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Demystifying the Vietnam Job Market: Key Insights

Vietnam job market is one of Southeast Asia's most vibrant and dynamic, with many opportunities and challenges for businesses and job seekers. The country’s labor force has grown to over 52 million individuals in the first quarter of 2023. This makes it one of the largest in the region.

Here, we’ll share some valuable insights into the labor market in Vietnam, based on the latest data and trends, and what they mean for your business or career goals. You’ll also find practical tips and advice on how to navigate and succeed in this emerging and competitive market, whether you’re looking for a job, hiring talent, or expanding your business in Vietnam.

1. Vietnam Job Market workforce is expanding and shifting

1.1 Labor force growth and recovery

Labor force
Labor force by quarter, 2020 - 2023 (Unit: Million people) (Source: General Statistics Office of Vietnam - GSO)

The country's workforce has been growing steadily, reaching 52.2 million workers in the first quarter of 2023. This is an increase of 88,700 workers from the previous quarter and one million workers from the same period last year. In other words, Vietnam has recovered from the impact of the pandemic lockdowns that caused many workers to leave the urban and industrial areas in Q1 of 2022.

1.2. Workforce distribution and transformation in the Vietnam job market

The distribution of workers between rural and urban areas also reflects this recovery. In the first quarter of 2023, there were 121,000 more workers in urban areas and 32,300 fewer workers in rural areas. This indicates that Vietnam is undergoing a structural transformation from an agriculture-based economy to a manufacturing-based economy.

1.3. Implications and recommendations for your business

The growth and shift of Vietnam's workforce are consistent with its economic development strategy, which aims to increase the share of industry and services in GDP. The service sector was the largest employer in Vietnam in Q1 2023, with 39% of the workforce or nearly 20 million people working in this sector. The industry and construction sector came second, with 33.9% of the workforce or 17.3 million people. The agriculture, forestry, and fisheries sector was the smallest, with 27.1 percent of the workforce or 13.8 million people. This sector also lost 285,600 workers compared to Q4 2022. On the other hand, the service sector and the industry and construction sectors gained 38,100 and 360,900 workers, respectively, during Q4 2022.

This trend creates new opportunities and challenges for foreign businesses, companies, and investors who want to expand to this market. For example, you may tap into the potential of the service sector. Vietnam has a strong demand for various services like finance, education, health, tourism, e-commerce, and logistics, driven by its rising middle class, urbanization, digitalization, and integration.

On the other hand, the growth and shift of Vietnam’s labor force reflects the changing aspirations and expectations of Vietnamese workers, who are seeking better jobs, higher incomes, and more skills. They’re more aware of their rights and responsibilities as employees, and more willing to voice their opinions and demands. As an employer, you need to consider the availability, quality, and cost of labor in different regions and sectors. Also, think about the legal and social aspects of hiring and managing workers in Vietnam.

2. Vietnam job market: The importance of skill development

2.1. The skill level of employees remains stable

The proportion of employees with degrees or certificates in Q1 2023 was 26.4%, the same as in Q4 2022. That said, this was a slight improvement from Q1 2022, when it was 25.8%.

This figure is crucial for Vietnam's economic development, as the country aims to move up the value chain and enter the high-tech industry. This requires a substantial supply of skilled labor that can meet the demands of the market.

2.2. Challenges and opportunities for education and training

Job market
Ease of Recruitment by Labor Type

There are still some challenges in the education and training system in Vietnam. For instance, finding managers and supervisors was more difficult than hiring low-skilled labor, according to the Provincial Competitive Index (PCI) 2022. This suggests that there is a gap between the quality and quantity of management and leadership skills in Vietnam.

To change this reality, education and training will be key. According to GSO, while there is some progress in this regard, it is slow and uneven. There is a need for more investment, innovation, and collaboration in the education and training sector, to provide quality and relevant programs that can equip workers with the skills they need for the future.

2.3. Implications and recommendations for your company

Vietnam Job Market
The quality of local workers is not enough for foreign-invested enterprises, so they need to train them by themselves. The cost of training was 4.7% of their total expenses in 2020. It went up to 5.69% in 2021 and 5.85% in 2022.

The skill level of workers in Vietnam affects the competitiveness and productivity of your business in the market. You need to ensure that your people have the necessary skills to perform their tasks, as well as to adapt to the changing technologies and customer preferences. Plus, monitor the skill gaps and shortages in the market and plan for your future skill needs.

What is more? This factor influences your attractiveness and retention. Consider offering competitive wages and benefits, along with opportunities for career development and advancement, to attract and retain the best talent. You may also want to foster a positive and inclusive work culture, where employees feel valued, respected, and engaged.

Furthermore, foreign businesses, companies, and investors can play a role in creating a more skilled, productive, and competitive workforce in Vietnam. For example, offer opportunities for education and training, support innovation and entrepreneurship, and share best practices and experiences.

3. The trend of rising wages

3.1. Average monthly income increases

labor market
Average monthly income of worker

The average monthly income of workers in Vietnam went up in Q1 2023, compared to the previous quarter and the same quarter last year. The average monthly wage was 7 million VND ($298) per month, which was 197,000 VND ($8.39) higher than in Q4 2022.

