The Future of Work for the Asian Youth: Vietnam - Auslandsbüro Japan / Regionalprogramm Soziale Ordnungspolitik in Asien (SOPAS)
Mr. Yuri Baral started by welcoming all the participants and introducing another session of the Future of Work for the Asian Youth webinar series with the focus on Vietnam. In the past, KAS has organized webinars covering 3 countries from Asia (i.e. Taiwan, Indonesia and Malaysia). Over the past year, everyone has tried their best to persevere from the challenges brought upon by COVID-19, shifted from pre-pandemic routines to coping with working from home and other changes in professional and personal lives. Some of the worst affected by the pandemic are the youth, especially those who graduated in the middle of the health crisis. In the past months, it has been observed that the work prospects of Asian youth are deteriorating as they become more vulnerable, more likely to accept lower-level jobs or are not able to find jobs at all. Taiwanese youth are looking to China for higher paid salaries, Indonesian youth raise the need to upskill and reskill the labor force and Malaysian youth feel the need to enhance social protection. All countries need to improve the effort to prevent brain drain. There is still a lot to be done to ensure that the Asian youth are being prepared and able to survive in the workplace.
Welcome remarks, Ms. Rabea BRAUER - Country Representative, KAS Japan - Director, SOPAS
Ms. Brauer expressed her pleasure to open the last seminar of the series and welcome all the partners in Asia as well as the speakers who greatly contributed to the results. She also directed her appreciation to the speakers’ availability to present at the webinars and also to the team behind the grand project for their tremendous support.
She mentioned 3 projects under SOPAS:
- Future of Work;
- Multilateralism and Free Trade;
- Advancing Women’s Leadership;
all of which are essential for Asia’s growth and future. After 2 years of implementation, KAS has achieved numerous publications and studies and were able to share policy recommendation to different target groups.
The target for this current webinar is the youth. How the young generation will be able to prosper and grow greatly depends on the post-Covid19 recovery, digitalization, youth education, favorable business environment, startup support, exchange networks and a peaceful environment. Sustainability and resilience and the idea of leaving no one behind is also in focus. For KAS, Vietnam represents an interesting case study with the following characteristics:
- Development of population;
- Stable youth policy;
- High level of education;
- An ASEAN showcase of economic development in the past years;
- Clear aims to deepen diplomatic ties with other countries and regions.
How these characteristics will be translated into favorable conditions for Vietnamese youth will be presented today by the speakers.
Message, Mr. Peter GIRKE - Country Representative, KAS Vietnam
Mr. Girke acknowledged that the topic of future of work for Asian youth seems to be very trendy and has received a lot of attention, both on ASEAN’s level and international level by organizations such as the UN and ILO. At a national level, it is very relevant in Vietnam whose economy is growing steadily over the decade and even throughout the pandemic despite little slow down. Vietnam is also politically stable for a long time. However, the country still has a large informal work sector although formal work sector is growing along with the expansion of the middle class, especially at urban centers. Vietnamese demography is also interesting with a still rather young population predicted to transform into an aging society within the next 15-20 years.
What does it mean for the youth and their participation in the labor sector? For almost every newly graduated Vietnamese student, one of the most frequent questions asked from the elders is “Have you already got a job offer?”. This question is asked because, despite having academic degrees, it is not always easy for the youth to enter the formal market and find jobs matching their qualifications. A lot of Vietnamese jobs are still in family farming, household enterprises, uncontracted labor, etc. These jobs are characterized by low productivity, low earnings, limited worker protection and limited social security. At the same time, automation and digitalization is on the rise in Vietnam. Global trends like globalization and climate change also affect the future of work and require specific education, training, and specialization. It will be important for the Vietnamese government to adjust the education program accordingly. As it has been said, the skills of the Vietnamese students are, generally and in a regional context, considered to be good enough to attract foreign investors, but still education is considered to be very academic, so there is the need for additional framing requiring more practical skills (e.g. soft skills, English, digital skills, etc.) and experiences through on-the-job training.
A brief look at the regional level, the mutual recognition agreement to acknowledge qualifications and careers at ASEAN’s level is an important tool for Vietnamese youth to have a perspective and to be mobile in the future.
