technology over the next decade or two.

Over the past 20 years, Vietnam has gradually entered global value chains while achieving a remarkable reduction in poverty. However, in the coming years, disruptive technologies are expected to present both challenges and opportunities for remaining on this successful trajectory, according to the World Bank.

In Vietnam now, about 1.6 million of new people like Tran and Duc enter the domestic labour market every year, which is a big burden for the country to provide sufficient employment.

This burden is expected to grow further as digital transformation ascends, with robots and high technologies set to replace many workers, especially manual ones. “Industry 4.0 is changing everything – from the way we relate to each other, to the way our economies work, to what it means to be human. We cannot let the brave new world technology is creating simply emerge. We must shape the future we want to live in,” Schwab of the WEF said.

Needing more assistance

Hoa Huu Cuong, head of the Institute for European Studies’ Department of European Nations Studies, said that for Vietnam to catch up with Industry 4.0, it must invest more into creating related human resources, as many nations have done.

For example, in Germany, 40 per cent of the workforce is in the scientific and technological sector, higher than the average rate of 33.5 per cent in the EU, and 34 per cent in the Eurozone.

Since 2011, the German government has been supporting universities in boosting scientific and technological cooperation with foreign governments, institutes, and universities.

According to Vietnam’s Ministry of Science and Technology, only 0.5 per cent of GDP is used for research and development (R&D) annually. The rate is 3.18 per cent in Germany.

“Vietnam will miss its train to Industry 4.0 if its people and its businesses fail to improve themselves with knowledge of the ongoing digital technology revolution,” Cuong said.

In Germany, thanks to heavy investment and favourable business for investors, companies in 2019 invested $102.6 billion into digital transformation. Last year, German startups mobilised $6.4 billion from investors.

The United Nations Development Programme (UNDP) has warned that Industry 4.0 and digital transformation will cause unemployment in Vietnam, given the country’s obstructions in R&D.

“Vietnam must better prepare for, and adapt to, the impact of Industry 4.0 on drivers of growth and job creation. Accelerating Industry 4.0 offers both opportunities and risks in terms of future employment creation, as Vietnam embarks on new growth pathways,” said a UNDP report on Industry 4.0.

“It is anticipated that automation and AI will displace jobs in several sectors that have been driving Vietnam’s growth.”

“It is important to forecast the country’s growth drivers that will be affected by Industry 4.0 and the jobs at risk of being replaced by AI and automation, to explore potential negative impacts and formulate actions for mitigation,” said the UNDP report.

Ingrid Christensen, Country director International Labour Organization Vietnam The increased megatrends including technological advances, demographic shifts, globalisation, and especially climate change and a shift to green production and consumption are changing the world of work profoundly. The transition to the green economy will inevitably involve destruction of a number of jobs but at the same time, the creation of new ones, including those for young people. We estimate that about 100 million new jobs can potentially be created by 2030, leading to a net job creation of 25 million jobs. Out of this, 8.4 million jobs are for young people. Asia-Pacific has strong potential for increased green jobs. In fact, there are already 5.8 million jobs in renewable energy. If the countries in the region continue investing in the environment, an additional 14 million jobs will be created. These can be only obtained if well managed by investing in skills development for workers, including young ones. Many workers will need to reskill, upskill, and adopt different work practices entailing the use of new tech that help improve resource efficiency. Young workers and those who still enrol in education would be more inclined to acquire new skills and competencies required by employers in the green economy. The ILO also estimates that, up to 2030, about 25 million young persons aged 15-29 are expected to enter the labour force searching for employment globally. Vietnam currently has 10.8 million young workers, accounting for 21.4 per cent of the labour force. This is a good opportunity to equip youth with the skills needed to succeed in the green economy, improving prospects for creating more and better-quality jobs. Sustainable development is only possible with the active engagement of governments, employers, workers, and concerned agencies who play critical roles, as well as young people who are able to develop new ways of thinking that protect the environment and promote sustainable work. It is therefore crucial to promote equal access to opportunities for skills development for youth so that they can unlock the potential of the green economy. Skills development for all including young people is a key policy agenda of our in response to the future of work. Our Centenary Declaration for the Future of Work adopted in 2019 highlighted the importance of taking a human-centered approach in meeting challenges and opportunities in the world of work. We are happy to work with Vietnam and others to build a meaningful and sustainable career and a greener future.