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Vietnam’s Hiring Challenges and Potential Incentives for Retaining Employees

Vietnam Briefing, Vietnam, 31 May 2022 - Vietnam’s labor market varies across the country and can prove challenging for first-time investors. Some of these issues have been amplified after Vietnam reopened its economy with factories resuming operations but facing a shortage of labor. Vietnam Briefing highlights hiring challenges for businesses and solutions for retaining employees.

Vietnam’s labor market is going through a transformation, with people moving from the countryside to the city, and switching from agriculture to manufacturing and service industries. While agriculture contributes significantly to the local economy, employing many people, with the economy opening up, other sectors such as the service industry are growing looking to hire additional labor to meet demand. But this has proved challenging due to a shortage of labor.

Vietnam’s labor pool counts approximately 56 million people, with active workers being around 76 percent.

With further development, businesses are shifting production chains to Vietnam or relocating a portion of their value chains following a China plus one strategy. Therefore, Vietnam is developing into a prominent manufacturing hub in the Asian region.

However, demand for qualified labor is increasing. The number of employees working in foreign-invested enterprises (FIEs) have increased from 330,000 in 1995 to around 6.1 million in 2019. This shows an average growth rate of 7.72 percent during the 2005-2017 period higher.



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