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Understanding Vietnam’s Workforce: Challenges and Advantages

Vietnam boasts a young, dynamic, and resilient workforce that offers multiple opportunities for businesses. With a population of over 100 million people, the country has one of the largest and fastest-growing labor markets in Southeast Asia. Also, the abundance of labor is a driving factor in Vietnam’s competitive labor costs. This puts the country on the map as one of the top destinations in Southeast Asia for operations like software outsourcing.

But specifically, what makes Vietnam’s workforce so attractive and competitive? How can you leverage its strengths and overcome the challenges? Here, we’ve got you covered.

1. Strengths and advantages of Vietnam’s workforce for your business

1.1 Age structure: A young and large force

One of the most striking features of Vietnam's workforce is its youthful demographic. The average age of the labor force in the country is 32.5 years old, which is lower than the regional average of 35.4 years old. That is, Vietnam has a large pool of young and energetic workers who can drive innovation and productivity for your business.

Moreover, the General Statistics Office reported that in the second quarter of 2022, there were 51.6 million people in the working population in their prime years. This was over 0.4 million people more than the previous quarter and almost 0.6 million people more than the same quarter of 2021. In other words, Vietnam has a high labor force participation rate and a low dependency ratio, which are favorable factors for economic growth and development.

Vietnam's work force
Vietnam's labor force

1.2. Gender distribution: An empowered force

This is another notable aspect of Vietnam’s workforce. Women make up 48% of the total employed population, which is higher than the regional average of 43.8%. This shows that Vietnam has a high level of female labor force participation and a low gender gap in employment.

Furthermore, Vietnam has made significant progress in advancing gender equality and empowering women in the workforce. The country moved up 11 spots from 83rd to 72nd out of 146 countries in the Global Gender Gap Index, which measures how well women and men have equal access to opportunities and resources. Vietnam’s score improved from 0.711 to 0.724, which means that it has closed about 72% of its gender gap.

1.3. Vietnam’s workforce: Well-educated

One of the most impressive achievements of Vietnam’s education system is its high literacy rate. More than nine out of ten Vietnamese people can read and write. The global literacy rate is only about eight out of ten people. This means Vietnam has a well-educated workforce that can communicate effectively and learn new skills.

Moreover, the country has invested heavily in improving the quality and relevance of its education system to meet the changing demands of the labor market. It has implemented several reforms and initiatives to enhance technical and vocational education and training (TVET), for example, the National Qualifications Framework and the Law on Vocational Education. By 2023, there will be thousands of vocational training programs in different sectors like mechanics, electronics, hospitality, and information technology.

1.4. English speaking skills: Improved

Vietnam's work force
Vietnam ranks 31st globally and 7th in Asia in English proficiency, according to the English Proficiency Index. (Source: vnexpress)

According to the EF English Proficiency Index, Vietnam ranks 7th out of 19 Asian countries in terms of English speaking skills, with a score of 54.06 out of 100. This indicates that the country has a relatively proficient and fluent workforce that can communicate with global partners and customers.

Furthermore, Vietnam has made significant progress in promoting English as a foreign language in its curriculum and society. The country has adopted the National Foreign Languages Project, which aims to improve the English proficiency of students, teachers, and employees. The project also supports the development of English teaching materials, methods, standards, and assessments.

1.5. Qualifications: A trained and certified force

Another important indicator of Vietnam’s workforce education and skills is its qualifications. According to the General Statistics Office, the share of employees with degrees or certificates didn’t change much in the first quarter of 2023, staying at 26.4% compared to the last quarter of 2022. However, it was slightly higher than the same quarter of 2022. That is, Vietnam aims to grow its high-tech industry, which requires a skilled labor force.

The share of workers with degrees/certificates increased a bit more in the second quarter of 2023, reaching 26.8%. This was 0.4 percentage points higher than the previous quarter and 0.6 percentage points higher than the same quarter of 2022. In total, the first half of this year saw a 0.5 percentage point increase, making the share of employees with degrees or certificates 26.6%

1.6. Behavioral skills: Diligent

Vietnamese employees are widely praised and valued by foreign employers for their admirable traits, such as their diligence, intelligence, and enthusiasm to learn new skills. They show an amazing ability to adapt to new work settings, needing little training from employers. Moreover, Vietnamese workers are usually willing to work overtime and cope with stress when needed.

For instance, according to the 2023 Vietnam IT Salary Guide, IT professionals in the country have high expectations for their career development, with more than 81% of them wanting to upgrade their tech skills and 65.1% of them wanting to improve foreign languages. This indicates that Vietnamese workers are eager to grow and improve themselves, which can create a competitive advantage for their employers.

