GROUP REPORT

INTRODUCTION
MACROECONOMICS
Tutor: Nguyn Thanh Triu
Class: Monday afternoon
Date Submitted: 20/4/2015

Student Name Student ID

Hunh Th Liu BABAUH13217
Phm Quang Minh BABAIU14152
Nguyn Xun Tin BABAIU14281

CONTENT
Employment overview.3
Employment structure3
Unemployment rate over years5
Causes of unemployment..6
Workers decision6
Lack of high-qualified employment..7
Governments policies...8
Effects of unemployment..9
Solutions..9
References...12

1.Employment Overview
Employment structure
Figure 11: shared of employment by sector 1990-2009

Percentage of employment in agricultural sector decreased from 1990 to 2009. In 1990,

the shared of employment in agricultural sector stood at 72% and remained nearly
stable at that point until 1998. After that, it became drop gradually to 54% in 2009. By
contrast, the shared of employment in service sector was only about 16% but almost
doubled to nearly 26% by 2006 and nearly remained stable at that point until 2009. The
shared of industrial sector leveled off at nearly 10% from 1990 to 1998. Then, it started
to increase to 20% by 2008 and stabilize at that point until 2009.
In overall, the shared of employment in agricultural sector took the largest percentage.
However, it is predicted that percentage of employment in agricultural sector will drop
over next years. Instead, industrial sector and services sector is predicted to contribute
more in shared of employment.

1 [source] Industrialization, economic and employment structure changes in Vietnam during economic transition
http://mpra.ub.uni-muenchen.de/id/eprint/26996

Table2: annual employment growth rate by sector (%)

During the period 1990-2009, data on employment growth by sector from over the last
two decades shows that overall employment growth rate on average remained stable at
around 2.34%, in which industrial sector accounted for 4.8% per year and service sector
accounted for 5.91% per year. Agricultural sectors growth rate is lowest, with 0.65%,
compared to that of agricultural and industrial sector.
Population in urban accounted for 30.6% and rural accounted for 69.4%. It means that
almost labor force concentrate in rural areas. Males take 49.5% while females take
50.5%. So gender structure distribute relatively balanced between two of genders.
Among people those who belong to group 15 of age and over, the number of people
who did not graduate primary school and illiterate accounted for 17.27%. There is the
inequality in level of education between males and females, urban and rural areas. On
average, Vietnams population has increased nearly 1 million people. This issue results
in tremendous problems in creating jobs for labors.

Unemployment rate over years

Figure 23: unemployment rate (%) in Vietnam 1990-2017
2 [source] Industrialization, economic and employment structure changes in Vietnam during economic transition
http://mpra.ub.uni-muenchen.de/id/eprint/26996

Unemployment rate of Vietnam stood at peak with 12% of total labor force in 1990. After
decreasing to nearly 10% in 1991, unemployment rate increased mildly to 11% in 1992,
followed by 3 years decreasing and stood at 11% in 1995. After that, unemployment
suddenly dropped significantly to nearly 6% and remained stable for 3 years until 1998.
Then, after growing by 1% in 1999, unemployment again decreased gradually to 4% in
2008. The unemployment continued to remain stable to 2014. The prediction is that the
unemployment will fluctuate between 4% and 5%
Many surveys and statistics showed that employment prospects in Vietnam were
positive. To be specific, the survey of employment in the fourth quarter 2013 which is
conducted by the Vietnam General Department of Statistics and ILO, showed that the
number of jobs increased by 1.7% in the 4th quarter 2013 compared to the same period
last year. The fastest job growth belonged to the foreign-invested sector which
accounted for 4.8% more than 2012. Most of the new jobs were created in the service,

3 the Economic Statistics Database service provided by EconomyWatch.com

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industry and construction sectors. The number of jobs grew 1.7%, mainly in the service,
industry and construction sectors
Although the unemployment rate rose mildly from 1.81% to 1.9% over the same period
of 2012, Vietnam is still among the countries with the lowest unemployment rates
across the globe. This information is provided by the International Labor Organization
(ILO) on the occasion of the publication of the Global Employment Trends 2014.
The world's average Unemployment Rate (% of Labor Force) value is 4.62 %; Vietnam
is 0.20 less than the average. This makes Vietnam No. 84 in world rankings according
to Unemployment Rate (% of Labor Force) in year 2014.

2. CAUSES OF UNEMPLOYMENT
There are many causes that lead to unemployment and in this paper three main causes
will be mentioned. They are workers decision, the lack of high-qualified employment
and government policy. These will be discuss below

Workers decision
It is a common problem faced by many companies and firms annually. This problem is
that after the Tet Holiday every year, a huge amount of workers refuse to get back to
work but stay at their hometown and enjoy the holiday for a whole month, while others
are unsatisfied with current working condition and looking for a new job where they
would get higher salary, benefit, etc. This problem gives not only companies and firms a
real headache but also the ones who work on policies for the government. Beside the
Tet holiday, many workers quit their job during the year for many reasons, most of them

ask for a better working condition and higher paymentsThose workers generally do
not find a new job soon because the companies usually find ways to recruit new
workers after Tet holiday and during the year most companies have to keep the
production line secure so they would take care of amount of workers carefully.