In short, there are challenges but also opportunities in the future of work for Vietnamese youth and they are in charge to press for these opportunities. Apart from knowledge and hard skills, they need to further improve on soft skills and flexibility to adapt to changes of work. At a higher level, government is also in charge to create perspective and conducive framework for the people.
Opening remarks, Mr. Yuri BARAL - Non-Resident Assistant Research Fellow, Taiwan-Asia Exchange Foundation, Webinar Moderator (Organizing Team)
Mr. Yuri Baral gave a quick context of Vietnam. The country has one of the highest population in Southeast Asia with approximately 96 mil people calling it home, large abundance of natural resources but geographically hilly and forested throughout. Vietnam is also ethnically diverse with the Kinh being the majority 85% and 54 other ethnic groups (e.g. Jarai, Hmong, Muong, etc.). The country has been investing in agriculture in the previous decades but have since liberalized its trade and economic policies and provided opportunities to raise income for people and reduce its poverty rate. GDP per capita have grown to more than 5 folds in the 2000s and increased from over USD400 to USD2,300 (figures to be updated), which placed the country in the low middle income bracket. However, it still relies greatly on agriculture being a major exporter of rice, cashew, coffee, tea and rubber among others. Heavy investment in R&D, establishing centers of tech and opening new education created better career pathway among youth. The country has high literacy (i.e. 95%) among the youth, but the education system continues to be criticized for being outdated, lack of practical training resulting on large number of graduates not able to find suitable jobs or ending up in skill-mismatched positions.
While Vietnam’s accomplishment in poverty reduction has lifted millions of people out of extreme destitution and drastically improved the people’s standard of living, some social issues have also risen in the context of modernization/ urbanization or economic transformation over the past years.
First speaker: Dr. DO Ta Khanh – Director of Centre for EU Studies, Institute for European Studies, Vietnam Academy of Social Sciences
Dr. Do Ta Khanh is the director of the Centre for EU Studies, Institute for European Studies, Vietnam Academy of Social Sciences (VASS). He is currently interested in research on industrial policy and its impacts on labour issues. In the past decade, he has been project manager and team leader for various international and EU-funded projects in the field. Recently, he is the manager of the project “Empowering Civil Society and Workers” (ECOW) funded by the European Commission and the Vietnam team leader of the project “Competing Regional Integration in Southeast Asia” under EU Horizon 2020.
He obtained his Bachelor’s degree at Vietnam National University in international studies, 1999. He then obtained his Master degree at Roskilde University (Denmark) in 2005. He got his PhD degree at Graduate Academy of Social Sciences, Hanoi with the focus on industrial policy in some key EU members.
In this webinar, he presented under the perspective of the government discussing about industrial workers and their perspective on the future of work. The presentation is based on the results of a field research conducted in three regions in Vietnam – North (Ban Ninh, Vinh Phuc, Hai Phong), Centre (Da Nang, Quang Ngai) and South (Ho Chi Minh City, Dong Nai, Tay Ninh), with the interviews of more than 3000 garment and electronics workers who are working in industrial parks, from 2019 to 2020 - under an EU-funded project (ECOW - www.ecow.vn). The research revealed that workers tend to work temporarily in industrial sectors since there are many obstacles for them to adhere to the employer as well as to settle down in their working place, such as the precariousness of industrial work, health requirements, marriage (for single), children's education (for those having children) and accommodation. Thus, they mainly take the opportunity to work in industrial sectors to accumulate for their future business/work, mainly in the informal sectors. The organization has pursued research under this topic for almost 10 years and conducted one research every 4 years. He made a remark that the life and situation of industrial workers have not had much change over the last 10 years.
They have chosen the two sectors garment and electronics due to their labor-intensive nature and both of the sectors require some sort of technical skills from the workers. They noted that industrial workers in these two sectors are mainly young (with 38.2% below 25 years old) and female dominant (approximately ¾ of the work force).
