Improvement of human resources quality for demand of fdi enterprises in vietnam today

Nội dung text: Improvement of human resources quality for demand of fdi enterprises in vietnam today

1. IMPROVEMENT OF HUMAN RESOURCES QUALITY FOR DEMAND OF FDI ENTERPRISES IN VIETNAM TODAY Truong Thi Thuy Lien1 Abstract: Foreign direct investment (FDI) is identified as one of the important economic components for Vietnam. According to the Provincial Competitiveness Index (PCI) Report in 2020, Vietnam is still evaluated as an attractive investment destination by FDI enterprises thanks to stability of politics, openness of administrative procedures, and reduced costs for informal inspection. In the course of being an ideal investment destination of Vietnam, the availability of highly qualified human resources is one of the prerequisites in order to attract this investment inflow, which is also a great opportunity in accelerating industrialization and modernization of the country. However, the shortage of highly qualified human resources as well as low productivity of labor is a challenge for Vietnam to a new period. Therefore, development of highly qualified human resources plays an important role as a motivation for Vietnam to break through and attract more investment sources from FDI enterprises. In this paper, the author referred to current situation of human resources in Vietnam and recommended a number of solutions for purpose of improving the quality of human resources for demand of FDI enterprises in near future. Keywords: human resources, labor productivity, FDI enterprises 1. A REVIEW OF QUALITY OF HUMAN RESOURCES IN VIETNAM AT PRESENT For purpose of taking short cut quickly and shortening process of industrialization and modernization, the Party soon realized that the important factor for implementation of this strategy is human resources with scientific knowledge, development of education and training, improvement of science and technology, international integration to take advantage of foreign capital and technology. Science and technology together with education and training have been forming new people who are workers with creative intelligence, deep and wide knowledge, and vision of covering many different areas - the workers in a new perspective. Currently, the biggest advantage of Vietnam is the abundant labor force and young labor structure. According to General Statistics Office, in 2018, Vietnam has approximately 94 million workers, of which the labor force at the age of 15 and over accounts for approximately 55,16 million people. The number of employed workers at the age of 15 and over in 2018 is estimated as 54 million, including 20,9 million people working in agriculture, forestry and fishery (accounting for 38,6%); industry and construction sector has 14,4 million people (accounting for 26,7%); service sector has 18,7 million people (accounting for 34,7%). At the same time, labor productivity of Vietnam has been improved remarkably over the years and Vietnam is now a country with a high rate of labor productivity growth in the ASEAN region. 1 Thai Nguyen University of Technology; Email: thuylienktcn@gmail.com 889
2. 890 KỶ YẾU HỘI THẢO KHOA HỌC QUỐC TẾ FDI TOÀN CẦU VÀ ỨNG BIẾN CỦA DOANH NGHIỆP FDI TẠI VIỆT NAM TRONG BỐI CẢNH MỚI According to the General Statistics Office, the labor productivity of whole economy at current price in 2018 is estimated at 102 million VND/labor (equivalent to 4.512 USD), increased by 346 USD compared to 2017. This means labor productivity in 2018 increased 5,93% compared to 2017, the average increase in period of 2016-2018 was 5,75%/year, higher than the average increase of 4,35%/year in the period of 2011-2015. In general, there are nearly 1 million people in Vietnam entering the working age every year, which is an important competitive advantage of Vietnam in attracting foreign investment to contribute to socio-economic development. In parallel with that, the quality of Vietnamese labor in the past years has been gradually enhanced; The trained labor has partly met the requirements of enterprises and labor market. The technical labor force of Vietnam has mastered science and technology and undertook most of the complicated jobs in production and business that previously needed to hire foreign experts. Qualifications of labor force throughout the country has been improved in the proportion of workers with college and university degrees or higher though this number is not too much; The proportion of workers who have undergone vocational training and professional intermediate has also increased, which is a good sign when we have to accelerate improvement of labor force quality in order to increase competitiveness and enter the knowledge economy. The increase of trained human resources is also reflected through increase in the number of newly recruited and graduated students every year. Vietnam has developed a large number of scientists and technologists. Many economists and scientific officials of Vietnam have acquired and accessed to many modern scientific and technological advances of the world; through labor export and foreign experts, many Vietnamese workers have access to more modern machinery and industrial working styles. They are evaluated to be smart, industrious and skilled, have high education and academic level compared to GDP, as well as quickly receive scientific and technical advance and public technology of the world. However, according to Central Economic Committee, the increase