General Office of Statistics Releases 2023 Labor Market Summary
The General Office of Statistics has released a summary of the development of Vietnam’s labor market in 2023. Here’s what it says.
Vietnam’s General Office of Statistics (GSO) has of Vietnam’s labor market at the end of 2023. This summary details how the impacts of broader economic challenges have weighed on human resources in Vietnam. Furthermore, it provides an overview of the current trajectory of Vietnam’s labor market headed into 2024. In this light, the Vietnam Briefing summarizes the key takeaways.
Vietnam’s workforce got biggerIt’s estimated that Vietnam’s workforce grew to 52.4 million people in 2023 an increase of 665,500 people. These numbers are significant and suggest that the low-cost labor that has been so attractive to foreign firms looking to reduce manufacturing costs is still abundant. That said, the bulk of these workers are still living in rural areas. According to GSO data just 19.5 million or 37.3 percent of working-aged Vietnamese were located in urban areas. The remaining 32.9 million or 62.7 percent were in rural communities. This suggests that while labor is still abundant it may not be where it is needed. Foreign firms should keep in mind that these rural workers may need some coaxing to relocate to Vietnam’s manufacturing hubs. This could include benefits like accommodation, higher wages, or overtime. Alongside this growth in Vietnam’s workforce, the number of workers of both genders also grew. Labor force participation of men in Vietnam hit 75.2 percent in 2023, up 0.3 percent over 2022, and on the same metric, for women, it was 62.9 percent, an increase of 0.4 percent.
Employed workers grew by 1.35 percentOf Vietnam’s working-age population 51.3 million people were considered employed. This was an increase of 683,000 over 2022. It’s worth noting, however, that a person generally only needs to complete one hour of paid work in the reporting period to be counted as employed in Vietnam. This increase in employed persons was recorded in the service sector, which added 553,600 people, and the industrial and construction sector, which added 248,200 workers. Conversely, the agriculture, forestry, and fisheries sector shed 118,900 people. This was in line with a broader shift in Vietnam’s economy from agriculture to manufacturing.
Trained workers increased marginallyAn estimated 27 percent of workers had a degree or training certificate in 2023. This was an improvement over 2022 of 0.6 percent. This did, however, leave 38 million workers without higher education or additional certified training. The report notes that this highlights broad challenges upskilling Vietnam’s workforce. This has been a key pain point for Vietnam’s economy as it endeavors to climb up the global value chain. Specifically, there has been a strong emphasis on attracting semiconductor firms to Vietnam over the last twelve months or so, however, there is currently a notable lack of qualified staff. Vietnam currently has an estimated 5,000 chip design engineers but in the next five years.
The country is currently working to promote greater investment in training local workers. In particular, an Investment Support Fund that would include reimbursement of up to 50 percent for upskilling workers, is currently being considered by key decision-makers (See: Draft Global Minimum Tax Support Fund Unveiled).
Wages rose across the board
In 2023, the average monthly income hit VND 7.1 million (US$291.34). This was an increase of 6.9 percent or VND 459,000 (US$18.83) over 2022. Note that this was organic wage growth, with mandatory minimum wages remaining unchanged. That said, there is a minimum wage hike of 6 percent slated for July 2024.That said, there was a notable difference in wages by gender. Men in Vietnam received an average of VND 8.1 million (US$332.38) whereas women received only VND 6 million (US$246.20). Furthermore, a similar gap was reported between urban and rural areas. Workers in urban areas received VND 8.7 million (US$356.96) per month whereas rural areas recorded an average wage of VND 6.2 million (US$254.38). Notably, this discrepancy is in line with variations in living costs. It may also indicate an opportunity for foreign firms that are willing to forgo some of the big city amenities in order to realize lower labor costs. All of that said, there were also relatively big gaps between wages in key industries. Mining industry workers, for example, received an average monthly wage of 10.3 million VND, which was an increase of 11.2 percent. Workers in the agriculture, forestry, and fisheries sector, however, recorded a monthly income of just VND 4.1 million (US$168.19), an increase of just 6.6 percent.
But challenges persistDespite broad improvement in wages and employment, there are still several challenges facing Vietnam’s labor market. The GSO notes that the shift of workers from the low-paid agriculture, forestry, and fisheries sector into the higher-paid industry and construction sector and the services sector has slowed. It also notes that youth (15 to 24 years old) unemployment is still considerably high. At 7.63 percent in 2023, it was only 0.08 percent lower than in 2022. It also estimates that in the fourth quarter, there were 1.5 million young people, or about 11.5 percent of the Vietnamese in the aforementioned age bracket, who were unemployed and not studying or training.
Vietnam’s labor market moving forwardVietnam’s labor market has improved considerably over the last two decades. Last year, it also recorded small gains, though it seems clear that a broader global economic downturn has had an impact. That said, its young low-cost labor force is still plentiful and in this vein foreign firms choosing to produce goods in Vietnam may find extensive cost advantages.
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