As with many emerging markets, Vietnam is rife with opportunities as well as challenges.
Its declining youth population poses a threat to productivity and economic growth in the long run. Meanwhile, the government is busy enacting wide ranging reforms across various sectors of education to improve the quality of education at home and better prepare graduates for the work force. This presents a variety of opportunities for foreign entities to partner or invest in Vietnam to support change, especially as the country breaks down barriers to foreign investment.
Indeed, the mentality of both the government and its people is increasingly open, as also evidenced by outbound travel and tourism and social media behavioural trends.
Read on to learn more about important developments in Vietnam covering a period of roughly 2015 to 2020. Since Covid-19, the country has recovered well, as detailed in the relevant section below. Please don’t hesitate to contact us for help or advice when recruiting in Southeast Asia.
As indicated in the first section of this report, Vietnam’s working age population is set to decline in the coming decades and in turn, overall labour productivity is likely to decline. As a result, this will “probably be a drag on per capita growth between 2020 and 2050,” according to an IMF blog post.
The World Health Organization now considers Vietnam to have one of the world’s fastest ageing populations in the world.
At the moment, the elderly population hovers below 4% of the country’s population, which equates to about 10 million people over the age of 65.
By 2030, this is expected to rise to almost 7% of the population, and more than 10% by 2050.
Added to this, Vietnam has a low retirement age (currently 60 for men and 55 for women), and now has the second-highest life expectancy in Southeast Asia (75 years).
Higher education reforms
In a move towards decentralisation, the government seeks to shift from a highly specialised centrally planned system to a more autonomous system of multi-disciplinary universities.
Tran Anh Tuan, deputy director of MOET’s University Education Department, said Vietnam endeavours to change four issues related to higher education:
The following statistics come from official government reports:
The total number of lecturers at both colleges and universities has grown from 20,112 in 1997 to 61,190 in 2009.
The number with doctoral degrees has grown from just 2,041 to 6,217 over the same period.
Those with masters degrees have increased from 3,802 in 1997 to 24,831 in 2009, meaning that more than 50% of tertiary-level instructors do not have graduate qualifications.
One of the key objectives included in the government’s reform plan for higher education is to improve the teaching quality of academics employed in higher education. A goal set by the government is that all academics will hold masters and preferably doctoral degrees by 2020.
Saigon Online reported in January 2019 that the Prime Minister approved a project to improve lecturer quality. The country aims to attract 1,500 scientists and holders of master’s degrees working abroad or in international units to lecture in local educational institutions. They are particularly looking for professors the field of art and sport, and the government will pay more for those who have published articles in prestigious journals.
One of Vietnam’s strategies to achieve further economic growth is the modernisation of its education system, which is considered to be lagging behind other Southeast Asian countries by outside observers. Education features prominently in Vietnam’s current “Socio-Economic Development Strategy for 2011-2020”, which seeks to advance human capital development, boost enrolments in higher education, and modernise education to meet the needs of the country’s industrialisation in a global environment.
The goals of several of the current education reforms were already laid down in a government directive from 2005 on the “Comprehensive Reform of Higher Education in Vietnam, 2006–2020”. Among the bold reforms currently enacted are the establishment of new accreditation and quality assurance mechanisms, the creation of a national qualifications framework, and a drastic increase in higher education enrolments by 125%, from 200 students per 10,000 people in 2010 to 450 students per 10,000 people by 2020.
Labour force development is being prioritised with large-scale investments in applied, employment-geared training: 70-80% of the student population should be enrolled in applied programmes by 2020.
Skills gap challenges in Vietnam
A skills gap is emerging as an obstacle to both FDI absorption and to business in general. In its Global Competitiveness Report 2017–2018, the World Economic Forum cited an “inadequately educated workforce” as the second biggest constraint on doing business in Vietnam.
Similarly, a World Bank survey of employers found that filling vacancies for jobs that require higher skills was a major challenge for most firms, with 70–80% of managerial and technical applicants reported as being underqualified.
Solutions to the skills gap challenge
According to the Asian Development Bank, Vietnam needs to prioritise three sets of initiatives toward strengthening its universities and its technical and vocational education and training (TVET) system:
Progress in these area can lead to coordinated strategies toward achieving national policy targets and to adopting jointly agreed standards and responsibilities among training providers.
