Photo for illustration (Source: vov.vn)

Vietnam’s low labor productivity is attributed to workers’ limited capacity for innovation and creativity, according to experts. 

Prime Minister Nguyen Xuan Phuc is set to hold a direct dialogue with laborers from the Red River Delta province on May 5th to discuss ways to improve labor productivity, increase welfare for workers, and clear up queries about trade unions and employment.

Reasons for low labor productivity

According to the General Statistics Office (GSO), Vietnam’s labor productivity has seen remarkable improvement year by year. The country is one of ASEAN member states nations with the highest rates of labor productivity growth.

In the 2007-2016 period, the Southeast Asian country’s overall labor productivity growth based on purchasing power parity in 2011, rose by 4.2% on average per year, higher than the average rates of Singapore, Malaysia, Thailand, Indonesia, and the Philippines. However, Vietnam’s labor productivity remains below that of other nations in the region.

Nguyen Bich Lam, GSO Director General says the main reasons for Vietnam’s low labor productivity, compared to other nations in the ASEAN region, is the slow progress being made in the transition towards economic restructuring while industrial and service sectors, and especially the spearhead industries such as finance, credit, and tourism have made up a small proportion.

Despite having a large number of laborers in the agricultural industry, its labor productivity is below par due to outdated machinery and equipment.

Most of the country’s businesses, especially private ones are using outdated equipment compared to the average level around the world. The quality, restructure effective use of laborers, remains low, along with poor management, and ineffective use of human resources as well as limitations in business administration.

Mr Lam emphasizes that improving labor productivity is one of the core issues for Vietnam’s national economy. Increasing labour productivity is considered as a decisive factor for businesses’ competitive edge and for the sustainability of the national economy.

He notes that high labour productivity proves the country’s rapid and sustainable development compared to the other regional nations. To avoid the pitfalls of low labour productivity, Vietnam can learn from the lessons learned by other regional countries.

For example, the experiences of the Republic of Korea, Taiwan, and Singapore have shown that creativity is the key factor behind economic growth and these economies have focused on investing in infrastructure, capital accumulation, human resource development, and orientations for export.

Vietnam can develop its human resources through promoting education in science, technology, vocational training, talent attraction, and learning experiences from overseas Vietnamese and foreigners, Lam says.

Bottlenecks need to be removed

Vu Tien Loc, President of the Vietnam Chamber of Commerce and Industry, highlights labor productivity as the key to  for for Vietnam’s national development and underlines the importance of removing bottlenecks in terms of the institutions, human resources, and infrastructure which are hampering efforts to increase labour productivity.

Additionally, domestic businesses need to sharpen competiveness and adapt themselves to the fast changing technologies to keep up with modern business models and trends in economic growth around the world.

Nguyen Thi Thanh Huyen, General Director of Garment 10 Joint Stock Company (Garco 10), stresses that there should be mechanisms which will lead to improvements in labour productivity.

However, businesses should be active and self-reliant when it comes to facing tough competitions, she adds. Businesses need to develop the available human resources and equip them with a good command of foreign languages and technological adeptness in order to to seize every opportunity of the fourth industrial revolution.

Relevant ministries and agencies should consider businesses as the centre of the national economy and organise regular meetings with businesses to ensure the path to progress is cleared of difficulties and hindrances, Huyen says.

According to experts, Vietnam’s low labor productivity is intertwined with the capacity for innovation and creativity of labourers, who have not had the opportunity to work in an environment which encourages creativity and innovation.

They underlines the importance of building a creative society to increase labour productivity, and dealing with difficulties in infrastructure and intensifying technological investment to improve product value./.

CPV/VOV