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Do not “let go” of productivity, even in difficult economic conditions.

Công LuậnCông Luận19/09/2023


Sustainable economic development, job transformation and increased labor productivity need to go hand in hand.

On September 19, at the Vietnam Socio-Economic Forum 2023, with Topic 2 titled "Improving labor productivity, ensuring social security in the new context", Mr. Felix Weidencaff, Employment Expert, International Labor Organization (ILO) Regional Office for Asia - Pacific , said that the trend of decreasing productivity growth rate in the long term is happening globally, in most regions of the world, posing many policy challenges. In addition, there are changes in the global macroeconomic environment. Specifically, inflationary pressure, geopolitical tensions, food and energy prices, commitments to reduce greenhouse gas emissions and necessary investment resources; resource limitations...

Do not ignore the issue of productivity even in difficult economic conditions. Figure 1

Mr. Felix Weidencaff presented on the issue of "Driving productivity growth in Vietnam: The role of institutions and labor market policies".

Although Vietnam has achieved unprecedented economic growth over the past decade, Mr. Felix Weidencaff said that compared to other ASEAN countries, Vietnam still has a gap, lower than some countries in the region.

Emphasizing the importance of increasing productivity, Mr. Felix Weidencaff said that Vietnam needs new momentum for productivity growth. Accordingly, transformation, sustainable economic development and employment transformation, and labor productivity increase need to go hand in hand. In addition, it is necessary to improve labor market institutions and policies to address the dual challenges...

Do not ignore the issue of productivity even in difficult economic conditions. Image 2

Overview of the Vietnam Socio-Economic Forum 2023, September 19.

According to Mr. Felix Weidencaff, Vietnam needs to develop human resources and increase employment to meet the growing needs of the knowledge economy, technology and industry 4.0; change the nature of unemployment and new challenges; establish an effective labor market information system. At the same time, increase productivity and sustainable employment, especially focusing on small and medium enterprises...

Many small projects limit the impact of investment

Meanwhile, participating in a roundtable discussion and sharing international experiences on productivity improvement, Mr. Jonathan Pincus, Senior International Economist of the United Nations Development Program (UNDP) in Vietnam, said that currently, there are only about 11 countries in the world that can maintain productivity growth in the long term, of which the United States is the leading country and most of the countries are in Europe. The common point of these countries is that they are successful exporters, taking advantage of foreign demand to increase the scale of production in both industrial and agricultural sectors.

Do not ignore productivity issues even in difficult economic conditions. Figure 3

Mr. Jonathan Pincus, Senior International Economist of the United Nations Development Program (UNDP) in Vietnam, shared international experience in improving productivity.

UNDP economists shared previous experiences in Southeast Asia, with Thailand and Malaysia having rapid labor productivity growth rates, however, these two countries could not maintain the labor productivity growth rate after the Asian financial crisis. These countries failed to upgrade their development policies when they reached middle-income status, but continued to pursue a growth policy based on low-cost exports without innovating to upgrade technology and upgrade the capacity of domestic manufacturing industries.

Vietnam is a middle-income country that has achieved “admirable” growth for a period of time. The question is whether Vietnam will fall into the middle-income trap like the above countries. According to UNDP experts, the key issue is that Vietnam must succeed in building a national innovation system.

Do not ignore productivity issues even in difficult economic conditions. Figure 4

Delegates attending the Forum.

Currently, Vietnam's investment in innovation and research and development is the lowest in the public sector, and private research institutes are not encouraged to develop. This is because private export enterprises are mainly FDI enterprises and multinational enterprises, while domestic enterprises are mainly small and medium enterprises, which hardly have enough resources for research and development.

UNDP experts pointed out two problems in Vietnam's investment in research and development: spending too little and spending too widely. There is a low level of coordination between the central and local levels in investment in research and development. Investment is spread out among too many ministries and agencies and not focused on key sectors. Many small projects limit the impact of investment.

In addition, UNDP experts also gave their opinions on specialized and postgraduate training in Vietnam. Currently, there is not enough space in higher education, especially in science and technology. In the context of businesses being interested in investing in Vietnam, Vietnam needs to be better prepared to take advantage of this opportunity and upgrade its capacity. Vietnam has many international students studying in developed countries, many scientific and technological talents need to be encouraged to return to institutes and schools in Vietnam to take advantage of this human resource.

Do not ignore productivity issues even in difficult economic conditions. Figure 5

Mr. Nguyen Duc Hien, Deputy Head of the Central Economic Commission, moderated the discussion.

In his concluding remarks, Deputy Head of the Central Economic Commission Nguyen Duc Hien said that in terms of productivity, in the short term of 2023, special attention should be paid to policies that create a foundation to promote productivity, increase investment in science and technology, and education and training. We must not neglect the issue of productivity, even in difficult economic conditions, and we need to pay attention to investing adequately in innovation and technological development.

“In the long term, it is necessary to reform the internal structure of the industry, create sustainability in productivity, create synchronization in implementation stages, improve human resource quality, and promote digital transformation in the business community,” Deputy Head of the Central Economic Commission Nguyen Duc Hien stated.



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