Vietnam Q3 Labor Market Update: Increase in Workers, Employment

The Vietnam General Office of Statistics has released its Q3 2023 labor market and employment update. Here’s what it says about Vietnam’s human resources at the end of September this year.

Vietnam’s low-cost workforce has been a key selling point for foreign manufacturers looking to enter the market. However, that workforce is not always spread out consistently and changes periodically. With this in mind, the General Office of Statistics (GSO) provides quarterly labor market updates. Here are the results for Q3 2023.

Employment

The most recent quarterly update is generally positive with the GSO finding that the number of workers in Vietnam and the number of workers employed have both continued to increase quarter-on-quarter and year-on-year. There were a total of 52.4 million Vietnamese of working age in the third quarter of this year. This represents an increase of 92,600 thousand people compared to the second quarter of the year and 546,000 more than were of working age in the same period last year.

In the working age cohort, the GSO found that in the period from July through September, 51.3 million people were employed, which was 87,400 more people than in Q2 and 523,600 people more than in the third quarter of 2022. The number of trained workers (with degrees or certificates) also increased by half a percentage point over the previous quarter to hit 27.3 percent. This also represented an increase of 1 percent over the same period last year.

Unemployment, underemployment, and informal employment

Despite the improvement in employment numbers, the GSO also raised some concerns.

For example, 60 percent of employed workers were informal workers—working in agriculture, fishing, and/or forestry—which is more seasonal and irregular work. These jobs often have low wages and can be unstable.

The report found that there was an increase of workers in the informal sector of 43,900 compared to the second quarter of the year, and 355,800 more people when compared to the same period in 2022. This brought the total number of workers in Vietnam engaged in informal employment to 33.4 million people.

Underemployment also failed to see an improvement, registering 2.06 percent—the same as Q2 although up 0.14 percent over Q3 2022. Whereas there was a slight decrease in underemployment in the agriculture, fishing, and forestry industries, the construction and service sectors both saw increases in underemployment at 109,200 people and 14,100 people, respectively.

Furthermore, the number of unemployed people increased to 1.08 million. This was an increase of 6,300 people over the previous quarter and 22,100 over the same period last year. This was, however, too small to impact the official unemployment rate, which remained steady at 2.3 percent. It was, however, 0.02 percent higher than the third quarter of 2022.

Wages

Average monthly wages increased quarter-on-quarter and year-on-year in the third quarter of 2023. The average income in Q3 of this year was VND 7.1 million (US$289). This represents an increase of VND 146,000 (US$5.94) over the previous quarter and VND 359,000 (US$14.61) more than workers were during the same period last year.

Broken down by sector, most sectors saw an increase over the same period in 2022.

Wages by selected industries, Q3 2023 vs Q3 2022

Source: General Office of Statistics

Notably, the four sectors listed here are generally higher paid. The services sector and informal sectors typically have much lower rates of pay. These are often more in line with minimum wage.

Methodology: Vietnam Q3 2023 Labor Market Update

Vietnamese employment numbers often appear extremely low relative to more developed markets. This is due to different systems of measuring employment numbers. Understanding a few key definitions and calculations may clear up these differences. These are outlined in the Government’s Decision No. 05/2023/QD-TTg and briefly explained below.

Employed workers

The GSO classifies an employed worker as:

• Anyone aged 15 years or older who worked for 1 hour or more during the reference period providing labor for the purpose of receiving wages, a salary or in order to turn a profit.
• People who do not work during the reference period but who have a job (excluding self-employed work) and are still paid during the reference period or will definitely return to work after no more than one month.
• People who are in training to meet job requirements.
• Students, retirees, apprentices, trainees, and people looking for a job or receiving unemployment insurance, who perform at least one hour of work to generate income during the reference period.
• People whose wages, salary, or profits are not paid to them directly but are amalgamated into a general family income, also known as ‘family workers’.

Trained workers

Per government guidelines, a worker is considered ‘trained’ for reporting purposes if they are:

• A person over 15 years of age who has attended and graduated from a technical training program under the National Education System.
• A person who has not attended any technical and professional training program, but who through self-study, vocational training, or working while studying has acquired skills and workmanship, equivalent to a level 1 technical worker.

Unemployed workers

An unemployed person is a person 15 years of age or older who, during the reference period, did not work, but was looking for work and was willing to work. This includes workers who were willing to work but did not look for work because they already had a job lined up that would begin after the end of the reference period.

Informal workers

Workers with informal jobs are those who have jobs in one of the following five groups:

• Family workers who do not receive wages or benefits directly;
• Business owners and self-employed workers in the informal sector;
• Salaried employees who are not allowed to sign a labor contract or are allowed to sign a labor contract but are not required to pay compulsory social insurance by the recruiting establishment;
• Cooperative members who do not pay mandatory social insurance; or
• Self-employed workers or paid workers in households or agricultural, forestry, and fishery households.

Taking these definitions into consideration will provide more insight into the abovementioned figures for the third quarter of 2023. For assistance with your human resources requirements and compliance when doing business in Vietnam, contact the experts at Dezan Shira and Associates.

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