US-China trade war leads to fierce battle for skilled labour in Vietnam
- Companies shifting their manufacturing operations to Vietnam are facing a shortage of skilled labour, especially in IT and engineering
- Only 12 per cent of Vietnam’s 57.5 million-strong workers are highly skilled, and analysts lay the blame on the education system
Hanoi’s trade deals, including its recently signed FTA with the European Union, have also become a draw.
“Fresh, unskilled people are plentiful, but even basic sewing workers will need training for at least six months, so patience is the key,” said Jef Stokes of Maxport, a Vietnam-based garments manufacturer, highlighting a lack of reform in the education system as part of the problem.
“It’s adequate, but not graduating highly qualified candidates in enough volume,” said Stokes. “This is the choke point.”
IT workers, engineers, and managers were already in tight supply, but additional demand from trade war refugees is increasing turnover among highly skilled workers, factory owners, consultants and recruitment firms say.
The lack of capacity should come as no surprise: Vietnam’s population is just 7 per cent that of China’s, it still lacks investment in infrastructure, and needs to spend an average of US$6.7 billion a year to expand its annual power generation capacity by 10 per cent between 2016 and 2030, according to the World Bank.
Accelerating investment in the hi-tech sector and companies reconsidering their regional supply chains due to the trade war have reignited concerns about high-skill labour availability in Vietnam, said Michael Sieburg, of consultancy firm YCP Solidiance.
Only 12 per cent of Vietnam’s 57.5 million workers are highly skilled, according to recruitment firm ManpowerGroup.
This has created rising competition for talent among new investors, said Sieburg, who advises foreign companies looking to set up operations in Vietnam.
US-China trade war could slow global manufacturing into 2020
Nguyen Quang Anh, a 28-year-old software developer from Hanoi said he was approached several times by headhunters before he even graduated. Since leaving university, Anh has switched jobs four times, each time for at least a 50 per cent pay rise.
“Because of the shortage, employers are willing to pay us at much higher rates,” said Anh. “If tech giants relocate to Vietnam as a result of the trade war, I’ll definitely apply for a position.”
When Vietnam’s biggest listed company, Vingroup, began its push into industrial manufacturing, it had to look elsewhere to fill top talent jobs.
At the launch of its foray into automobiles, Vinfast, at least five members of the founding leadership team were veterans from General Motors, including the CEO.
“Our foreign experts have helped train our Vietnamese staff,” Vingroup said in a statement. “This model has been applied among large Vietnamese companies in the face of rapid process of globalisation”.
The China factor in Vietnam’s infrastructure development dilemma
Much of the problem stems from a lack of educational reform, analysts say. At secondary level, Vietnamese schools score highly in Programme for International Student Assessment (PISA) scores, an OECD study which assess the reading, mathematic and scientific skills of 15-year-olds around the world.
In 2015, the last year for which PISA data is available, Vietnam ranked eighth out of 72 countries in terms of science performance, and was 21st overall – ahead of the United States and most European nations.
At higher levels, however, the results differ. Around 28 per cent of the 18-29 age group attend university in Vietnam, compared to 43 per cent in Thailand and 48 per cent in Malaysia.
“Numerous studies show that educational curricula in Vietnam are outdated, teachers overwhelmed and underpaid, and graduates lack the job ready skills sought by the private sector,” said Adam Sitkoff of the American Chamber of Commerce in Hanoi.
The government should take further action to modernise its education system, particularly at the vocational and university levels, Sitkoff said. Vietnam’s labour and education ministries did not respond to requests for comment.
One example highlighting the lack of reform is the compulsory study at Vietnamese universities of the ideology and history of the ruling Communist Party, and Vietnam’s founding president, Ho Chi Minh.
Nguyen Bac Chuong, a lecturer of Ho Chi Minh Thought at Hanoi Medical University, said while the central tenets of the teaching were important, the way lectures on revolutionary and party history are delivered is a little dated, and not that practical.
“Not everyone is interested in hearing about politburo, national assembly or party meetings,” said Chuong. “So it’s understandable that the revolutionary lines of the Communist Party of Vietnam are not always welcomed by students.”