3.2. Wage gap across sectors

The wage increase wasn’t equal across different sectors. The services sector had the highest wage increase of 766,000 VND ($32.63), making the average wage of a worker in this sector 8.3 million VND ($353.42) per month. The industry and construction sector had a moderate wage increase of 655,000 VND ($27.89). This made the average wage of a construction worker 7.9 million VND ($336) per month.

Meanwhile, the agriculture, fisheries, and forestry sector had the lowest wage increase of 345,000 VND ($14.69). This means 4.1 million VND ($175) per month was the average wage of its workers.

3.3. Implications and recommendations for foreign businesses

The rising wages reflect the increasing demand and supply of labor in Vietnam, as well as the improving living standards and consumption patterns of Vietnamese workers. In other words, Vietnam has a large and growing market for various products and services, especially from the middle class.

Besides, the wage increase indicates the increasing costs and competition for labor in the country, especially for skilled and qualified workers. This means you should think about offering competitive salaries and benefits for talent attraction and retention.

Jobs Market Insight
Motivation to changes jobs

What about the wage gap across sectors? It reveals the uneven development and distribution of labor in Vietnam, aside from the potential for social and economic inequality. This increases your need to balance your investments and operations across different regions and sectors and support the social and economic development of your employees and communities.

4. The issue of gender pay gap

4.1. Men earn more than women

According to GSO, there is a significant difference in the average monthly income of men and women in Vietnam. Men earn 1.36 times more than women, on average. In Q1 2023, men earned 8 million VND ($340) per month, while women earned only 5.9 million VND ($251) per month.

4.2. The gap is smaller for salaried workers

The gender pay gap is smaller for employees who receive a salary from their employers. In Q1 2023, salaried men earned 8.3 million VND ($353) per month. In comparison, salaried women earned 7.3 million VND ($310) monthly. This means salaried men earned 1.14 times more than salaried women, on average.

4.3. Implications and recommendations for your company

This gap reflects the unequal opportunities and outcomes for men and women in the Vietnam job market. The country has not fully utilized the potential and contribution of its female workforce, which could affect its economic growth and development. That’s why promoting women’s involvement in the workforce is a key objective for the Vietnamese government. To support this aim, the government has launched the National Strategy on Gender Equality, covering the period from 2021 to 2030.

Moreover, the trend poses risks and challenges for foreign businesses and investors in Vietnam. They risk legal, reputational, and performance problems if they ignore labor laws and global norms on fair and equal treatment of workers regardless of gender.

In this regard, we suggest offering equal pay for equal work and promoting diversity and inclusion in your workplaces. Also, support the education and skill development of female workers. Advocating for gender-sensitive policies and practices in the labor market is a good idea as well. This way can help create a more fair, balanced, and competitive workforce in Vietnam.

5. The need for further administrative reform

5.1. Some areas in administrative procedures remain challenging

Labor Market
Administrative Procedure Burden on Business in 2022

The 2022 PCI survey shows that businesses faced fewer difficulties with administrative procedures in general. Still, some areas caused them trouble.

Taxes, fees, land clearance, and social insurance were the most burdensome areas. The percentage of firms that had problems with administrative procedures in all sectors decreased significantly in 2022, except for taxes and fees, which increased by almost six percentage points compared to 2021.

5.2. Administrative reform efforts should be more consistent and effective

Despite the remarkable achievements in improving the efficiency of administrative procedures, there is still room for further improvement. According to the Administrative Reform Steering Committee, some documents and results were still delayed at different administrative levels. Besides, people and businesses still had to go to the one-stop department to meet officials and scan documents on the spot, even though they could do it online.

Moreover, according to the 2022 PCI survey, the implementation of provincial policies wasn’t consistent or effective at the departmental and district levels. About 45.2% of firms said that provincial policies weren’t properly implemented by provincial departments, and 50.4% of firms shared that provincial policies were improperly implemented at the district level. These percentages increased from 31.9% and 36% in 2021, respectively.

5.3. Implications and recommendations for foreign businesses and investors

The complexity and inefficiency of administrative procedures affect the time and cost of doing business in Vietnam, significantly impacting your competitiveness and productivity. To handle it, you may:

  • Conduct thorough market research and due diligence before entering or expanding in Vietnam, to understand the legal, regulatory, cultural, and competitive landscape of the country.

  • Leveraging digital technologies and platforms to enhance the efficiency and convenience of public service delivery, such as online submission and processing of documents, online tracking and feedback systems, and e-tax systems.

  • Engaging with the government and other stakeholders to provide feedback and inputs on policy formulation and evaluation and participate in public-private partnership mechanisms.

  • Seek reliable local partners or advisors who can provide guidance and assistance in navigating the Vietnam job market (including administrative procedures), complying with the regulations, and resolving disputes.

For example, by outsourcing your staffing and payroll needs to TSC, you can enjoy the following benefits:

  • Save time and money by hiring professionals within less than 7 days and reducing the workload and hassle of payroll processes.

  • Access a large pool of qualified and culture-aligned candidates, both active and passive job seekers.

  • Scale up or down your workforce according to your business needs and goals.

  • Focus on your core competencies and strategic priorities while TSC takes care of the operational aspects of human resources.

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TSC - Leading Staffing Agency in Asia


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