The staffing market in Vietnam is attractive and promising for businesses and investors who are looking for new and exciting opportunities to grow. This dynamic and vibrant country has been consistently ranked as one of the fastest-growing economies in the world, with a GDP growth rate of 8.0% in 2022, according to the World Bank. It also has a large and diverse workforce, with over 50 million employees, many of whom are young, educated, and skilled.
But how can you tap into this amazing potential and find the best talent for your business? How to navigate the complex and ever-changing landscape of the labor market in Vietnam? How can you overcome the challenges and seize the opportunities that exist in this emerging market?
That’s where we come in. This guide will help you discover Vietnam’s latest staffing market trends and gain insights to make more informed hiring decisions. Let’s get right to it!
1. How Vietnam’s labor market works: An overview
Vietnam’s labor market is a reflection of its large and diverse population, its key economic sectors, and its integration with the global economy.
1.1. Population demographics
“100 million hopes, 100 million dreams, and 100 million possibilities.”
Vietnam is set to reach a population of 100 million people by 2023, making it the 15th most populous country in the world. Its workforce is relatively young and dynamic, with a median age of 32.5 years.
This demographic has a lot of potentials. However, they also need enough skill development and employment opportunities. This creates both opportunities and challenges.
1.2. Major industries and sectors
The key industries and sectors influence the staffing market in Vietnam and drive its economic growth. The manufacturing sector is a major employer, with about 16% of the workers. It has many employment opportunities in industries like textiles, electronics, and automotive manufacturing. Other sectors such as agriculture, construction, services, and tourism also contribute to the economy and the labor market.
These industries and sectors provide significant employment opportunities for the local workforce, as well as generate income and revenue for the country. Furthermore, they enhance Vietnam’s competitiveness and attractiveness in the global market, as they produce high-grade goods and services that can be exported to multiple countries.
1.3. Foreign investment and trade
Foreign investment and global trade also have shaped Vietnam’s labor market. Vietnam has received a lot of foreign direct investment (FDI) over the years. In 2022, the disbursed volume of FDI totaled $22.4 billion. This has indicated the country’s continuous attractiveness to foreign investors, who have brought capital, technology, and expertise to the country. This FDI influx has led to the development of many manufacturing facilities, which have offered jobs to the local workforce, as well as increased Vietnam’s production and export capacity.
Besides, Vietnam’s engagement in global trade agreements, such as the EU-Vietnam Free Trade Agreement (EVFTA) and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), has enhanced trade opportunities and spurred job growth in various sectors. This way, Vietnam has gained access to new and larger markets, reduced tariffs and non-tariff barriers, and improved its competitiveness and attractiveness in the global market.
2. Workforce and job market dynamics
2.1. Labor force size and growth
Vietnam has one of the largest labor forces in Southeast Asia, with more than 50 million employees as of the first quarter of 2023. You can expect this number to increase further as the population grows and more people enter the working-age group.
Moreover, Vietnam has a relatively young labor force, with a large share of workers aged between 25 and 54 years. This means that the country has a high potential for productivity and innovation and a low dependency ratio.
2.2. Employment structure and quality
This is another important aspect of the staffing market in Vietnam. The country has undergone a significant economic transformation in recent decades, shifting from a predominantly agricultural economy to a more diversified and industrialized one. This has led to a change in the employment patterns of the labor force, with more workers moving from rural to urban areas, and from agricultural to non-agricultural sectors. Particularly, the manufacturing, services, and construction sectors have seen rapid employment growth, reflecting the increasing demand for skilled and semi-skilled workers.
It’s also worth mentioning that Vietnam boasts a low and decreasing unemployment rate. In 2023, about 77 out of 100 people of working age had a job, and only 2 out of 100 people who were looking for work could not find one. This shows that the country has a strong and resilient economy, with a high demand for labor and a low supply of job seekers.
2.3. Gender and wage disparities
Vietnam has a high participation rate of women in the labor force, with about 48% of the total workforce being female. However, women still face various barriers and discrimination in the labor market like occupational segregation and lower wages.