Vietnam’s labour force is growing rapidly. From 38 million in 2000, it is projected to reach 56 million by 2020. Despite significant increases in funding, the current supply of places offered in TVET institutions is inadequate to meet the needs of this workforce. Currently, just 20% of workers hold formal university or vocational qualifications.
PISA scores have shown that secondary school students in Vietnam substantially outperform their peers in Southeast Asia, including those in richer countries such as Thailand and Malaysia. However, more progress is needed in developing the capacity of higher education students for critical thinking, problem solving, and people management skills in real world settings.
Effective management is complicated by fragmentation of responsibility among the 13 line ministries and 63 provincial governments that administer some 2,000 institutions. While accreditation has been compulsory for all institutions since 2005, enforcing common standards has been difficult in practice.
Youth unemployment is nearly 3 times that of the national average: 6.3% of those aged 15-to-24 are out of work, compared to a national unemployment rate of 2.3%.
The General Statistics Office indicates that 1 of every 5 unemployed people in Vietnam has a bachelor’s or master’s degree.
While in developed countries, 25-30% of the labour force is composed of university graduates, they make up only 7% of the labour force in Vietnam.
Among working-age Vietnamese, students with bachelor or vocational degrees were the most likely to be unemployed in 2015 – while those with no training and no specific skills somehow were the least likely to be unemployed, according to the Institute of Labour Science and Social Affairs.
Between 2003 and 2006, the percentage of firms that reported difficulty in recruiting workers…
increased from 37% to 63% for engineers and technicians;
increased from 54% to 70% for middle managers;
was low at 14%–20% for manufacturers (e.g., production-line workers).
The World Bank released a detailed report in 2018 entitled “Vietnam’s Future Jobs: Leveraging mega-trends for greater prosperity” which identifies the challenges and opportunities for better quality and more inclusive jobs in Vietnam and shares policy reforms that could be a catalyst to create these jobs. The report outlines recommendations drawing from macroeconomics, agriculture and rural development, business environment and exports, labour force participation and mobility, employment, trade policy, gender, education and skills training, and demographics.
Youth employment in Vietnam
Improving the quality of National Technical and Vocational Education and Training (TVET) institutions
In December 2018 Saigon Online reported that the Asian Development Bank (ADB) approved a USD 78 million financing package to help Vietnam’s labour force meet market demands by improving the quality of National Technical and Vocational Education and Training (TVET) institutions.
The Skills and Knowledge for Inclusive Economic Growth Project, supported by a USD 75 million loan from ADB, will provide advanced training equipment to 16 national TVET institutes. In collaboration with the business community, these upgrades will enhance the quality of training programmes for advanced skills in key growth areas, such as electronics, mechanics, biotechnology, automation, and automotive.
In addition, a USD 3 million grant financed by the government of Japan will complement these activities by strengthening the quality of the soft skills and developing demand-driven short-term skills programmes for women and youth in disadvantaged communities.
“With more than 60% of the population under age 35, Vietnam has the potential to help deliver high and sustainable economic growth,” said ADB Senior Social Sector Specialist Ms. Sakiko Tanaka. “To help realise this potential, this project aims to help ensure Vietnam’s labour force has the skills and knowledge necessary to increase their competitiveness and productivity for the global market.”
Vietnam is currently facing a shortage of skilled labour, and its labour productivity is lower than its neighbours in Southeast Asia (e.g., 7.5% of Singapore’s and 17% of Malaysia’s in 2015). Moreover, a recent survey by Vietnam’s Chamber of Commerce and Industry said TVET graduates lack industry-specific skills and other soft skills.
The project is expected to benefit about 75,000 students as a result of an improved teaching and learning environment. At least 2,500 adults and out-of-school youths are expected to take part in short-term skills training courses to help them find better-paying jobs or start their own businesses.
Outbound travel and spending habits
The rise in outbound student numbers corresponds with outbound travel habits from globally curious Vietnamese consumers.
