Improve labour productivity in FDI sector

By May 2018, the nation has more than 25,691 FDI projects with a total registered capital of nearly 323 $ bilion US. Not only creating jobs and bringing more income for labours, FDI sector has contributed to improving the quality and labor productivity of Vietnam.

Currently, 63 provinces and cities nationwide have FDI projects, with about 14,600 enterprises (businesses) employing over 3.6 million people. Mr. Vu Dai Thang, Deputy Minister of Planning and Investment said that labors in FDI enterprises account for a low proportion, but production and business efficiency has been quite high. Employment growth rate of FDI sector is always high, especially after WTO accession of Vietnam. The presence of FDI sector also contributes to shifting labor structure from rural to urban areas. Along with that, FDI enterprises also form a team of highly qualified managers and technical workers.

Not only that, the presence of FDI enterprises has helped Vietnam’s labor productivity to be gradually improved and achieved a relatively high growth rate, averagely in the 2014-2016 period, reaching 5.5%/year. Dr. Le Van Hung from Vietnam Institute of Economics analyzed that FDI helps to shift the labor structure in the country from the industry group with low labor productivity to higher ones. At the same time, create spillover effects on technology and skills for the domestic sector through production links. On the other hand, it also helps increase competitive pressure, forcing domestic firms to improve technology to catch up with the trend, indirectly improving the overall labor productivity.

However, the FDI sector also reveals inadequacies. FDI projects mainly focus on assembly, processing, low localization rate, the value created in Vietnam is not high; Contribution to the state budget is inadequate, some enterprises have the phenomenon of price transfer, tax evasion or violations of regulations on environmental treatment, etc. More alarming, according to the Vietnam General Confederation of Labor, the situation of dismissal workers over 35 years of age occurs quite a lot in FDI enterprises. The reason is that some industries are not suitable for workers after age 35, etc.

In the context of the industrial revolution 4.0 going strong, Mr. Vu Dai Thang suggested, it is necessary to review and comprehensively assess the situation of labor of FDI enterprises in the past time on the achieved results, limitations, weaknesses, causes, thereby proposing appropriate and breakthrough solutions to improve the quality and efficiency of labor in this area.

According to Mr. Le Van Hung, it is necessary to clearly define the strategic direction and priority of the development industry in the coming period. The training of universities and vocational schools needs to be raised according to quality standards, combining theory with practice. In order to protect the weak labor group, Mr. Ngo Duy Hieu – Head of the Labor Relations Department (Vietnam General Confederation of Labor) proposed that the Government should study and promulgate legal provisions in order to limit the situation of enterprises firing workers over 35 years old; well organize the labor market information system to introduce and combine jobs in the domestic market with the overseas labor market. “We have to design the overall policy for workers who have lost their jobs. In particular, labor support policies must be developed to cope with the social problems arising from the process of changing production structure and technological innovation of enterprises “- Mr. Hieu recommended.

Productivity and Quality Office