Managing Contracts and Severance in Vietnam

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Issue 28 • December 2016 •Vietnam Briefing
Minimum wages are also on the rise. Just this past
fall, Vietnam’s National Wage Council decided to
increase monthly minimum wages by 7.3 percent
on average in 2017. Depending on the zone of
work, monthly minimum wages range from VND
2.58 million (in Zone 4) to VND 3.75 million (in
Zone 1). Over the past decade, the average annual
increase in minimum wage was 15 percent. This
latest increase is one of the lowest increases in
years, as the country attempts to maintain its cost
advantages in the face of growing competition
from regional rivals.
Growing number
of skilled workers
After decades of solid growth, Vietnam is now in the
midst of shifting its economy into more advanced
terrain. There is a market transition occurring from
a rural, agrarian, and informal set of conditions
to an urban, manufacturing, and services-based
formal economy. A skilled workforce is central to
this transition.
Within the past two decades, Vietnam has invested
in education and now boasts a literacy rate of 95
percent. However, a shortage of workers equipped
with in-demand skills persists, particularly for skilled
blue-collar andmanagement positions.This shortage
is especially acute in four major job categories –
laborers, managers, engineers, and skilled manual
tradespeople. Employers in the following fields also
reported having difficulty in filling positions: mining
and construction, manufacturing, transportation and
utilities, wholesale and retail trade, services, finance,
insurance, and real estate.
However, Vietnam has made efforts to decrease
the skills gap and attract foreign direct investment
(FDI). In Q1 2016, the total number of skilled
Change in Vietnamese Employment* by Sector (2005-2015)
-1.3% -7.4% +60.7% +73.3% +87.6%
AGRICULTURE,
FORESTRY,
AND FISHING
MINING AND
QUARRYING MANUFACTURING CONSTRUCTION SELECT SERVICES
*Note: Growth based on quantity of workers (aged 15+) in given sector
Source: General Department of Statistics Vietnam
SkilledWorkers inVietnamby Level of Education (2016)
Education Level Workers (millions) Percentage of Vietnamese workforce*
Primary vocational 1.7 3.1
Secondary vocational 0.8 1.4
Prof-secondary school 2.1 3.7
Vocational college 0.2 0.3
Professional college 1.5 2.7
University and higher 4.9 9.1
Total 11.2 20.3
*Defined as those between 15 and 65 years of age
Source: General Department of Statistics Vietnam