Outdated technology and a low-skilled workforce is widening the productivity gap between its Southeast Asian peers and Vietnam.
A General Statistics Office (GSO) report released on Wednesday said that with Vietnam’s GDP growth of 7.08 percent, average labor productivity reached VND102.2 million ($4,520) per worker in 2018, up 6 percent year-on-year.
Despite this increase, the country’s productivity continues to lag behind many of its Southeast Asian neighbors, and the gap is widening, said GSO General Director Nguyen Bich Lam.
Based on purchasing power parity (PPP) at 2011 constant prices, the GSO estimated Vietnam’s overall labor productivity in 2018 was $11,142, 7.3 percent of Singapore, 19 percent of Malaysia, 37 percent of Thailand, 44.8 percent of Indonesia and 55.9 percent of the Philippines.
In Southeast Asia, Vietnam’s labor productivity is only higher than that of Cambodia which reached $6,963.
Outdated technology, lack of high-skilled workers and the huge gap between career education and market demand are to blame for the poor performance, Lam said.
“Vietnam’s economy will face huge challenges in the coming time to catch up with the labor productivity of neighboring countries,” he said.
The aging population will also affect labor productivity in the future, he added.
Vietnam reached a turning point in 2015 when it started to become one of the countries with the fastest aging populations in the world, said the Ministry of Labor, Invalids and Social Affairs.
The number of Vietnamese people over the age of 65 will rise from 6.3 million last year to a projected 18 million by 2040, accounting for more than 18 percent of the population and transforming Vietnam from a young society into an old one, the report quoted the United Nations as saying.
Officials have cautioned that the demographic changes will require Vietnam to optimize its human capital via skills training, improved education and technology transfer, as well as inclusive social protection, including pensions and universal basic healthcare.
Prime Minister Nguyen Xuan Phuc has also said that Vietnam cannot continue to rely on low-cost labor as it faces increasing competition from global integration.
Businesses need to offer skilled workers attractive wages and benefits since they lead the use of technology, he’d said.
With Vietnam climbing on the Industry 4.0 bandwagon, experts have warned that its low-skilled workforce would be threatened by technological advances like artificial intelligence.