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The Impact of Covid-19 on Vietnamese Labour

The COVID-19 epidemic has had a significant influence on the economy, society, and, most importantly, Vietnamese labour. According to the General Statistics Office, the number of Vietnamese labour market participants in 2021 was lower than in the previous quarter and the same period in 2020. In the preceding quarter and the same time in 2020, the share of employees in informal employment and underemployment grew. The pandemic's long-term impact on households has become obvious. By March 2021, 30% of households had lower incomes than in March 2020. According to the data, around 12% of households have financial trouble when they lose 50% of their income. The Vietnamese government has taken measures to support businesses and workers, aiming to restore output and improve labor conditions. These actions aim to contribute to the overall enhancement of employment conditions in the nation.

1. COVID influences on Vietnamese labour

As you know, the Covid-19 pandemic destroyed our national economy and even the Vietnamese labour market in 2020. Besides, this issue is on the increase until May 2021. However, in the scope of this article, we only focus on data extracted from 2020. Let’s get started now.

2. Workforce increases with the recovery phase in quarter III of 2020, but the rate has yet to get over its previous point before the COVID pandemic

The Vietnamese labour aged 16 and higher in quarter 4 of 2020 has reached about 56 million staff. This has proven the recovery trend of the workforce market after a record fall from April to June 2020.

The pandemic has transformed the seasonal style of the workforce through many quarters of the year. In the past, between 2016 and 2019, it was popular to realize the number of working staff in the first quarter of the year reducing before steadily boosting in the latter quarters and particularly pitching in Quarter IV.

Until 2020, the workforce begins decreasing in quarters I and II, and steadily gets over in quarters III and IV. Although recovery might be realized, the workforce at the end of 2020 has yet to meet the same number while the pandemic had not been destroyed. The number of employees moving the workforce is around 200 thousand employees that are lower than this of Quarter 1.

Vietnamese labour continues increasing with the recovery phase in quarter III of 2020
Figure 1. Vietnamese labour continues increasing with the recovery phase in quarter III of 2020

3. Pandemic has pushed unemployment while driving some of them into the informal work resort

In quarters IV-2020, the ratio of unemployed employees aged 16 and higher was around 55 million, reduced by 945 thousand staff, compared to a similar period in 2019. Among them, the employed staff in city centers is about 17.6 million – a decrease of 90.2 thousand individuals. This rural zone is approximately 36 million – a reduction of 854 thousand staff, evaluated to the similar period of 2019.

Even though the number of employed people at the end of 2020 raised quickly, compared to the double quarters before, its quick reduction in quarter II has made the number of employed staff aged 15 and higher in the economy for 2020, lower than that in the previous year.

4. Pandemic deprives individuals of work opportunities and leads to the high unemployment rate

To make quarter IV in 2020 in specific, there have been about 902 thousand individuals nationwide suffering from working unemployment. The number is quite higher than that in the quarters in 2019. However, compared between the first and third quarters of 2020, the unemployment ratio of working-aged employees has gone down significantly, from 3% in the second quarter to 2.7% in the third quarter and falling to 1.9% in the final quarter.

Despite the adverse impact of the Covid-19 pandemic, Vietnam's job market experienced remarkable changes, especially in the latter part of 2020. During this period, there was an increased demand for workers to produce goods related to holidays and upcoming events. This indicates the resilience and adaptability of Vietnam's workforce amidst challenging circumstances.

More young people looking for jobs after a pandemic
Figure 2. More young people looking for jobs after a pandemic

5. The Covid-19 epidemic has caused an exceptionally high rate and quantity of unemployed employees in the third quarter of 2021

During the third quarter of 2021, the number of underemployed individuals of working age exceeded 1.8 million. This represented a significant increase of 700.3 thousand people compared to the previous quarter and a 620.0 thousand rise compared to the same period in 2020. In the third quarter of 2021, the statutory working-age underemployment rate was 4.46%, up 1.86 percentage points from the previous quarter and 1.74 percentage points from the same period in 2020. The statutory working-age underemployment rate in cities was higher than in rural regions (5.33% vs. 3.94%). In contrast to the historical trend, the current situation in the Vietnamese labour market shows that underemployment in rural areas is less severe than in metropolitan regions. This represents a shift in the prevailing pattern, indicating a changing dynamic in the distribution of underemployment across different regions.

