Vietnam’s wage increases were at least three times higher than labour productivity over the past years, according to a report by the International Labour Organisation (ILO).
Workers processing tra fish at a company in the Mekong Delta region.
The ILO's Global Wage Report 2012-2013 showed that Vietnam’s wage increases were contrary to the global trend.
General Director of ILO, Guy Ryder, said that Vietnam’s average nominal wages increased by 26.8% in the period from 2006-2010.
Amid high inflation, Vietnam’s actual wages still rose 12.6% per year during this period.
Dr. Ho Duc Hung, from the HCM City University of Economics, said Vietnam’s labour productivity is 10 times lower than in Indonesia, 20 times lower than Malaysia, 30 times lower than Thailand and 135 times lower than Japan.
A recent survey conducted by the Science Institute of Labour Science and Social Affairs and Manpower group showed that Vietnam’s labour productivity is among the lowest in the Southeast Asian region. The survey included 6,000 enterprises in nine different sectors and nine localities nationwide.
The results also revealed that up to one fourth of firms questioned said that their workforce still lacks technological expertise and creativity.
One fifth of enterprises that participated said their workers lack ability to adapt to new technology. One third those surveyed said they had trouble finding and recruiting capable management.
For foreign investors the advantage Vietnam has had for low-wage labour has been decreasing in relation to other countries in the region.
Tran Dinh Thien, Director of the Vietnam Institute of Economics, blamed low labour productivity on an imbalance between modern economic growth model and human resource development strategy.
“Economic development based on technology and high labour productivity were the focus of Vietnam’s socioeconomic development strategy over the past decade. However the skill of the country's workforce remains low. Productivity is still among the lowest in the region, while labour structure is inadequate,” Thien emphasised.
Vietnam’s average labour productivity in 2009 was equivalent to only USD1,459 per worker a year, which was much lower than in the Philippines where it was USD3,606 and South Korea where it was USD38,253.
Last year, the country’s labour productivity increased to USD2,400 per annum. However, according to the General Statistics Office (GSO), the figure is still modest compared to other regional countries.
The current development model mainly based on natural resources, capital and ailing State-owned enterprises has hindered human resource development, he stated.
Vietnam needs to should work out a more effective wage regulation system with special attention paid to labour market development and ensuring balanced increases between wages and labour productivity, said ILO Vietnam's Senior Industrial Relations Specialist, Yoon Youngmo.