of labor productivity of Vietnam in recent years have mainly been in width, not in depth, because the majority still relies on economic restructuring from the agriculture to industry and service, which is not a specific improvement in each economic sector. Therefore, the labor productivity growth rate of Vietnam did not show superiority compared to other East Asian and Southeast Asian countries, and was still much lower than that of China in the same period (4,7% compared to 9,07%). With average labor productivity growth rate mentioned above, Vietnam is facing the risk of lag behind. Accordingly, the productivity growth rate is currently lower than the average growth rate of GDP of about 6,21% in the same period, lower than the average real wage increase rate of about 12,59%/year. This means that expense of production in Vietnam becomes more expensive, impacting directly on the competitiveness of the economy, which results in a risk that many FDI enterprises will shift production location to cheaper countries, putting great pressure on economic growth. According to the General Statistics Office, by 2017, the country still has 21,6 million laborers working in the agriculture, forestry and fishery sector, while the labor productivity in this region is only 35,5 million VND/labor year, equivalent to 38,1% of the general labor productivity of the economy. Moreover, only 21,5% of trained workers have degrees and certificates, of which rural areas account for a very low rate, only approximately 13%.
3. INTERNATIONAL CONFERENCE PROCEEDINGS: GLOBAL FDI AND RESPONSES OF FDI ENTERPRISES IN VIETNAM IN THE NEW CONTEXT 891 In addition, outdated machines, equipment and technological processes are also causes of low labor productivity in Vietnam. Most private enterprises are using technology lagging behind from 2-3 generations compared to the world. Up to 76% of imported machinery and technology lines originated from the period of 1960, 75% of devices expired depreciation, 50% of the equipment is renewed. Moreover, creative-related activities are limited, not deeply involved in the global supply chain, so it has not taken advantage of the spread of knowledge, technology and labor productivity from companies, transnational corporations on domestic enterprises. These limitations show that the enterprise sector is not really the decisive driving force for labor productivity growth of the economy The number of high quality human resources and skilled workers is still inadequate compared to the social needs to develop core economic sectors, especially to participate in the global value chain as well as strengthen position of Vietnam in such value chain. The World Bank evaluate that Vietnam lacks of skilled workers and high-level technical workers. The foreign language ability of Vietnamese workers is also not high, so they have to face up with many difficulties in the integration process. The limitations and weaknesses of human resources are one of the main factors affecting the competitiveness of the economy. In addition, the level of satisfaction in term of skill is very low due to technological change of labor in electronics and sewing enterprises. Apart from safety skills and compliance with labor discipline, some of enterprises undergoing survey are evaluated as good and very good in terms of the skill satisfaction of workers compared to the relatively high requirements for new technologies. (72% for electronics and 50% for apparel), the other skills have a very low rate to be evaluated as good/very good by enterprises, especially for apparel industry. Despite rapid increase rate, the scale of highly skilled workers is still small compared to requirements of industrialization, modernization and international integration. The number of workers who have professional and technical qualifications, even those who have high qualifications and understand the theory well, but are weak in their practice and adaptability in an industrially competitive environment; Additional training or retraining is still needed for effective use. The ability to work in groups, professionalism, foreign language ability for communication and working of human resources is limited. 2. CURRENT SITUATION OF HUMAN RESOURCE QUALITY IN THE FDI SECTOR IN VIETNAM In the trend of market economy development, globalization and expansion of international exchanges, human resources in general and highly-qualified human resources in particular, more and more play a decisive role. Based on statistics, the number of direct and indirect jobs has a significant increase. The foreign investment inflows in recent years have caused a significant impact on the development of the market as well as productivity and income of Vietnamese employees. The number of employees working in FDI enterprises has increased from 330.000 in 1995 to nearly 6,1 million in 2019 with average labor growth rate of 7,72%/ year in the period of 2005 – 2017, much higher than that of the whole economy and other economic sectors. By 2019, the number of labor force working in FDI enterprises is about 6,1 million. Labor productivity of FDI sector reach about 118 million VND (exchange rate of 2010) with a growth
