Shortage of skilled workers hinders FDI in Vietnam

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A worker on the assembly line of a Samsung Vietnam plant in northern Vietnam

Over 20,000 job application letters were sent to Samsung Electronics Vietnam when it announced a major recruitment last April.

It was easy for the company to find 1,200 manual laborers, but upper-level personnel were scarce.

An official from the firm said it was very difficult to find enough qualified managers and skilled workers in Vietnam due to a shortage of qualified candidates.

He also expressed concern about the fierce competition with rival, Finnish phone producer Nokia, in attracting skilled employees. The two companies are located in the northern province of Bac Ninh.

Nguyen Van Dao, vice general director of Samsung Vina, a joint-venture between Samsung and the Ho Chi Minh City-based TIE Company, said: "Job demand is very high, so it is not difficult for us to find manual laborers. But, it is very difficult to find enough engineers for our demand."

Even the skilled workers who have been recruited are not qualified enough to fully meet the firm's requirements. Thus, the company has to spend big money on training laborers both at home and abroad.

Samsung is not the sole foreign-invested firm in Vietnam having difficulty finding skilled laborers. At several meetings and conferences, representatives of foreign invested firms have complained that the shortage of skilled workers has been a major barrier to their business in the country.

Managing director of recruitment firm Navigos Search Nguyen Thi Van Anh said the shortage of necessary skills for Vietnamese laborers are much more serious than those from other ASEAN countries like Singapore, Malaysia and Thailand. "The shortage of engineers and managers can be seen in most sectors in Vietnam."

Local engineers have not done enough to stay up to date on the latest knowledge, information and technology, while they also lack foreign language skills and creativity, she said. Meanwhile, managers are still weak in management skills and their knowledge of law and finance.

"In the field of information and technology, many Vietnamese and foreign firms wish to set up software development centers in the country, but they cannot find enough engineers to meet their demand because of the supply shortage," Ạnh said.

"The qualifications of local engineers are not enough to meet the requirements of employers. Many of our engineers do not know foreign languages, and are not updated on the developments in their fields," she added.

Meanwhile, candidates for CEO jobs lack managerial experience and strategic vision. "So many firms still have to recruit expats for the position though they prefer Vietnamese, who have better understanding of the country's culture, business environment, and legal system," she said.

The shortage of senior employees will be even more serious when the economy recovers and labor demand bounces back. The number of university graduates is very large, but their capabilities cannot meet firms' requirements, she said.

A leader from a South Korean owned firm said the shortage of skilled workers is one reason preventing his firm from expanding production in Vietnam. He said the company wants to purchase more modern machines to expand production here but worries about the difficulty in finding qualified engineers to run them.

According to the Ministry of Planning and Investment, the low qualification of Vietnamese workers is one of reason for the small number of high technology FDI projects that the country has attracted. Most FDI projects are outsourcing and assembly projects, which bring low added value to the country.

Deputy Minister of Planning and Investment Dao Quang Thu said the government should build a strategy on improving human resource quality to meet foreign firms' requirement in private and serve the country's socioeconomic in general.

A specialist from the International Labor Organization (ILO) said the productivity of Vietnamese laborers is 8-15 times lower, depending on the sector, than those from other ASEAN countries. Thus, Vietnam should quickly shift its labor structure from a manual-labor intensive one to a skilled one.

Anh of Navigos Search said: "The changes in our educational system have not caught up with economic development, failing to meet the requirements of employers. Vietnam will become less competitive in attracting FDI unless the government carefully reconsiders the issue." 

Foreign direct investment for the year was worth US$19.23 billion as of October 20, a whopping 66 percent rise year-on-year, Foreign Investment Agency data showed.

The figure exceeded the full-year target of $13-14 billion last month.

"We would have to compete with other countries in attracting FDI by increasing workers' productivity, not by offering low wages. The productivity of Vietnamese workers is low compared to that of those from China, Thailand, and Malaysia," she added.

Vietnam had some 53 million workers in 2012, of whom 83.54 percent were manual laborers without any vocational certificates.

Improve training

Deputy Minister Thu said the government will help foreign experts and high qualified laborers to come to work in Vietnam. However, it will also ask foreign firms to build plans to train laborers so that local employees can soon take over work that can now be done by foreigners only.

Vietnam also encourages foreign firms to invest in training centers to develop their human resources sustainably, he said.

Danish Ambassador in Vietnam John Nielsei said Vietnam could not deal with the shortage of skilled employees overnight. However, he said the country needs to improve its education system first. He suggested that the government help foreign investors participate in education and training in Vietnam.

Anh of Navigos Search said businesses should cooperate with schools and colleges to produce more skilled workers. Accordingly, schools can focus training on businesses' real requirements.

Now, schools focus too much on theory, and ignore practice, thus their graduates are not fully qualified. Many foreign firms said local laborers can work independently only after undergoing training courses at their companies.   

"By focusing on improving the workforce's skills, Vietnam could take advantage of its young workforce that has enormous potential," she said.

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