With regards to type of contract, in the North, it is more likely for workers to sign fixed term contract than in the South, because the industrial parks in the North specialize more in producing electronics device which were more recently established compared to the industrial parks in the South whose focus is on the garment sector. For example, in Hai Phong, the research was conducted in Trang Due Industrial Park by the LG company, more than 1000 workers in sample are mainly electronic workers. Almost 66.9% of workers in the North signed a fixed term contract while only less than 28.5% of workers in the South agreed on the same term. In contrast, the indefinite-term contract in the North is only 20.7% and in the South it is 63.3% because in the South the investors have been investing since very early 1990s but in the North of Vietnam the investment was quite recent (e.g. Samsung in Quang Ninh province was established about 10 years ago, and some the manufacture in Thai Nguyen was only 4 years ago).
As a result, industrial workers in the North tend to be more worried about the security of their contract when signing fixed term contract because the factory may refuse to renew their contracts when these expire. For the South, because they sign indefinite term contracts, they are quite neutral or not worried at all about their job security. When the workers are asked about their preferred type of contract, more than 70% of the workers in all regions, and even 96% of the workers in the South, prefer indefinite term contract, which shows a high demand from the workers for stable work placement.
With regards to the workers’ adherence to industrial work, it’s quite a surprise for the research team because only 32% of the interviewed workers would like to continue with the industrial work until retirement, which is very low. Almost 47% of the workers do not want to continue with the industrial work until retirement and would like to move on to something else in the future.
When asked what they would do if they leave the industrial work, most of them say they would like to go home, launch a startup of their own business or learn how to become service providers such as hairdressers or work in spa facilities. About 26% of the workers responded that they would like to start their own business, another 26% would like to come back to the village to work as farmers and almost 10% have no idea what they would do.
One immediate implication of this trend is for the social security system, especially with regards to social insurance. If the workers continue the industrial works and pay the premium for pension funds, they will receive pension when they are retired. But more than 60% of industrial workers say if they leave industrial work, they will receive the insurance premium they have contributed and be no longer involve in the social security system. In Vietnam, it’s easier to be involved in health insurance but quite difficult to be involved in pension schemes because the premium for pension is quite high according to the law. Therefore, so often that the workers say they do not contribute because they cannot afford the living of their families and do not have enough resources to contribute to social insurance. About 60% of the workers would like to receive their insurance premium back in both the electronics and garment sectors. During the research, the team has met with a 50-year-old worker in the garment sector in the South who, when asked if she would like to continue working until retirement, said she would work for additional 1-2 years more and would leave the job before the age of 55, which is the retirement age in Vietnam, to get back the insurance premium. Her reason was because she doesn’t know how many years after retirement she would live, which is a typical reason for other Vietnamese industrial workers.
The workers were also asked about their preferred places to live after retirement. Although most of the workers are very young and still have a long life before retirement, many of them said they would come back to live in their home village. Only about 12% of the workers in the electronics sector and 18% in the garment sector said they would stay in the city. Region-wise, more workers in the North would like to stay in their home village after resigning compared to the South.
In conclusion, the future of work for industrial workers in Vietnam is quite uncertain. Many of them are very young and have obtained university degrees, but they still cannot find jobs in the city and must come back to the province for temporary jobs to earn a living to support the family and/or accumulate for their own future. In addition, the working conditions in the factory is difficult, especially for the initial sectors. For example, many industrial workers said they have eye problems after a few years having to look through telescopes for a long time and have to do work shifts of 12 hours, not to mention having to work on both day and night shift. Interviews with workers working for Samsung shows the work shift to be night shift followed by 2 days of day shift and back to 4 days of night shift. The chaotic routines and fast-switching day-and-night mechanism affect the workers and they find it difficult to switch back to their normal routines. Also, the workers cannot contribute to voluntary pension schemes after they leave the industrial work due to their limited income. Moreover, if they leave after 30 years old, it is very hard for them to find a new job in the formal sector and they are forced to work in the informal sectors in the city somewhere. This is truer for the electronics sector than the garment sector, which is less demanding in terms of age. The situation is even more dim now with Covid19 and the economy going down as its consequence. As a result, many factories started to dismiss workers and/ or refused work for older ones. Therefore, these workers are left behind in the social security system having to engage more in the informal sector and rely on their children when they are old. It is, indeed, urgent for the industrialization and policies on social security system as well as education policies to be rebuilt taking into account the social gap between the urban and rural/ mountainous areas when most of the industrial workers come from. The social gap is one of the main challenge for Vietnam to pay close attention.
