As the economy recovers, the demand for labor is sure to increase. This is the prediction of Prof. dr. Andreas Stoffers – Country Director Vietnam of the Friedrich Naumann Foundation for Freedom for the labor market in 2022.
†More than 1.4 million Vietnamese were unemployed in 2021 due to effects of the fourth wave of Covid-19 – an increase of 17 percent – according to the General Bureau of Statistics (GSO)† What is the trend in the labor market in Vietnam in 2022?
The Year of the Tiger is off to a good start. Vietnam achieved favorable growth results compared to other countries last year. This was due to the country’s policy making and all the fundamentals that support Vietnam even in times of Covid-19, including liberal investment and investment protection policies, integration in the global value chain, integration into a system of free trade agreements. The prudent and appropriate and prudent monetary and fiscal policies of the country under both former Prime Minister Nguyen Xuan Phuc and his successor Pham Minh Chinh.
These are points to build on. However, it does not necessarily guarantee that the economy will build on the successes of the pre-Corona era. Much remains to be done to ensure that the promising trend continues at the end of the old year 2021.
Globally, signs are currently pointing to an economic recovery. This is especially true for Vietnam. In recent weeks and months, we have all witnessed a winding down of the Corona restrictions in Vietnam. As Prime Minister Chinh rightly said in September, “we will have to live with Covid”. Subsequently, traveling in the country has been made easier, businesses have reopened, social distancing has been reduced and there is a great sense of optimism. This is accompanied by a further recovery of the economy.
This will increase the demand for new workers. Rising demand for economic goods at home and abroad and increasing FDI will also fuel the labor market. This will affect almost all sectors, especially industrial production and trade. There is an increasing need for recruitment in all urban provinces, especially in those where attention has already been paid to these sectors. It will be even more difficult in the tourism and hospitality sector. Here the recovery and thus the demand for labor will certainly take longer.
† Are wages going up?
As the economy recovers, the demand for labor is sure to increase. Currently, many former employees are still in their own provinces. The lockdown measures came as a shock to many. But I am convinced that the positive signs on the horizon will increase the optimism. I personally witnessed this as life quickly returned to the streets of Hanoi after the harsh Covid-19 measures ended over the summer. Vietnamese people have a remarkable resilience. It was like after a rain shower in the desert: everywhere was green again. Admittedly, some companies had disappeared. Some of them will not be revived either. But new opportunities are emerging.
That is why I assume that there will be an increasing struggle for good workers again, especially in the cities and industrial zones. Workers must be paid accordingly to keep them employed and also to offset inflation. That is why I expect salaries, bonuses and travel allowances to increase. Increased inflation will also play a role. However, this will mainly affect industrial production, trade and services. Due to the lack of guests, workers in the tourism sector will not yet benefit from the increasing demand. This will change once Vietnam – hopefully soon – opens completely to foreign visitors.
– More than 2.2 million workers left the big cityie if COVID-19 worsen crisisEd, do you think they’ll come back after Tet?
Understandably, many workers made redundant during the crisis are frustrated. Many life plans have been shattered. I am aware that especially in the poorer classes and for the less developed provinces the restrictions on quality of life have been enormous. There is nothing to criticize about that.
What helped many Vietnamese in need during this difficult time was the support of the government’s economic stimulus packages, the solidarity of other Vietnamese and especially their own families. My wife is Vietnamese. My mother-in-law has done an impressive job in her hometown of Mui Ne, Phan Thiet. In times of need, she has not only coordinated support for relatives but also helped other poor families in the congregation. And this despite the fact that she is not rich. This solidarity of the Vietnamese is impressive and a good reason why the Vietnamese survived the crisis. After Tet, people want to work again and earn money. Coupled with incentives from employers regarding pay and benefits, they will return to HCMC and the other places.
Most importantly, there is no more lockdown. But I don’t expect this to happen. The Vietnamese government is on track to balance the health of the population with the health of the economy, which is just as important for survival, and focuses on personal responsibility.
– Will there be enough room for those 2.2 million workers to go back?
Some employees will not return to their old jobs. Some jobs will be gone, but new ones will emerge at the same time. Some people have found new business and earning opportunities out of necessity. This can even be in areas they never thought of before. Some employees may have started their own businesses. The crisis has also had its positive sides in the field of digitization. New forms of entrepreneurship have emerged, for example in online business. Many people have now looked more closely at alternative forms of entrepreneurship. I am aware that this does not affect all people in Vietnam. Many have suffered from loss of income and have not weathered the crisis so well. But the trend towards business reconstruction in the provinces, together with the increasing demand for labor in the industrial and urban areas, is causing jobs and prosperity to return.
SMEs are the backbone of our German economy in my home country of Germany. They will also be in Vietnam – in addition to foreign direct investment and large companies.
† What is the lesson learned from last year’s crisis in the labor market?
I think it’s important that the business community restores employees’ confidence and wins their hearts. The layoffs came as a shock to many of those affected. Life plans were disrupted, people fell into poverty through no fault of their own and tears were shed. The companies themselves were not responsible, as they cannot be held responsible for Covid-19.
Now it will be important for all companies, whether they are large enterprises or SMEs, to establish appropriate risk management plans (ORM operational risk management, MRM market risk management) to be better prepared for future crises. These measures must be communicated openly to build trust. In addition, financial incentives (salaries, bonuses, allowances) should also help to attract employees again. Finally, I believe that employers should invest even more than before in the training of their employees in order to strengthen their resilience and employability. Ultimately, it is about a new social partnership between workers and employers in the “New Normal”.
† What is your advice for both business and the workforce to work together to develop the economy?
My advice to companies and employees is: be optimistic and start over. You can build on what you have learned and achieved in the past. But let times of crisis be a lesson to you: it is necessary to always be prepared and have an alternative, a “plan B”, ready for times of crisis. Do not limit yourself to one product, one service or one assignment. Be open to new things and learn something new every day. Easily increase your market value as a company and as an employee. Then every crisis is also an opportunity for you.
One of the many things I appreciate about Vietnamese culture is the tradition of starting the new year with something new and leaving the old behind. The year of the tiger has begun. Many Vietnamese have made plans for this year. These include setting up your own business, making good money, and taking on a new, better job. Based on this, I assume that everyone will start the year with a healthy optimism and work on repositioning themselves and therefore their homeland Vietnam. Vietnamese women play a crucial role in this. I wish all of us and especially your readers all the best, much success, prosperity, peace and health in the Year of the Tiger.
