As the economy recovers, the demand for labour will certainly increase. This is the forecasting of Prof. Dr. Andreas Stoffers – Country Director Vietnam of Friedrich Naumann Foundation for Freedom for the labour market in 2022.
–More than 1.4 million Vietnamese were unemployed in 2021 due to impacts of fourth wave of Covid-19 – an increase of 17 percent – according to the General Statistics Office (GSO). What is the trend in the job market in Vietnam in 2022?
The Year of the Tiger is starting well. Last year, Vietnam achieved favourable growth results compared to other nations. This was due to the country’s policymaking and all the fundamentals that are supportive of Vietnam even in times of Covid-19 including liberal investment and investment protection policies, integration into the global value chain, integration into a system of free trade agreements. The country’s prudent and appropriate and cautious monetary and fiscal policies under both, the former Prime Minister Nguyen Xuan Phuc and his successor Pham Minh Chinh.
These are points to build on. However, it does not necessarily guarantee that the economy will build on the successes of the pre-Corona era. Much remains to be done to ensure that the promising trend at the end of the old year of 2021 continues.
Globally, the signs are currently pointing to economic recovery. This is especially true for Vietnam. In recent weeks and months, we have all witnessed a scaling back of the Corona restrictions in Vietnam. As Prime Minister Chinh rightly said back in September, “we will have to live with Covid”. Subsequently, travel in the country has been made easier, businesses have reopened, social distancing has been reduced and there is a great sense of optimism. This is associated with a further recovery of the economy.
Accordingly, the demand for new workers will increase. The rising demand for economic goods at home and abroad and increasing FDI will also fuel the labour market. This will affect almost all sectors, especially industrial production and trade. There is an increased need for recruiting in all urban provinces, especially in those where there was already a focus on these sectors. It will still be more difficult in the tourism and hospitality sectors. Here, the recovery and thus the demand for labour will definitely take some time longer.
– Will wages go up?
As the economy recovers, the demand for labour will certainly increase. Currently, many former workers are still in their home provinces. The lockdown measures came as a shock to many. But I am convinced that the positive signs on the horizon will increase optimism. I personally experienced this when life quickly returned to the streets of Hanoi after the harsh Covid-19 measures ended in the summer. Vietnamese people have a remarkable resilience. It was like after a rain in the desert: everywhere was green again. Admittedly, some businesses had disappeared. Some of them will not be revived either. But new opportunities are emerging.
For this reason, I assume that there will again be an increasing struggle for good workers, especially in the cities and industrial zones. Employees must be paid accordingly to keep them coming and also to compensate for inflation. For this reason, I expect salaries, bonuses and travel allowances to rise. Increased inflation will also play a role. However, this will mainly affect industrial production, trade and services. Due to the lack of guests, employees in the tourism sector will not yet benefit from the rising demand. This will change as soon as Vietnam – hopefully soon – opens up completely to foreign visitors.
– More than 2.2 millions of workers left the big cities as Covid-19 crisis worsened, do you think they will come back after Tet?
It is understandable that many workers made redundant during the crisis feel frustrated. Many life plans have been shattered. I am aware that especially in the poorer classes and for the less developed provinces the restrictions on the quality of life have been massive. There is nothing to euphemize about that.
What helped many Vietnamese in need during this hard time was the support from the government’s economic stimulus packages, the solidarity of other Vietnamese and, above all, their own family. My wife is Vietnamese. My mother-in-law has done an impressive job in her hometown of Mui Ne, Phan Thiet. In times of need, she has not only coordinated support for family members, but also helped other poor families in the commune. And this despite the fact that she is not rich. This solidarity of the Vietnamese is impressive and a good reason why the Vietnamese have weathered the crisis. After Tet, people want to work and earn money again. Coupled with incentives from employers regarding pay and working conditions, they will return to HCMC and the other places.
The important thing is that there is no lockdown again. But I do not expect this to happen. The Vietnamese government is taking the right path of balancing the health of the population with the health of the economy, which is just as important for survival, and focusing on personal responsibility.
– Will there be enough room for those 2.2 million workers to go back?
Some workers will not return to their old jobs. Some jobs will have disappeared, but at the same time new ones will have been created. Some people have found new business and earning opportunities out of necessity. This may even be in areas they never thought of before. Some workers may have started their own business. The crisis has also had its good side in the area of digitalization. New forms of business have emerged, for example in online business. Many people have now looked more intensively at alternative forms of business. I am aware that this does not affect all people in Vietnam. Many have suffered from loss of income and have not come through the crisis so well. But the trend towards rebuilding businesses in the provinces, together with the increasing demand for labour in the industrial and urban areas, will ensure that jobs and prosperity come back.
SMEs are the backbone of our German economy in my home country, Germany. They will also be – alongside FDI and large companies – in Vietnam.
– What is the lesson learnt from last year crisis in the job market?
I consider it important for the business community to restore workers’ confidence and win their hearts. The layoffs were a shock to many of those affected. Life plans were disrupted, people fell into poverty through no fault of their own and tears were shed. The companies themselves were not to blame as they cannot be held responsible for Covid-19.
Now, it will be important for all companies, regardless of whether they are large enterprises or SMEs, to establish appropriate risk management plans (ORM operational risk management, MRM market risk management) in order to be better prepared in the event of future crises. These measures must be openly communicated in order to create trust. In addition, financial incentives (salaries, bonuses, allowances) should also help to attract employees again. Finally, I think employers should invest in the training of their employees even more than before in order to strengthen their resilience and employability. Ultimately, it is about a new social partnership between employees and employers in the “New Normal”.
– What is your advice for business as well as work force to work together for the economy development?
My advice to businesses and workers is: be optimistic and start afresh. You can build on what you have learned and achieved in the past. But let times of crisis be a lesson to you: it is necessary to always be prepared and to have an alternative, a “plan B”, ready for times of crisis. Don’t limit yourself to one product, one service or one job. Be open to new things and learn something new every day. Simply increase your market value as a business and as an employee. Then every crisis is also an opportunity for you.
One of the many things I appreciate about Vietnamese culture is the tradition of starting the New Year with something new and leaving the old behind. The Year of the Tiger has begun. Many Vietnamese have made plans for this year. These include setting up their own business, earning good money and taking a new, better job. Based on this, I assume that everyone will start the year with a healthy optimism and work on repositioning themselves and thus also their fatherland Vietnam. Vietnamese women play a crucial role in this. I wish all of us and especially your readers all the best, much success, prosperity, peace and health in the Year of the Tiger.