Labor market to rebound in 2014

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Students practice assembling electronic circuits at the Ho Chi Minh City University of Technology

The labor market is expected to see a rebound this year, especially with a huge increase in investment from Japan and South Korea. IT, marketing, and customer service continue to lead the demand for labor, Jonah Levey, founder and CEO of job company VietnamWorks tells Vietweek.

What is your expectation for the labor market in 2014?

Jonah Levey: 2013 witnessed an amazing recovery in the labor market. Q1 saw no change in labor demand, but from Q2 on, demand kept rising at a steady pace of more than 10 percent each quarter compared to the same period of 2012. Overall, labor demand in 2013 increased 9 percent compared to the previous year. This upward trend is expected to continue into 2014, especially with a large amount of investment coming from Japan and South Korea.

Major cities like Hanoi and Ho Chi Minh City will be the hubs of job supply due to their strategic positions as centers of commercial activities. However, places like Bac Ninh and Binh Duong will also post a lot of jobs thanks to the flourishing industrial parks.

Which sectors will have the biggest demand and offer the best salaries this year?

IT, marketing, and customer service continue to lead the labor market’s demand side. However, we do see great growth in other industries like import-export, which increased its labor demand a whopping 38 percent in Q4 of 2013, compared to the same period of 2012.

As for salary level, popular sectors tend to be those that offer the most competitive compensation package for employees. In this economic climate, applicants flock to jobs that promise financial stability. Japanese and Korean companies are among the most popular employers. According to VietnamWorks’ survey, seven out of the 10 most desired companies belong to Japanese and Korean groups.

The economic slowdown has changed society’s perception of jobs, with some sectors becoming less attractive to workers and others more attractive. What do you think about this?

There is always a fair reason for any change, especially in the labor market. As I mentioned above, in the current economy, people prioritize financial stability in choosing their employers. Highly qualified individuals look for a decent compensation package that will allow them to not only survive but also live comfortably in a time associated with rising costs of living.

Industries that promise good financial compensation like banking and finance, as usual, attract a lot of job seekers. Technology companies have also become great potential employers in Vietnam, similar to what has happened in the world in the last few years. By contrast, the production sector has become less attractive to highly qualified individuals who prefer to work in central downtown districts instead of industrial parks.

JONAH LEVEY, Founder and CEO of job company Vietnamworks
Many graduates from Vietnamese universities and trade schools do not possess the skills and ability required of foreign enterprises or top local businesses

The change has profound ramifications for the labor market. On the part of job seekers, signing themselves up for trendy and highly-compensated careers like banking and finance can be a promising decision, but there is a great deal of competition just to get an entry-level position in these industries. On the other hand, the less attractive sectors can be unexpectedly rewarding and much easier to enter.

On the employers’ side, companies in popular sectors will have a hard time choosing the right talents in a crowded pool of applicants, some of whom are only in it for a generous compensation. At the same time, companies in less popular sectors will struggle with the task of finding qualified talents with such a limited supply of labor.

Experts have warned about the oversupply of workers in some sectors like banking, finance, and property, and the shortage of skilled workers in manufacturing. How can these be balanced?

One possible measure is to push for a more serious career guidance program. A lot of college students in Vietnam do not know what they have to do to become appealing to employers.

In addition to getting high scores at school, college students should participate more in activities like volunteering or internships. The experience gained through these activities will help them become familiar with professional work environments as well as prepare them for the reality of working in certain sectors. As a result, students will have a better sense of who they really are as a professional and which industry is best suited to their interests and abilities.

What should Vietnam do to improve the quality of its workforce?

Rather than focusing on the weaknesses of Vietnamese workers, I would like to talk about a more pressing problem: how to improve Vietnamese the labor force’s quality. It is a big question for policymakers and educators. However, employers themselves can also help.

Recruiting skilled workers is a major challenge in Vietnam, and the situation is very likely to worsen in the coming years as demand for skilled talents continues to grow faster than supply. Universities and vocational schools are not generating enough graduates to meet the demand. More importantly, many graduates from Vietnamese universities and trade schools do not possess the skills and ability required of foreign enterprises or top local businesses. That is why companies like Intel, FPT Software, and others are spending billions of dong on training. delivered over 2.8 million job applications to over 8,000 employers in 2013. Employers come to us because they want more and better candidates to apply for their jobs. In addition, companies with the means will continue to invest heavily in training to bridge the gap between the talent they require and the talent available in Vietnam.

Are firms willing to pay higher salaries for workers with better qualifications when many of them only seek low-cost workers?

The problem is that a lot of times it is not about the costs; it is about the overall benefits that a company can get from an employee. If an employee contributes greatly to the growth of a company, he/she should be rewarded with a decent compensation package that reflects his/her value to the company.

Many companies already have effective human resource policies to retain and reward their most valuable talents. For example, Japanese company Evolable Asia uses the “probation bonus” approach to rewarding talents in Vietnam: any employee who passes the probation period will receive a one-time bonus of half a month’s salary. Companies are willing to invest in their most valuable employees. The most pressing question right now is not whether firms want to pay high salaries, but whether there are good enough employees who deserve competitive compensation packages.

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