That is why promoting gender equality and empowering women in the labor market is not only a matter of social justice but also a key factor for enhancing economic growth and competitiveness. The Vietnamese government has adopted several policies and initiatives to address these issues, for example, the Law on Gender Equality (2006), the National Strategy on Gender Equality (2011-2020), and the project that supports women’s startups for 2017-2025.
3. Education and skill development in Vietnam: Implications for foreign investors
To succeed in this market, you should understand the education and skill development trends and conditions that affect the availability, quality, and cost of labor.
3.1. The education system and enrollment rates
One of the main strengths of the staffing market in Vietnam is its high level of education attainment and enrollment rates. The country has achieved remarkable improvements in providing education to its people, which enhances the quality and potential of its workforce.
Its diverse education system covers different levels of learning, from pre-primary to tertiary. Almost everyone in Vietnam has access to basic education, as the enrollment rate for primary education is more than 100%. Moreover, more and more people in this country are seeking higher education, with an enrollment rate for tertiary education of 35%.
3.2. Programs and partnerships for vocational and technical skills development
The country understands that these types of education are crucial for preparing its workforce for the changing needs of the economy. Its government has launched initiatives to support vocational training programs and partnerships with industries.
By 2023, thousands of vocational training programs offer training in various fields, including information technology, hospitality, electronics, and mechanics. These programs aim to improve the employability of workers and close the gap between the skills that industries require and the skills that employers have.
3.3. Skill requirements and challenges in the workforce
The staffing market in Vietnam still faces some skill gaps and challenges, despite making progress in education and skill development. The economy and technology are changing fast, and they need new and specialized skills. Employers often have trouble finding skilled workers for jobs in sectors like information technology, engineering, and digital marketing. Also, employers want workers to have soft skills like problem-solving, communication, and teamwork.
To close the skill gaps, the government and private sector need to work together continuously. They need to provide targeted training programs, work with educational institutions, and start industry-led initiatives.
3.4. Rising demand for digital and tech competencies
(Cited from Vietnam IT Salary Guide 2023 by JT1)
Vietnam is going through a digital transformation and technological revolution, which means that digital and tech skills are in high demand. Many industries like information technology, e-commerce, software development, and data analytics are growing fast and need employees who can use digital tools and have technical knowledge. Learning new skills or improving existing ones in areas like digital literacy, programming languages, cybersecurity, and artificial intelligence can help people find better jobs and join these booming sectors.
4. Employment regulations and policies
4.1. Legal framework for employment and workers’ rights
Vietnam has a set of laws that cover employment and protect workers’ rights. The Labor Code of Vietnam deals with different aspects of work, including hiring, pay, work conditions, safety, and insurance. It gives rules for employers and employees, which makes sure they treat each other fairly and work well together. The Labor Code has been updated to follow international standards and deal with new challenges in the staffing market in Vietnam.
You need to be aware of these laws and regulations in Vietnam since they affect your operations and obligations here. For instance, comply with the rules on hiring foreign workers, such as obtaining work permits, paying social insurance contributions, and ensuring equal treatment. Also, respect the rights of workers like freedom of association, collective bargaining, and dispute resolution.
4.2. Types and terms of work contracts and hours
Employment contracts are the basis for work relationships in Vietnam’s labor market. They describe what employers and employees have to do and what they can expect from each other. Most full-time workers have contracts that don’t have an end date, while workers who are hired for specific projects or short-term jobs have contracts that last for a fixed period or a season. The normal working hours in Vietnam are 48 hours a week, with no more than 8 hours a day. If employees have to work extra hours, they are regulated and paid more for the overtime work.
Foreign investors should be familiar with the types and terms of employment contracts in Vietnam that affect their hiring practices and costs. For example, consider the advantages and disadvantages of different types of contracts, including flexibility, stability, termination conditions, and severance payments. Plus, because the working hours and overtime work affect your productivity, quality, and employee satisfaction, manage it effectively.