4. 892 KỶ YẾU HỘI THẢO KHOA HỌC QUỐC TẾ FDI TOÀN CẦU VÀ ỨNG BIẾN CỦA DOANH NGHIỆP FDI TẠI VIỆT NAM TRONG BỐI CẢNH MỚI rate of about 8,7%/year (much higher than that of domestic enterprises: 8,7/4,6). According to Enterprise White Paper 2020 published by the Ministry of Planning and Investment, the average income of an employee in the FDI enterprise sector is approximately 11,2 million VND/month, higher than that of the economy as whole (11,2/9,6). However, it is obvious that the FDIs mainly come from countries with medium technology or without high technology, accounting for a large proportion, which gives a challenge for Vietnam to find a solution to attract FDI investors from developed countries with leading technology, strong financial potential and a large market. Therefore, development of highly-qualified human resources is one of the prerequisites for Vietnam to break through and attract more investment sources from FDI enterprises. Labor productivity had a significant change thanks to the capital from the FDI sector. At current price, the labor productivity of FDI enterprises in 2017 reached 330,8 million VND/ labor, 3,5 times higher than that of the whole country as well as higher than that of whole enterprise sector in general and non-state enterprises in particular. The shift in labor structure from low-skilled labor-intensive industries to highly-qualified ones is boosted. In the early period of FDI attraction, the labor force was often focused on a number of labor-intensive production industries such as textiles and garments, leather and footwear. However, the current proportion of labor in a number of high-tech manufacturing sectors has a relatively rapid growth rate. This index in the field of electronics and electronic products has increased from 8,03% in 2012 to 15,7% in 2017. Through internal training system at home and abroad, and association with external training institutions, foreign-invested areas have also made important contributions to improvement of human resources quality in Vietnam. In the period of 2008 – 2018, the average labor force in the FDI sector was at 12%/year, 5 times higher than the national growth rate. However, 80% of labor force in FDI enterprises currently have no degrees/certificates of training, and lack of technical and other core qualifications. According to the Provincial Competitiveness Index (PCI) report made by the Vietnam Chamber of Commerce and Industry (VCCI) in 2019, 33,8% of enterprises in general claimed difficulties in looking for human resources in line with their needs. In particular, 69% of FDI enterprises pointed out they faced up with challenges in labor recruitment due to lack of professional and technical skills from labor force; 39.86% FDI enterprises is short of labor and many of them must take 1-2 years to retrain their labor force. Thus, it is completely grounded when the investors have concerns about quality of human resources in Vietnam. Therefore, now is reasonable time for Vietnam to carry out specific measures in order to maximize benefits from FDIs, especially in technology transfer and training of highly-qualified human resources. Competition based on the advantage of cheap labor force should be replaced by investment in environmentally friendly high-tech sectors. Highly- qualified human resources are considered as the core resource and decisive factor for growth rate, socio-economic development and use, protection and regeneration of other resources. For realization of these, development of highly-qualified human resources need considering as an important task to attract foreign investment. In terms of quality, it can be seen that labor qualification in the FDI sector is increasingly better. However, there are still some shortcomings related to human resources in FDI enterprises such as:
5. INTERNATIONAL CONFERENCE PROCEEDINGS: GLOBAL FDI AND RESPONSES OF FDI ENTERPRISES IN VIETNAM IN THE NEW CONTEXT 893 In comparison to needs for development of key economic sectors, the number of highly- qualified human resources and skilled employees is insufficient, especially for attraction of more investment sources from FDI enterprises in Vietnam market. The World Bank supposed that Vietnam currently faces lack of skilled employees and highly-qualified technical workers. Besides, the foreign language proficiency of Vietnamese employees is not good enough, causing certain difficulties in the course of integration. According to the General Statistics Offices as of 2019, the number of people undergone vocational training with proficient skills (elementary level or higher) across the country only accounted for 22,8% of the total labor force. Those without degrees/certificates of training in FDI enterprises accounts for nearly 80% of employees, which almost remains unchanged from 2011 to now. The limitations and weaknesses of human resources are one of the key factors affecting the attraction of FDI. The labor size with skilled employees is still small compared to requirements from FDI enterprises in particular and process of industrialization, modernization and international integration in general. The employees with professional and technical qualifications, even those with high professional qualifications good theoretical knowledge have a bad practice and adaptability in a competitive industrial environment and they need more time or training to get the highest effectiveness. Human resources’ working in groups, professionalism, and use of foreign languages for communication and working is still limited. The sectors that Vietnam has a serious shortage of high-tech and high-class service employees are finance, auditing, law and most of industries. FDI enterprises in Vietnam currently are in dire need of highly-qualified human resources. The majority of employees in enterprises