Navigating Vietnam's Evolving Labour Market: Opportunities and Challenges

As Vietnam's economy continues its rapid expansion, understanding the local labour market has never been more crucial for businesses looking to tap into the country’s vast potential. With a population exceeding 98 million, Vietnam's workforce comprises 57% of that figure, presenting both opportunities and challenges for companies navigating this dynamic landscape.

The Shift in Vietnam’s Workforce

Vietnam’s labour force is heavily concentrated in three key sectors: manufacturing (16% of GDP), services (51%), and agriculture (14%). Notably, recent years have seen a significant shift of young workers moving away from traditional agriculture to the growing manufacturing and services sectors, driven by increased mechanisation in agriculture.

Despite this transformation, challenges remain. Only 11% of Vietnam's workforce is considered highly skilled, making it difficult for businesses to find local talent with specialised expertise. The government, aware of this gap, is actively working to improve skill levels through vocational training and university education initiatives.

Education and Skill Development: Key to Future Growth

Vietnam’s government has made significant strides in raising educational standards. With a literacy rate of 94.5%, the country is ahead of the global average and ranks 7th in Asia for English proficiency. However, there remains a significant skills gap, with 50% of new graduates lacking critical foreign language abilities and workplace adaptability.

To address this, Vietnam is prioritising technical and vocational training, with a particular focus on partnerships between businesses, universities, and international organisations. These collaborations are vital for developing a highly skilled workforce capable of meeting the demands of Vietnam's fast-growing industries.

Fastest Growing Industries: A Call for Skilled Labour

Vietnam's booming industries—automotive, electronics, hospitality, mechanical engineering, and textiles—are creating a surge in demand for skilled labour. Workers in these fields can expect to earn at least 7% more than the minimum wage, but many industries are growing faster than they can hire, leading to significant workforce gaps.

The most in-demand roles include:

1. Business and sales professionals

2. Marketing specialists

3. Accountants and auditors

4. Software designers

5. Electrical and electronic maintenance workers

6. Construction engineers

Conversely, sectors like agriculture, beverage production, and repair services are seeing a decline in employment opportunities, reflecting the ongoing economic shift towards more advanced industries.

Regional Labour Market Differences

Vietnam’s labour market is not uniform across the country. Major urban hubs like Hanoi, Ho Chi Minh City, Da Nang, and Hai Phong see higher employment rates while emerging areas like Nghe An in the north are becoming attractive for businesses looking to expand.

Minimum wage levels also vary by region, with the highest wages found in urban centres like Hanoi and Ho Chi Minh City (USD 198), and lower wages in rural areas (USD 138).

Tips for Recruiting Talent in Vietnam

For foreign businesses, recruiting skilled labour in Vietnam can be challenging. Here are a few strategies to help you succeed:

- Leverage probation periods: Use probationary periods to evaluate new hires, keeping in mind that the length depends on the job role and qualifications (up to 180 days).

- Use fixed-term contracts: A standard 12-month contract is common after probation, with terms extendable up to 36 months.

- Recruit proactively: Skilled English-speaking workers are in high demand. Building relationships with universities, attending recruitment events, and utilising platforms like LinkedIn and Vietnamworks can help you find the right talent.

Vietnam’s labour market is rapidly evolving, and businesses that understand these dynamics will be well-positioned to thrive in this exciting and growing economy. Feel free to contact us for further advice in respect of HR support!