4.3. Minimum earnings and benefits for employees
Vietnam has a policy that sets a minimum wage for workers, to ensure that they can afford a basic living. The minimum wage changes annually and depends on where the employees live. In 2022, the minimum wage in Vietnam is about 4680 VND a month, which is about 199 USD. Besides the minimum wage, workers get social security benefits, such as health insurance, maternity leave, sick leave, and retirement benefits. The social security system helps them to be safe and supported during their work and after retirement.
Learning the minimum wage and social security benefits in Vietnam helps manage your labor costs and competitiveness properly. Remember to update yourself about the changes in the minimum wage every year.
5. Foreign workforce and expatriates that affect the staffing market in Vietnam
5.1. The legal framework for employing foreign talent in Vietnam
Employers who want to hire foreign workers have to follow certain steps and get work permits and visas for them. Vietnam has rules for hiring foreign workers that aim to balance the needs of both the local and foreign workforce.
The rules state what employers and foreign workers have to do. These include showing that they have skills that local workers don’t have, following the labor laws, joining social insurance programs, etc.
5.2. Vietnam: A magnet for expatriates and foreign professionals
Vietnam wants to bring in expatriates and foreign professionals to help its economy grow and develop. The country has various incentives and initiatives to attract skilled people. Ho Chi Minh City and Hanoi are places where many multinational companies, startups, and international organizations work, and they offer expatriates a chance to work in different sectors. As it has a good business environment, competitive salaries, a rich culture, and many lifestyle options, Vietnam is a great choice for foreign professionals.
You can benefit from the presence of expatriates and foreign professionals in Vietnam since you can access a pool of talent with global experience and expertise. Expatriates help you establish your presence in the country, navigate the local market conditions, build networks and partnerships, and manage your operations effectively. Also, with them, you can tap into new markets and opportunities in the region.
Furthermore, you need to be prepared for the challenges of employing expatriates in Vietnam. For instance, consider the costs and benefits of hiring expatriates versus local workers, such as relocation expenses, salary expectations, productivity levels, and retention rates. Also, provide training and orientation programs for expatriates to help them adjust to the culture, language, and business etiquette of Vietnam.
6. Best recruitment and hiring practices in Vietnam
6.1. Typical methods of attracting talent
We hope you know that traditional recruitment methods can help you reach a wide range of potential candidates. For example, you can use newspapers and publications to advertise their vacancies to the general public or specific audiences. Besides, use recruitment agencies and personal referrals to access qualified and reliable candidates. You can also partner with universities and educational institutions to recruit fresh graduates and young talent.
6.2. The impact of digital platforms on hiring practices
With this, you can enhance your efficiency and effectiveness in hiring. For instance, use online job portals to post your vacancies and search for candidates. Moreover, you can use professional networking sites such as LinkedIn or Facebook to build your online presence, network with potential candidates, and showcase your employer brand.
6.3. Creating a strong employer brand and retaining talent effectively
Foreign investors need to pay attention to their employer branding and talent retention strategies that can affect their reputation and performance in the country. We suggest communicating your vision, mission, and values clearly to your employees and potential candidates. Also, consider offering attractive compensation packages that include not only salary but also bonuses, allowances, health insurance, social insurance contributions, annual leave, and public holidays. You may want to provide opportunities for employees to learn new skills, grow their careers, and receive feedback.
6.4. Staffing solutions for different business needs
Staffing services are another option for foreign investors who want to navigate the staffing market in Vietnam without establishing a legal entity or a representative office. They’re provided by HR companies that act as intermediaries between employers and employees. Employers only need to share their requirements for the candidates they want, and the HR company will find suitable candidates for them.
The selected employees will sign a contract with the HR company and work on the employer’s project. The employer will pay a package fee to the HR agency each month that includes hiring fees and other expenses (such as working allowance and travel expenses). Your company does not have to deal with any legal or administrative issues related to the employees.
Staffing services from TSC can be a convenient and flexible solution for foreign investors who want to test the market or run short-term projects in Vietnam. For instance, thanks to it, you save time and money on setting up a legal entity or a representative office, obtaining work permits or visas for foreign workers, complying with labor laws or tax regulations, etc. They also help you access qualified local talent swiftly without going through lengthy recruitment processes. Feel free to contact us to unlock the best of our services.