Vietnam's work force
Willingness to change

1.7. Labor cost: Affordable and competitive

Vietnam has a large and growing labor force that contributes to its low labor costs. The availability of employees means that employers can offer lower wages and benefits without compromising the quality and quantity of their output. This gives Vietnam an edge over other countries in terms of labor cost competitiveness.

We hope you know that one of the main advantages of outsourcing software development to Vietnam is the significant cost savings. Compared to hiring the U.S. labor force, Vietnam’s software development outsourcing cost is around 90% lower, which means that you can get the same quality of work for a fraction of the price. Even compared to other Asian countries like China and India, Vietnam’s software development outsourcing cost is still much lower, with a saving of 50% versus China and 30% versus India.

2.Challenges you may face in hiring qualified Vietnam’s workforce

2.1. Inadequate employer branding

You need to actively promote and communicate your values, culture, and benefits to attract and retain top talent. A well-designed employer branding strategy should help improve your image and reputation among job seekers, employees, and stakeholders.

However, many companies don’t pay enough attention or invest in employer branding. This can affect their ability to compete for talent in the market.

2.2. Lack of market insights

Market insights research is a valuable tool that helps you identify market trends, understand your core customers better, and set suitable goals for your business. With it, you’ll gain a deeper and broader knowledge of the market conditions, customer preferences, competitor strategies, and industry opportunities.

That said, in reality, the number of personnel who can conduct market insights research is limited and hasn’t been given enough attention by recruiters despite its high demand. This can cause missed opportunities, inaccurate decisions, and ineffective strategies for your business.

2.3. Vague job descriptions

Some employers and businesses haven’t yet identified the specific requirements or essential skills that they’re looking for in their prospective employees. This leads to vague and ambiguous job descriptions that fail to convey the expectations and needs of the employers clearly or transparently to the candidates.

Furthermore, employers tend to face challenges in finding qualified individuals who can match their expectations and needs. This is because of the unclear scope of work or niche requirements that they have for their positions.

2.4. Unrealistic language requirements

Several businesses have high expectations for the English abilities of their candidates and demand advanced English levels and certain certifications as proof of their English skills. This can pose a challenge for them to find the ideal candidate. Some applicants may have proficient English skills and be suitable for the position but don’t have the required documentation to support their claims.

In addition, some companies may be unnecessarily limiting their pool of candidates. They require a high level of English proficiency for some positions that don’t need it while ignoring other relevant skills and experience that the candidates may have.

Vietnam's work force
Source: 2023 Vietnam IT Salary Guide

3. How to harness the potential of the Vietnam’s workforce for your business

3.1. What do job seekers want to see in a job listing?

Career development

Vietnam's labor force
Motivation to change jobs

One of the trends among job seekers is that they value their career growth similarly to their salary range. Top talent is looking for a position where they can have a clear and realistic career path, with guidance and support from their leader or manager.

Work culture

  • Flexibility: The Covid-19 pandemic has changed the way people work and many job seekers prefer to have flexible work arrangements. They want to have the option to work remotely or choose their working hours, as long as they can deliver their tasks effectively.

  • Recognition: Job seekers also expect to be acknowledged and appreciated for their hard work and contribution to the company’s success. They want to feel valued and respected by their employers and colleagues.

  • Learning opportunities: Employees are eager to learn new skills and improve their work performance. That’s why they look for job listings that offer them access to more in-depth courses or training programs.

3.2. How to avoid high turnover rates and retain talent in Vietnam

The pandemic has caused a high turnover rate among companies worldwide, and Vietnam is no exception. Moreover, Vietnam faces the challenge of “brain drain”, where skilled workers leave the country for better opportunities abroad. We learned some strategies to address this problem, including:

  • Employee engagement: One of the key factors to retain talent is to engage employees and make them feel connected to the company’s vision and values. Employees who are engaged are more likely to stay loyal and motivated, and less likely to look for other jobs.

  • Win-win situation: Another strategy is to create a win-win situation between the employee and the employer, where both parties benefit from the employment relationship. You can do this by offering competitive compensation, flexible work arrangements, and opportunities for career development.

  • Talent recognition and investment: Importantly, you recognize and invest in talented and competent staff, who are the driving force of the company’s success. For example, provide regular feedback, recognition, rewards, training, and mentoring to the employees.

3.3. How TSC helps tap into the talent pool of Vietnam’s workforce

TSC connects businesses with talented and skilled workers from Vietnam. We have a large database of candidates, flexible and competitive pricing packages, and a guarantee option that ensures customer satisfaction.

The Staffing Company
What our clients are saying (Source: Clutch)

Our vision is to lead the Asian market in staffing and payroll services. We strive to excel in providing innovative solutions, prompt delivery, and outstanding results for our clients and candidates. Feel free to contact us whenever you need business support, 24/7.


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