today come from rural areas have not undergone any basic and systematic training courses. There is no attention to propaganda and education, so a number of employees and workers’ sense of class enlightenment and political bravery in enterprises are still not clear. Their knowledge on policies and laws, sense of labor discipline and organization, and industrial manners is very poor. Their basic skills such as working in groups, cooperating and taking risks are not good enough and they are afraid of raising personal initiatives and sharing work experiences. Most FDI enterprises wasted much time to re-train their employees’ working style for only before officialy hiring them to work. 3. SOME SOLUTIONS TO IMPROVE THE QUALITY OF HUMAN RESOURCES FOR DEMAND OF FDI ENTERPRISES IN VIETNAM After more than three decades of opening-up, Vietnam has obtained many achievements in terms of quantity in attraction of foreign direct investment, contributing greatly to economic growth, investment capital, import and export, local budget and job creation. Attraction and use of talents always get more prioritized for all enterprises and entrepreneurs than ever because good human resources play decisive role for competitive strength of an enterprise, especially in the context of globally competitive economic integration. Therefore, below are some solutions that author recommended to improve the quality of human resources to attract investment from FDI enterprises. First of all, the propaganda needs to be paid more attention so that the whole society has a proper awareness of position and role of highly-qualified human resources today, thereby making a strong change in awareness for all leadership levels from the central to grassroots as
6. 894 KỶ YẾU HỘI THẢO KHOA HỌC QUỐC TẾ FDI TOÀN CẦU VÀ ỨNG BIẾN CỦA DOANH NGHIỆP FDI TẠI VIỆT NAM TRONG BỐI CẢNH MỚI well as people of this issue. It is essential to innovate thinking in use, evaluation and treatment to human resources based on their capacity and working results and efficiency in fact. The psychology and current situation of over-emphasizing on and over-rating “degrees” in recruitment and evaluation of human resources. This is a way to express the view on human development, socio-economic development for the sake of people and by people, which is one of the basic contents of sustainable development. Secondly, it is recommened to promote fundamental, comprehensive renovation and synchronization of education and training. This is a key task and essential solution for target of building and developing human resources in general and highly-qualified human resources in particular for needs of FDI enterprises. Accordingly, it is required to accelerate completion of education system towards an open and integrated form, promote stratification, streamlining, organization and restructure of education system, especially higher education and vocational training. The shortcomings in training scale, structure of qualifications in each profession and structure of regions need to be handled; training should be associated with scientific research and technology application. It is necessary to pay more attention to development of automation industries, invest in in-depth research groups in the fields of digital industry, information technology, software technology, satellite information, digitization, new energy, new materials, biotechnology and their integration. Thirdly, it is indispensable to prepare a strategy on development of human resources, be bold in recruitment, prioritize investment in training of human resources in the fields of high technology, key technology, and high value-added industries. Besides, it is recommended to focus on group of solutions to improve the quality of human resources through emphasis on training of skills and practical capacity. Fourthly, the enterprises need to be active in promoting social responsibility, and participating in development of training programs and curricula together with schools; training professional practice for teachers; admitting interns, providing funding for scholarships to excellent students; giving support to schools in terms of facilities, equipment for practice and internship; taking advantage of technology to establish a connection of training supply and demand throughout the system (schools, enterprises and students) so as to solve the issue in labor supply and demand and set a close bonding with FDI enterprises to timely supply of human resources to these enterprises. Fifthly, it is suggested to prepare a clear and specific plan and budget for training and development of human resources. A system of personnel evaluation, remuneration regime for officials and employees, regime of attracting and using talents, and arrangement of cadres need to be promulgated and applied widely. In particular, it is needed to pay attention to spiritual life and social community activities of employees. The policies, rules and regulations must be closely associated with production and business activities, characteristics of enterprises based on trends and labor market. Sixthly, the human resources with skilled and highly-qualified employees is one of the prerequisites from foreign investors when coming to Vietnam. To meet these requirements for shift of FDIs into Vietnam, the enterprises need to clearly state their specific requirements for human resources (quantity, quality of human resources byeach profession, each qualification) in the course of making investment in Vietnam.