In 2018, Visa released its Global Travel Intentions (GTI) Study which analysed international travel trends and the behaviour of more than 15,000 global travellers from more than 27 countries and territories. The report shows that Vietnamese travellers are expected to take on average nearly five trips abroad in the next two years, up from 3.5 trips in the last two years.
Vietnamese travellers are also expected to spend more on their trips overseas. Each traveller is expected to spend an average of USD 1,100 per trip, up from USD 880.
The average time spent overseas by Vietnamese travellers was four nights per trip over the past two years, much lower than the Asia-Pacific average of seven nights. They also chose destinations that were, on average, 4.5 hours travel time away.
Thailand, South Korea, Japan and Singapore were the most visited countries. Intra-region travel dominated, with 91% of Vietnamese travellers visiting destinations in Asia in the past two years.
They are likely to continue to be well patronised over the next two years, with the U.S emerging in the top five.
Meanwhile, Mastercard Advisors forecast that some 7.5 million Vietnamese travellers will venture outside the country in 2021, increasing from only 4.8 million in 2016.
About 6.5 million Vietnamese tourists travelled abroad in 2016, an increase of 15% from 2015, according to the national Vietnam Tourism Association.
Annually, Vietnamese spent over USD 3.491 billion a year on travel and accommodation – and that’s just via ecommerce – an increase of 16% in the last year.
Internet, mobile and social media trends in Vietnam
Fast facts – from a January 2019 Global Digital Report by We Are Social and Hootsuite
64 million Vietnamese were online in 2018, an Internet penetration rate of 66%.
62 million of them are active social media users, a penetration rate of 64%.
58 million Vietnamese access social media via mobiles, a 60% penetration rate.
94% of Vietnamese online access the Internet every day and 71% watch videos on a daily basis, which underscores the importance of using videos as a form of digital marketing.
The average Vietnamese social media user spends 2 hours 32 minutes using social media and has more than 10 accounts.
In Vietnam, 6.2 million people can be reached via ads on Instagram, 2.6 million on LinkedIn, and 684,500 via Twitter.
In terms of Facebook users, Vietnam ranked 7th worldwide (in 2017), with 14 million users in HCMC alone.
45% of mobile connections in Vietnam are on broadband (3G & 4G).
95% of Internet users watch videos on their mobile, 84% play games on their mobile and 50% use mobile banking.
Looking at the population over the age of 15 years old, 31% of them have an account with a financial institution, 4.1% have a credit card, 21% of them pay bills or make purchases online and 62% have used their mobiles to do so.
The impact of Covid-19
Vietnam has been hailed as one of the success stories in the wake of the Covid-19 pandemic owing to the government’s swift, decisive action which led to a low infection rate. The country’s recovery has also been buoyed by two key economic measures introduced in 2020:
A VND 27 trillion stimulus package was released in March, targeting households and small businesses.
A new free trade agreement came into effect in July with Vietnam and the European Union that will cut or eliminate 99% of tariffs on goods traded between them.
In sharp contrast to Western countries, Vietnam experienced GDP growth of 2.9% in 2020. Despite Covid-19, the country beat predictions from Goldman Sachs which forecasted 2.7% growth and beat the Asian Development Bank’s forecast of 1.8%.
Looking ahead, Vietnam’s GDP growth is predicted to reach an incredible 6.6% in 2021. Further growth will continue to come from:
Vietnam’s increasing strength as an ideal manufacturing hub;
A rebound in the tourism and hospitality industries.
Recruiting in Vietnam
BMI runs 85+ events in 15 countries each year. Join these events in Vietnam to recruit students directly via our fairs and attend our peer-to-peer events to build connections with high school counsellors and recruitment agents.
Providing you the unique ability to connect with influential leaders at the secondary school level from across Vietnam. Hold 15 meetings and network with school leaders who advise teenagers and their parents on the next steps in their academic careers.
BMI's biannual student recruitment fairs in Indonesia, Thailand and Vietnam draw in thousands of academically-oriented students and their parents to bring them in direct contact with institutions from around the world. BMI also takes a limited number of accredited institutions on chauffeured visits to top-rated private high schools in Bangkok, Hanoi, HCMC and Jakarta and to meet top high school counsellors at the Vietnam Internation School Workshop & Forum.