A new front has opened in the US-China trade dispute, as companies shifting manufacturing to Vietnam engage in a fierce battle for skilled labor, aggravating an existing shortage and prompting calls for education reforms to address the problem.
Vietnam has emerged as one of the largest beneficiaries of the trade spat between Washington and Beijing.
Exports to the US rose 21.5 percent in the first eight months of this year, and several companies, including Google parent Alphabet Inc and Nintendo, have announced new plans to open facilities in the country.
Photo: Reuters
Hanoi’s trade deals, including its recently signed free-trade agreement with the EU, have also become a draw.
“Fresh, unskilled people are plentiful, but even basic sewing workers will need training for at least six months, so patience is the key,” said Jef Stokes of Maxport, a Vietnam-based garments manufacturer, highlighting a lack of reform in the education system as part of the problem.
“It’s adequate, but not graduating highly qualified candidates in enough volume,” Stokes said. “This is the choke point.”
Information technology workers, engineers and managers were already in tight supply, but additional demand from trade war refugees is increasing turnover among highly skilled workers, factory owners, consultants and recruitment firms said.
The lack of capacity should come as no surprise: Vietnam’s population is just 7 percent that of China’s; the nation still lacks investment in infrastructure.
Accelerating investment in the high-tech sector and companies re-considering their regional supply chains due to the trade war have re-ignited concerns about high-skill labor availability in Vietnam, said Michael Sieburg, of consultancy firm YCP Solidiance.
Only 12 percent of Vietnam’s 57.5 million-strong workforce are highly skilled, recruitment firm ManpowerGroup said.
This has created rising competition for talent among new investors, said Sieburg, who advises foreign companies looking to set up operations in Vietnam.
“I know that when companies are considering where to locate their facilities, they do review what other manufacturers are in the area and the associated risk of poaching,” he said.
Nguyen Quang Anh, a 28-year-old software developer from Hanoi said he was approached several times by headhunters before he even graduated.
Since leaving university, Anh has switched jobs four times, each time for at least a 50 percent pay rise.
“Because of the shortage, employers are willing to pay us at much higher rates,” Anh said. “If tech giants relocate to Vietnam as a result of the trade war, I’ll definitely apply for a position.”
When Vietnam’s biggest listed company, Vingroup, began its push into industrial manufacturing, it had to look elsewhere to fill top talent jobs.
At the launch of its foray into automobiles, Vinfast, at least five members of the founding leadership team were veterans from General Motors, including the CEO.
“Our foreign experts have helped train our Vietnamese staff,” Vingroup said in a statement. “This model has been applied among large Vietnamese companies in the face of rapid process of globalization.”
Much of the problem stems from a lack of educational reform, analysts said.
At secondary level, Vietnamese schools score highly in Program for International Student Assessment scores, an Organisation for Economic Co-operation and Development study that assesses the reading, mathematic and scientific skills of 15-year-olds around the world.
However, the results differ at higher levels.
About 28 percent of the 18-29 age group attend university in Vietnam, compared with 43 percent in Thailand and 48 percent in Malaysia who pursue higher education.
“Numerous studies show that educational curricula in Vietnam are outdated, teachers overwhelmed and underpaid, and graduates lack the job ready skills sought by the private sector,” said Adam Sitkoff, of the American Chamber of Commerce in Hanoi.
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