7. INTERNATIONAL CONFERENCE PROCEEDINGS: GLOBAL FDI AND RESPONSES OF FDI ENTERPRISES IN VIETNAM IN THE NEW CONTEXT 895 Seventhly, building of a working environment with specific corporate cultures must be emphasized as the identity of that enterprise to attract talents and promote training towards strong development of the enterprise; Corporate culture must be deeply instilled in everyone and leaders and managers must be the pioneer. It is necessary to avoid the case where the employees lose their enthusiasm in working and the attractiveness from external labor market will induce employees to leave from the enterprise. Finally, it is required to equip a good vision to predict changes in the labor market, state policies on the labor industries, objective and subjective changes of production and business lines as well as competitive trends, thereby presenting countermeasures, especially in corporate governance and human resource affairs. CONCLUSION In the boom of industrial revolution 4.0, the competition in attracting FDIs is increasingly fierce, thus Vietnam determined to shift attraction from quantity to quality, focusing on high and environmentally friendly technology, and gradually shift from attracting foreign investment with the advantage of cheap labor force to competition through highly-qualified human resources. Therefore, in the national development strategy, human resources must be paid attention and facilitated to improve intellectual capacity, will and belief, so on. Highly- qualified human resources with reasonable quantity and structure who are rich in intelligence, will and aspiration with clearly enlightened revolutionary ideals, will be a source of attraction for FDI enterprises to invest more in Vietnam, thereby making our country basically become an industrial country towards modernization, meeting the requirements of the fourth industrial revolution today. Acknowledgements The work described in this paper was supported by Thai Nguyen University of Technology for a scientific project. REFERENCES 1. Dr. Lam Thuy Duong (2020): The role of foreign direct investment and solutions for economic development in Vietnam, Journal of Finance, April 18, 2021 2. Dr. Le Xuan Sang (2021): Attraction of foreign direct investment into Vietnam in a new context, Journal of Finance, February 13, 2021. 3. General Statistics Office (2019): Vietnam Statistical Yearbook 2019 4. Le Anh (2020): Looking back the situation of labor force and employment in 2019. Accessed at the Communist Party of Vietnam Online Newspaper: lao-dong-va-viec-lam-2019-548623.html. 5. Ministry of Planning and Investment (2020): Vietnam Enterprise White Paper 2020, Statistics Publisher 6. Ms Dang Thi Ngoc Anh, Ms. Nguyen Thi Thanh Tham, Ms. Phan Duy Hiep (2021): Improvement of human resources quality in FDI enterprises in the period of industrial revolution 4.0, Journal of Industry and Trade, March 22, 2021. 7. Ms. Tran Van Dung (2020): Attraction of FDIs into Vietnam and current issues, Journal of Finance, December 14, 2020.
8. 896 KỶ YẾU HỘI THẢO KHOA HỌC QUỐC TẾ FDI TOÀN CẦU VÀ ỨNG BIẾN CỦA DOANH NGHIỆP FDI TẠI VIỆT NAM TRONG BỐI CẢNH MỚI 8. Ngo Thuy Quynh (2019): Management of sustainable development in Vietnam, Journal of Science, Hung Vuong University, Vol. 2/2019 9. Pham Thi Hanh (2020): Development and improvement of human resource quality in the context of the Fourth Industrial Revolution, Communist Journal, February 21, 2021. 10. VCCI (2020): PCI Report 2019. Access at PCI Vietnam: dai-PCI/Bao-cao-PCI-2019.pdf