Informal employment instability persists in Vietnam

Christine Sheng, regional managing director Talentvis

These roles, characterised by their seasonal and irregular nature, bring to light the persistent issues of instability and low wages. Moreover, the shadows of unemployment cast a looming concern. The quarterly report highlights not only the surge in informal employment but also a concurrent increase in the number of unemployed individuals.

With 1.08 million people now unemployed, this figure represents an increase of 6,300 people over the previous quarter and 22,100 over the same period in 2022. This, along with the prevalence of informal work, paints a comprehensive picture of the challenges faced by the workforce in Vietnam.

One striking consequence is the surge in fraudulent job postings, preying on the vulnerabilities of individuals seeking stable employment. The enticing allure of remote work and attractive salaries becomes a breeding ground for scammers who deploy sophisticated tactics, including borrowing the identities of reputable companies. In this environment, unsuspecting jobseekers find themselves lured into positions that do not exist, perpetuating the plague of informal employment.

Informal employment affects individual workers and has broader economic implications. The lack of formal employment leads to a decrease in tax revenue for the government, hindering investment in critical infrastructure and social welfare programmes.

Additionally, informal workers often lack access to social security benefits such as healthcare and retirement savings, putting strain on public resources in times of need.

Moreover, informal workers often face challenges in accessing financial services and credit, which can hinder their ability to invest in education, start businesses, or weather financial emergencies. Promoting financial inclusion through initiatives such as microfinance programmes, community savings groups, and digital banking services can empower informal workers to build assets, increase their resilience to economic shocks, and transition to formal employment opportunities.

As we navigate this complex employment landscape, the narrative shifts towards addressing the root causes and finding sustainable solutions for those grappling with informal employment. The rising tide of informal work highlights the vulnerability of workers who face job instability and devastating low wages. To foster positive change, a concerted effort is needed to implement policies and programmes that uplift workers, ensuring fair wages and stable employment opportunities.

In a country where only 12 per cent of the 57 million workers are highly skilled, with a shortage in critical sectors like IT, upskilling becomes an urgent solution. Firms grapple with hiring skilled labour due to challenges such as the lack of technology infrastructure, limited research and development spending, and a deficit in vocational and technical skills.

To address this, businesses can play a vital role by offering training initiatives and sponsoring vocational schools, facilitating upskilling efforts to bridge the skills gap. By investing in the workforce’s education and skills development, businesses not only contribute to the growth of highly skilled professionals but also create a pathway towards formal employment, reducing the reliance on informal work arrangements.

In the context of Vietnam’s complex job market challenges, there is a pressing need for an all-encompassing human resources approach that goes beyond conventional recruitment strategies. Addressing the challenges of informal employment requires a strong support system for workers. Ensuring easy access to legal help and educating workers about their rights can empower them, providing ways to resolve issues and prevent exploitation.

Also, spreading awareness about fake job ads can help jobseekers navigate the market safely. By prioritising the wellbeing of workers, Vietnam can make progress in minimising the negative effects of informal employment, creating a fairer and more secure job environment for everyone.

With insights into the challenges posed by informal employment and workforce instability in Vietnam, it is necessary to urge companies to consider adopting all-rounded HR and training solutions to optimise what their employees have to offer.

Overall, more advanced initiatives from firms will not only ease the burden of technical issues on the workforce, but also foster stability and growth in the face of prevailing workforce challenges.

Gloominess is embracing the employment market Despite the expectation of a recovery, the labour and employment market in Vietnam failed to see much improvement over the first six months of 2023.

Singapore’s unemployment rate increases The number of retrenchments and unemployed residents in Singapore rose in the third quarter of 2023 as a weaker economic outlook dragged down sectors such as wholesale trade, according to the Ministry of Manpower (MOM)'s statistics.