Second speaker: Ms. VO Thi Thanh Xuan - Tax Manager, Senior Associate at Roedl & Partner Law Co., Ltd.
Ms. Xuan Vo is a Tax Manager at Rödl & Partner Vietnam Legal Ltd. She has more than 8 years of experience in managing complex tax planning and compliance for foreign invested companies in Vietnam, advising on tax implications of cross-border supply of goods and services. In her professional capacity, Xuan has been deeply involved in advisory services for a number of investment projects in Vietnam, particularly Trading and Services, Manufacturing, Software Development, Renewable Energies, etc., from which she has obtained a broad perspective about the private sector and its representative industries.
Besides, she is a member of CPA Australia, a community of finance, accounting and business professional of certified competence, and a certified tax agent by the Vietnamese General Department of Taxation. She received her Bachelor’s degree with Distinction in International Finance from Foreign Trade University of Vietnam and is currently pursuing the 2nd Bachelor’s degree in Law at the University of Laws in Ho Chi Minh City.
Ms. Xuan Vo discussed the factors affecting the Vietnamese labor market. Firstly, the labor market of Vietnam since last year has been affected by general factors including: the FTAs that Vietnam have signed with other countries, Covid19, environmental changes, the revolution of technology especially the 4.0 industrial revolution and the change in population structure.
The youth labor force in the working age of 15-24 years old accounts for approximately 13% of the total Vietnamese labor force but the number is decreasing over the years. In 2016, it was 13.8% but in 2019 it was reduced to 12.8%. Of concern, the overall unemployment rate in 2020 is 2.3% of the total labor force (i.e. approximately 1.2 million people), from which the youth unemployment rate accounts for 34% of the national unemployment (i.e. approximately 0.4 million people). The youth labor force are easily affected by the change in the labor market and in 2020 due to the outbreak of Covid19, the ratio of the Vietnamese youth NEET (i.e. Not in Education, Employment, or Training) has increased significantly, accounting for 16.3% of the total Vietnamese youth or 2 million youth in the age 15-24 years old. This shows that the Vietnamese youth labor force is vulnerable because they have little experience and lack of skills compared to other groups. The increase of youth NEET also raises the issue of unemployment and early school leaving which results in labor market discouragement.
When a new generation joins the workforce, they often bring with them the trait/ characteristics shaped by their living styles or habitat. The youth labor force is often referred to as the technology generation or generation Z. They have early access to technology, social media, the Internet and, therefore, are more tech proficient. They are also more globalized in thinking and acting, more confident and independent than the previous generation, and have clear career aspirations. They like freedom and have passion for entrepreneurship and tend to choose work in startup and freelance. The young labor force also has high self-study ability thanks to access to different resources and materials from the Internet which help them learn independently without the need for instruction. Lastly, they are the trend makers rich in energy and enthusiasm and willing to take challenges to endure the pressure at work. In general, they have a good expectation of advancement in career and professional development.
They still have weaknesses. One of them is the lack expertise not only in experiences but also in working attitudes. Young people tend to have high opinion, lack of flexibility to adapt to the change from academic to work environment, and less likely to follow instructions, all of which make their integration into the workplace difficult. In addition, the ratio of trained labor forces are low and the qualification has not met the requirement of the market. They also lack soft skills especially in the area of communication and working together and tend to react poorly to feedback.