When the statutory working-age underemployment rate in six socioeconomic zones was compared in the third quarter of 2021, the Southeast had the highest rate of 7.73%, followed by the Mekong Delta with 6.10%. Before the pandemic (i.e., the third quarter of 2019), the Southeast area had the lowest underemployment rate in the country, at 0.37%. This rate was 8.50% in Ho Chi Minh City in the third quarter of 2021, which was 3.6 times greater than in Ha Noi (2.39%). The Delta variant has affected the Southeast area resulting in an increase in the region's underemployment rate. The impact of the variant has been pronounced in this region, causing a surge in the number of underemployed individuals.

6. The peculiar evolution of the Covid-19 epidemic has caused the unemployment rate to skyrocket, much beyond the average 2% number

On a nationwide scale, statutory working-age jobless individuals in the third quarter of 2021 were more than 1.7 million. In the third quarter of 2021, the statutory working-age unemployment rate was 3.98%, up 1.36 percentage points from the previous quarter and 1.25 percentage points from the same period in 2020. The urban statutory working-age unemployment rate was 5.54%, up 2.18 percentage points from the previous quarter.

The unemployment rate skyrocket
Figure 3. The unemployment rate skyrocket

The 3.98% statutory working-age unemployment rate’s the highest in ten years, making it difficult for employees to find work. Before the pandemic, despite periods of severe economic difficulty, the jobless rate rose only to 2.82%. Despite being hit by Covid-19 in 2020 and the half of 2021, the national unemployment rate remained around 2%.

The Southeast and the Mekong River Delta had the highest unemployment rates in this quarter, well above the national average. Over 6% of working-age people in these two locations have been actively seeking work but have yet to find it. Before the Covid-19 pandemic outbreak (third quarter of 2019), this percentage was just 2.33% in the Southeast area and 2.28% in the Mekong River Delta. This rate was particularly high in Ho Chi Minh City in the third quarter of 2021, at 9.93%, four times greater than in Ha Noi (2.49%).

7. The rate of youth unemployment has remained high. The proportion of youngsters who are not in employment, education, or training has risen

The youth unemployment rate (15 to 24 years old) was 8.89% in the third quarter of 2021, 0.75 percentage points more than the same period the previous year and 2.2 times higher than the statutory working-age unemployment rate. Youth unemployment in cities was 1.8 times greater than in rural regions. In metropolitan regions, for every 100 young individuals aged 15-24 engaged in economic activities, there were around 13 jobless persons; in rural areas, the comparable figure was 7 people. In the third quarter of 2021, the young unemployment rate in Ho Chi Minh City was 15.12%, 1.7 times higher than in Ha Noi (8.85%).

The country as a whole registered over 2.4 million (accounting for 19.6%) young people aged 15-24 who were not in work, education, or training in the third quarter of 2021, an increase of 642 thousand persons over the same time the previous year. Youth (15-24 years old) not in employment, education, or training (NEET) rates were higher in rural regions than in urban areas, 21.0% versus 17.4%, and higher among young women than young males, 21.5% versus 17.8%.

Wrapping It Up

The pandemic has changed the Vietnamese labour market very anarchically, with millions of employees badly influenced by job insecurity, decreased working hours, and even wages. For the first ten years, Vietnam’s economy of 2020 saw a severe reduction in the ratio of individuals stepping into the labor market and the number of economically hyperactive persons. However, thanks to the government’s effort and determination, the workforce, and employment background at the end of 2020 have considerably improved. That outcome brings assurance of economic development and IT staffing agency in Vietnam growth.

Source: Internet

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