December, 2021
Jobs have been a fundamental part of Vietnam’s economic success. The transformation toward services and manufacturing, with impressive labor productivity and wage growth, led to plunging poverty rates and globally enviable economic growth over the last decades. Doi Moi – the economic reform program that was launched in 1986 – not only changed Vietnam’s economic structure, but it also had deep implications for jobs, which is a key factor in the economic reform process. In 1986, most workers were engaged in agricultural production, with a small share laboring in state-owned enterprises. Today, less than half of jobs are in agriculture and a heterogeneous private-sector driven jobs sector has grown up. Employment rates are high and unemployment rates are low by global standards. However, job quality has not evolved as quickly, with the majority of jobs still being in low- or mid-skilled occupations, with low profits, meager earnings, and few worker protections. The challenge is not only to create more jobs, but also high quality and inclusive ones.
Public Employment Services – Are they up for the task?
With notable exceptions, most employment service centers in Vietnam are currently unable to fully perform the task of employment services. Due to limited resources, they are forced to focus on administering the unemployment insurance (UI) program, for which only a fraction of Vietnamese citizens qualifies. Data banks on local job vacancies and job seekers are often asynchronous and insufficient. Job counselors generally have limited training, resources, or outreach to employers. Although the centers have successfully built relationships with the business community, yet there is much more to be done to enhance effectiveness. The decentralization of the Vietnamese public employment services system clearly gives its members more flexibility. However, it also inhibits the coordination and sharing of labor market information between centers, limiting their ability to help job seekers identify opportunities around the country and meet national employment goals. These are the reasons why, to this day, job boards and job fairs are still the most important job placement tools.
The challenges for the public employment services in Vietnam lie in 3 specific areas: systemic challenges due to the structure of the system, resource constraints based both on the UI financing basis and the decentralization, and a limited service portfolio for increasing job placements. By both design and practice, the existing public employment service system (PES) is not adept at helping workers to integrate into the new economy [1].
Shift in labor market and the impact on PES
As the world battles Covid-19, there has been a very significant shift in the labor market. McKinsey’s studies, which examined eight economies, including China, France, Germany, India, Japan, Spain, the U.S. and the U.K., accounting for 45% of the population and more than 60% of global GDP, have shown that COVID-19 has transformed nearly every aspect of our lives. Remote work, online education, more e-commerce, and automation – these trends are accelerating the process of mass digital adoption, which was much slower before the pandemic [2]. For most well-developed PES, online services have become a significant channel of delivery. Digital transformation offers a holistic approach which improves accessibility, inclusivity, and equality. Customers can easily access their tailor-made service package with self-service counselling tools remotely and locally. However, this is not the case for everyone. In developing countries where PES is constrained by their lack of capacity, resource scarcity, and labor market mismatches, the shift to more online services has shown to be difficult. For some, digital transformation means “to build from scratch”. Surprisingly, in fast growing economies, the changes in methods of service delivery expose some customer sub-groups to even more vulnerability, especially the ones with limited digital skills, limited access to the internet or those suffering from other disabilities. In Vietnam, under the impact of the pandemic, many employment service centers have been embracing digital technologies to provide their services online, playing an important role in helping people find jobs and companies fill their vacancies. But will the technology infrastructure allow Vietnam to provide a comprehensive service, to better match people to jobs?
Technology application is the key!
That is the point of view of Mr. Ngo Xuan Lieu – Director of The National Center for Employment Services (Ministry of Labour, War Invalids and Social Affairs), when he looks at the fragmentary pieces of the current job market. According to him, the country currently has more than 54 million workers and the whole economy creates nearly 54 million jobs. However, many companies still cannot find the people they need, some provinces witness a shortage of workers, whereas others are hit very hard by a lack of jobs. Mr. Lieu also pointed out that, even though there’s a connection between local employment service centers in each province, the information sharing is still very limited. This indicates the need for the role of government management, pushing for digital technology application to improve the effectiveness of the employment service system [3].
Prepare for the future
While countries seize the opportunity to reap the dividends of digital transformation, Vietnam has clearly indicated it wants to be in the race. As the country accelerates its transformation, the Public Employment Services is under the pressure to seek suitable technical support. The aim is to develop an integrated system of local and national job bank databases, to expand its technological capacity, enhance employability, address skill gaps, and provide career guidance. As shown in many countries, digital transformation is not just about technology, it is also about political will. And it seems, Vietnam is ready to take the leap.
This is another article from our series of JANZZ In-depth Global Labor Market Insights. If you missed our previous one on this topic, please check out: Moving towards an advanced labor market information system in Indonesia. JANZZ.technology solutions do not only address the core task of matching supply and demand on the labor market. Instead, we provide tools and data that support the entire spectrum of public employment services. The solutions have been thoroughly tested and were built with many years of know-how of many other Public Employment Services around the globe. They are available in many languages, with ISCO-08, ESCO, O*NET and of course all country-specific classifications, as well as all necessary design, process, and color combinations. To learn more about our AI-driven semantic search and match solutions for Public Employment Services (PES), please have a look at our offerings or contact us at info@janzz.technology.
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[1] https://documents1.worldbank.org/curated/en/119211588060338962/Employment-Service-Centers-in-Vietnam-Summary-Review.docx
[2] https://www.mckinsey.com/featured-insights/future-of-work/the-future-of-work-after-covid-19
[3] http://www.congdoan.vn/tin-tuc/cong-nhan-360-500/nghich-ly-cung-cau-lao-dong-thua-van-thua-thieu-van-thieu-co-quan-ket-noi-cung-cau-lao-dong-chua-hieu-qua!-574526.tld