Third speaker: DR. LE Duy Binh – Director – Economica Vietnam
Dr. Le Duy Binh is working at Economica Vietnam as an economist cum managing director. Before Economica Vietnam, Binh worked as senior economist and policy advisor at the German Technical Cooperation (GIZ), as researcher at the National Economics University (NEU) and as analyst at the State Bank of Vietnam (SBV). His main areas of expertise are enterprise development, private sector development, business environment reform, governance, and competitiveness. Recently, he has been proactively involved in initiatives by the Government on the reforms of the legal framework for enterprises, labor markets, enhancing economic governance and competitiveness, and improving business environment. He is also working as advisor to the Government and different donor agencies, e.g. the ADB, APEC Secretariat, AusAID, GIZ, ILO, OECD, WB, ADB, UNDP, USAID etc. on business association development, economic governance, firm competitiveness, regulatory reform, business licensing reform, and economic restructuring. Most recently, he has been contributing to the formulation of the Labor Law and the evaluation of the Vietnam Decent Work Country Program (DWCP) 2017-2021 for the Ministry of Labor and Social Affairs and the ILO.
At the regional level, he is also working as advisor to the Government of Myanmar (the Directorate of Investment and Company Administration of the Ministry of Planning and Finance, the Central Agency for SME Development of the Ministry of Industry) on reforms in support of enterprise development and investment promotion in the country, for the ASEAN Secretariat on reforming business environment for SMEs in some selected ASEAN member States and for the OECD-ASEAN initiative on SME development and competitiveness. Some of his work have been published in Vietnam and internationally and been presented at national and international workshops. He is fluent in English and French beside Vietnamese as his mother tongue.
In this webinar, Dr. Binh took the role of the academia and presented about the trends and factors affecting the work for the youth in Vietnam.
Vietnam has a population of 96 million people with the growth of 1.14%. The middle-class accounts for 13% of the population and average life expectancy is 73 years. Vietnam is predicted to become an aging country by 2038.
The Vietnamese labor force has been increasing until 2019 but slightly reduced in 2020. The labor participation rate is 76.8% for 2019 and 74% for 2020. Youth account for 56% of the labor force (52% of the employment and 4% of the unemployment). Covid19 have had significant implication to the economy of Vietnam, its labor market and also the future of work for the people and for the youth.
Research have shown that more jobs are created by the private sector, especially for the small and medium enterprises and by foreign invested enterprises. It is noted that FDI enterprises have higher requirements in terms of skills, language, work disciplines, etc.
Youth unemployment rate is going up, more in the urban area than the rural area and more for female than for male (male youth unemployment reduced from 2019 to 2020). Many of the jobs are in the informal sector with 52% of the labor force. Covid19 have pushed many workers back into the informal sector, with workers in the informal sector increasing to 20.9 million in 2020, an increase of 338.4 thousand compared to 2019.
There is also a strong growth in international trade and a deeper integration with global economy. Participating in global value chains will change the nature and type of work and will require workers with new set of skills and expertise.
The digital economy is predicted to have high impact on the future of work. As a comment on Vietnamese workers, Director of Dahashi said ““Vietnamese workers are very hard-working, but their education, IT skills, and foreign language proficiency levels are quite limited. This makes it difficult to work with smart machines and technology at the production lines.” Vietnam’s digital economy has been growing at 38% per year since 2015, reaching the value of USD 12 billion in 2019 and is expected to reach USD 43 billion 2025. “Job automation: Up to 38.1% of Vietnam’s current jobs can be transformed or displaced due to automation by 2045. A more moderate estimate suggests around 15% of total jobs in Vietnam will be automated by 2033. Vietnam is projected to be short of 500,000 data scientists, and up to 1 million ICT workers by 2030.” (“Vietnam’s future digital economy – Towards 2030 and 2045”. Cameron A . CSIRO, Brisbane.(2019)).
First question: What do you think are the key advantages and disadvantages for Vietnamese youth in terms of establishing a career in the private sector, compared to the government sector and the academia?
How do you think entrepreneurship and the gig economy will change the youth’s prospect of work and how they enter the job market?
Ms. Xuan Vo: For the private sector, the working environment is more competitive and characterized by career growth and more expectation compared to the government and academia. The key advantage for Vietnamese youth is that they are young and dynamic and have clear career aspiration, and so the private sector is an attractive environment for the youth to showcase their capabilities. The disadvantage is that the private sector is very competitive and often require high level of expertise and soft skills which have not been fulfilled by the youth. The entrepreneurship and gig economy have been booming in Vietnam for the past few years and offer great opportunities for the new generation who is independent and prefers to work on their own terms. Entrepreneurship can also create a much better work-life balance and improve the quality of life for the young generation. The trend is positive and would be increased in the future. It would be more helpful for the youth to equip themselves with more knowledge and skills, especially in the field of startup operation.
