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The end of Q3/2017 signals the start of a new planning season for companies in Vietnam. As business leaders ponder their moves for 2018, the question about building and maintaining a strong workforce to deliver results in a growing market like Vietnam is one of their main concerns.

Written by Nam Huong Corp
2018-03-01

 

Vietnam Economic Outlook
Following the 6.21 expansion rate of 2016, Vietnam’s economy is forecasted to grow at an average of 6.3% in the next 3 years, according to a report by World Bank in June 2017. The Washington-based lender cited accelerating service sector, robust industrial production and recovered agriculture as the key drivers that put Vietnam among countries with the fastest economic expansion, “continuing to gain market share in exports and even giving China a run for competitiveness.”

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Youth Unemployment
With the country’s literacy rate at 97% and the government’s plan to increase the number of new students enrolling in college and university to 560,000 by 2020, Vietnam should be welcoming a wave of fresh graduates ready to take advantage of the country’s forecasted economic growth. However, in reality, a higher degree does not guarantee job prospects. The unemployment rate of youths with university training stands at an alarming rate of 17%, compared to a slightly over 6% of those only received short-term training. University and college curriculum is criticized for focusing too heavily on impractical theories while failing to provide students with pragmatic skills and knowledge. However, fresh graduates are not the only ones affected by the lack of skills.
The Skills Issues
In the first eight months of 2017, the number of enterprises registered for new establishment rose 16.3% and 44.8% in the registered capital. The average registered capital per newly-established enterprise went up by 24.5%. Recruitment still remains the top priority for businesses in Vietnam, as polled among HR leaders across different industries.
In spite of the increasing demand for talent from existing and newly established businesses, employers are facing challenges in hiring the right candidates for the jobs. In the first half of 2017, there was a mismatch between talent demand from employers and the market supply, especially in the Technical and Accounting functions.

Top 5 most in demand functions Top 5 functions with the most applications
Sales Marketing/PR
HR  Finance
Finance  HR
Technical  Accounting
Marketing PR Sales

 

Vietnam’s issues with the widening skill gap is also reflected in the Global Talent Competitiveness Index 2017, where the country’s ranking of Vocational skills declined from 95th in 2016 to 98th in 2017. While Vietnamese candidates are viewed as quick to learn, soft skills such as problem solving, communication and leadership is among the areas that is lacking and require further training from employers, according to a World Bank report.
“Businesses are looking for talents, however, the lack of sufficiently skilled applicants led to the mismatch between supply and demand”, commented Ms. Thanh Le, Recruitment Business Director of Adecco Vietnam. “It is not only fresh graduates who need to boost up their skills, 51% of employers think even experienced candidates do not possess up-to-date knowledge and practical skills required to perform in their roles. Fixing the skills issues can lead to higher job satisfaction, and improve company productivity and growth.”

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Technology Readiness and Talent
With the world on the brink of the Fourth Industrial Revolution, Vietnam needs to get ready for a new waves of technology that will fundamentally change the way work is done. 85% of production workers in Vietnam’s textile, clothing and footwear sectors are at risk from automation and robotics. White-collar workers are not fully immune either. According to an Oxford University study, loan officers, receptionists and information clerks, paralegals and legal assistants are among jobs most likely to be at risk of computer automation.
When measuring Vietnam’s readiness to benefit from the technology change, the GTCI “heat map” shows a mixed readiness in terms of education system, and stakeholder connectedness (i.e. the collaboration between government and businesses in training & education). While Vietnam’s position on Entrepreneurial Spirit is strong, the country needs to bridge the gap between education system and the economic needs to be ready for the 4.0 Revolution.
Mending the Gap
A look at countries ranked high on the GTCI in terms of Vocational Skills and Talent Readiness such as Germany and Switzerland shows a notable pattern – those are the countries with a structured vocational/apprenticeship training program that is aligned with their economic needs. In Germany, for example, after graduating from high school, students can choose to either go directly to university or apply for an apprenticeship with companies. Most of the students opt for the latter as they receive on-the-job-training over a period of time before going to university. Such programs allow students to obtain practical knowledge, develop their soft skills while making the most of their academic training later on.
Mr. Andree Mangels, General Director of Adecco Vietnam, shared, “At present, only less than 20% of employers in Vietnam maintain regular interaction with general education and vocational training institutes. The interactions are primarily focused on their short-term recruitment needs. More efforts are still needed to close the skills gap and structurally improve the quality of skill supply. Companies should be encouraged to work closely with educational institutions to develop curriculum and training programs that align with recruitment needs and ensure relevant skills are being taught to future workers.”
While such macro efforts require extensive time for planning, policy making and execution, on an individual level, Andree also recommends fresh graduates to actively seek and participate in quality internship programs to gain practical knowledge and skills. “Every year, Adecco Vietnam joins youth organizations such as AIESEC, Young Makers and universities such as Hoa Sen University, RMIT, and many others to organize CV writing & interview workshops, and career talks for students. Additionally, youths, and even experienced candidates, can make use of the immense and available online resources to constantly update their technical knowledge and industry trends.”

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Conclusion
With Vietnam’s current economic potential and growing workforce, issues with the skills gap and youth unemployment need to be addressed for the country to realize its potential. These tasks require a concerted and persistent effort among government – businesses – education institutions. A structured internship/apprenticeship program can help equip young workers with the skillset required to perform in their jobs. Over the past four years, Adecco Vietnam has implemented a successful six-month paid internship for fresh graduates with the offer to convert to full time employment. Furthermore, with the rapid change in technology, companies need to invest in training their current employees to retain and update them on the new trends in the industry. Lastly, candidates, both fresh and experienced, need to make their own efforts in their learning and professional development, to remain competitive in the job market.

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