Vietnamese labourers remain competitive in ASEAN

According to assessments by several international organisations, Vietnamese workers’ productivity is only 1/15 compared to Singaporean, 1/11 to South Korean, 1/7 to Malaysian, 1/5 to Thai labour force and amount only to 1/2 of the average ASEAN level. Is that the case?

In theory, such comparisons are not wrong. That is because labour productivity is measured through the division of a nation’s GDP by the number of labourers working in that economy. If a country has a high average per capita GDP, the labour productivity of that country will naturally be regarded as high.

In developed countries, labourers mainly work in sectors such as industry, construction, processing and services which feature a high productivity. Meanwhile, in Vietnam, 68 per cent of the labourers work in non-official labour areas, 47 per cent of whom work in agriculture with extremely low productivity.

This is proven through the fact that agricultural sector labourers only contribute a mere 8 per cent to the GDP, thus bringing down the whole country’s productivity to a lower level.

Does this mean that if the non-official labour areas, particularly agriculture, were disregarded, the productivity in Vietnam’s official labour areas would prove more competitive?

In order to appraise productivity objectively, we need to look at it in each specific field and area.

Going this way, local labour productivity in a diverse range of fields, such as information technology, in Vietnam is by no means inferior to that in other countries, even developed ones.

Information technology does employ only a modest number of labourers, does it not?

As I stated above, the labour productivity in official areas is not low.

Besides, foreigners come to Vietnam to work only when receiving considerably higher wages, while their productivity is not much better, making them less competitive in the eyes of the employers.

Furthermore, foreigners are unlikely to come to work in Vietnam in non-official areas such as agriculture, motorbike taxi driving or seasonal work due to meagre incomes, compared to other countries.

As you have stated above, labour productivity in Vietnam is not low in official areas. However, every time when the minimum basic salary was increased, it drew heavy protests from the employers, claiming labourers’ low productivity would not justify the extra expenses. Is that true?

The argument that the pace of wage increase in the enterprise area is higher than growth in labour productivity is inaccurate.

The labour productivity these employers mentioned is the general labour productivity covering both official and non-official labour areas, while the pay rise only takes place in official labour areas.

That was why despite such reverse actions, from 2006 until the present, the minimum salary level has been set higher almost every year in the official labour areas, at a level higher than the average growth in general labour productivity.