2. Do you think the increase in gig work as a result of the Covid pandemic will be a viable alternative to working at companies after Covid has ended?
Ms. Xuan Vo: It depends on the priorities set by each individual. While some may want stability and thus resume work at a company, others may want to maintain their work-like balance and flexibility in the job and choose to do gig work.
3. The research was conducted in different regions of Vietnam. Did you observe any regional patterns in the young industrial workers’ perspectives with regards to their future of work? Should we incorporate regional perspective into the research and in finding solutions to sustain the young industrial workers’ future? If yes, how could/ did you do that? Also, what can be done to level out the playing fields when it comes to work opportunities for workers in different regions?
Dr. Khanh Do: First, the studies focus on two sectors, garments and electronics, thus they have not integrated all aspects of working life for the youth. However, the youth need to focus on reskill and upskill, especially for those coming from the rural areas. Also, young people need to identify if they want to develop in the current sector or move to another, since the skill sets required in different sectors may not always be transferable. Lastly, Vietnam needs to open up to high-value sectors to increase profitability in the long run, and different sectors need to upgrade their program offering so that workers with higher education can move to higher-value sectors.
4. COVID-19 has been a surprising and significant interference into the labor market. What do you think would be the short-term and long-term impacts of COVID-19 on the Vietnamese labor market, especially for the youth? How do you think young people can overcome the difficulties posed by COVID-19?
Ms. Xuan Vo: First, to overcome the difficulties imposed by COVID-19, the young should accept this “new normal”. Second, young people should take this opportunity to accumulate knowledge and skills. As previously mentioned, COVID-19 has presented numerous opportunities for gig work and new job opportunities, through which young people can earn incomes and obtain skills and knowledge.
Dr. Khanh Do: COVID-19 has led to laid-offs due to closure of factories, and people had a hard time finding new jobs. However, there is a “balance” in the labor market: while some factories are closed, some recruit more due to increased demand in, for example, producing home clothing. A positive sign to the labor market in Vietnam is that in 2020, Vietnam witnessed stable trade volume and 3% of economic growth.
Dr. Binh Le: Regarding the challenges, COVID-19 has led to higher unemployment rates for young people as the number of jobs available reduces. Also, the job landscape shifts towards more informal jobs. On the flip side, the digital economy, which has grown by 38% in the last year, presents more job opportunities for the young. However, the young should upscale their skills and expertise to meet the demand of the digital economy.
Dr. Alan Hao Yang first shared some of his thoughts on the last question about the challenges posed to young people and how they can be handled. According to Dr. Yang, the youth in Southeast Asia and in Taiwan are vulnerable to challenges in the labor market. However, they are flexible and knowledgeable, and they can utilize the ongoing changes to upscale their skills. He emphasized that not only priorities be set to ensure rights and capacity of young people in the labour force, but countries need to elevate understanding amongst sectors.
Dr. Alan Hao Yang then summarized the webinar session on Vietnam by acknowledging the challenges faced by the young, especially with those from rural areas and during the pandemic. He rounded up the opportunities for the young, including the aging population, FTAs signed between Vietnam and other countries, and new opportunities arising from the pandemic. He noted that Vietnam is resiliently fighting against COVID-19, which demonstrates the government’s ability, and is also attractive for foreign investors, including those from Taiwan.
Lastly, to close the Future of Work for the Asian Youth webinar series, Dr. Alan Hao Yang extended his gratitude to KAS on their collaboration to develop insightful dialogues with speakers from different sectors from different countries, and to Mr. Yuri Baral as the coordinator throughout the series. Dr. Yang remarked that it is important for ASEAN members and Asian countries to exchange perspectives on how to handle challenges to the future of work for the youth. Thus, before ending, Dr. Yang proposed TAEF and KAS further collaborate in the future to conduct cross-national studies on this subject for cross-national reference in the future, and to build an executive summary of cross-national comparative studies after this webinar series.