Lack of high-qualified employment

Vietnam has the golden population which means there are more people in the labor
force than not in the labor force. But according to Associate Professor Nguyen Dinh Cu (
from the National Economy University ), we are having the golden population but not
having the golden labor force . That mean although we having many people in the labor
force, most of them are unskilled workers so they need to be trained to obtain
necessary skills. Training will cost companies and firm a lot of money time. Another
problem is that although there are many school that teach technical skills for unskilled
workers, the teaching program doesnt really fit well with the required standard of the
labor market. It means if a company recruits these workers, they still have to train them
again and it leads to waste of money and time for the workers, the company and the
government. According to a report from ILO ( International Labor Organization), every
for 4 out of 5 FDI firms in Vietnam are planning to expand their production and the
production line of many others are being moved from China to Southeast Asia, this is a
huge chance but we are throw away it because the quality of workers now does not fit
the requirements.

Governments policies
Many policies are now somehow outdated and do not work well in the current
environment. Vietnams economy is changing, becoming more open to the world and
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tries to associate with other economies. However, there are some barriers that keep our
economics from development. Our policies needed to change to fit in the world that
becoming globalized. Those policies including the way the government controls the
unemployment rate or the way that government encourage firms, especially FDI firms,
to build new factories and expand production. During the recent years there are some
improvements in policies, however, they are not enough. For example, the government
tries to open school to teach skills for people but these schools usually are not efficient,
or the policies to encourage firms to expand products to create more jobs but there are
still many procedures that make firms difficult to do so.
To sum up, the three cause above are not all of the cause but these are the most wellknown and obvious ones that need a solution as soon as possible.

Effects of unemployment
Unemployment leads to many serious problems. In this paper, we just mention briefly
the effects on Vietnams economy and society
The first consequence is that unemployment could lead to the increase in crime as
people who are unemployed try to find a way to make a living. As we can easily see,
where the unemployment rate is high, the crimes rate is also high, too. It can also affect
the environment as well because people try to do everything they can from fishing with
electricity or cutting down tree for wood or for farming land to earn money illegally.
Secondly, the more unemployment rate is high, the more the productivity of the whole
economy is low. As a result, a plenty of resource including human resource and even
natural resource are not used effectively. When so many people are unemployed, the
GDP will fall significantly and affect directly the economy of the whole country.
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3.SOLUTION
GOVERNMENTS POLICIES

According to the draft law on employment, due to

the economic

recession, rising unemployment, the project of using state funds will be

made for temporary jobs for people in a short time.
The draft insists that the temporary jobs are created through the implementation of
projects funded state programs associated with the local social economy. Hence, the
program must be hosted directly by the government to ensure jobs for the unemployed
since this program takes place only in the given period.
Another policy to support unemployed workers was mentioned in the draft Employment
preferential credit policy. The State shall execute this policy in order to support job
creation, maintain and expand the work of the national fund for employment and other
sources of credit.
As reported by the Bank for Social Policies, up to 06.30.2013, the total funds of the
National Fund for employment reached 5770 billion, of which the national fund for the
central employment reached 4333 billion, local is 1,437 billion. Furthermore, Deputy
Minister of labor, Invalids and Social Affairs Nguyen Thanh Hoa claimed that there are
many service centers work at the moment. The center of the Department of Labor
Invalids and Social Affairs already has 64, not including the center of the political system
and social center of the Defense Ministry.
However, most of these service centers were not operated efficiently. Service centers in
rural area have faced difficulties in reaching workers. Also the cost to maintain the
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programs is quite expensive especially in the

area. Since this is a program for

temporary jobs only, relying too much is not an option for long-run stability of the whole
economy. In many developed countries, such as in the US, when the economic meets
difficulties, the Government will give people time is extended unemployment benefit
time. At the same time they will look at a number of funds to change profession, create
new jobs ... also ordering businesses and organizations to create new jobs for workers.
For example, opening a new road to use more labor ... Any agency that has the ability,
not necessarily the company is entitled to a new state policy. In the US, when they want
to create high-tech workers, the Government will invest in education and human
resources in that area ... By this way, jobs will be created by both education and the
background economic future.

Lack of high-qualified employment

o A new educating method must be made to solve unemployment
among fresh graduated student Rector of FPT university

Nowadays, many universities and colleges are creating more bachelor than ever but the
quantity does not comes with quality. Questions have been raising about the outcome of
these universities and colleges: Why firms does not have enough employees when
there are so many unemployed bachelors?
The biggest problem today is the technological changes in life, occurs with very fast
speed and most universities are not able keep up with. Old-model university become
unsuitable, a new model is required to meet social needs. Which model is still not really
clear but it definitely needs a lot of applications in information technology, towards skills
training innovative and adapting for the study.

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The recent survey indicates two problems: 23% of employers reported that the skills
that workers have been trained to be different from the skills that the market needs;
35% recognition of the skills training new workers are not appropriate to the needs of
businesses. Only 26% of firms with the size of less than 10 employees have difficulties
in recruiting skilled workers, while the figure in the large size enterprise of 259
employees is 85%. This result reflects the fact that: The larger the enterprise, difficulties
in recruiting workers with the skills they need is higher. It implies that for long-run
economic growth, skilled workers are the crucial factor for the futures economy.

Workers decision
o Since 1.1.2015, many decrees and decisions about adjusting the
minimum wage of the Government of Prime Minister began to take
effect.

Under the new provisions of Decree 103/2014 / ND-CP, the employees working in
enterprises, cooperatives, cooperative groups, farms, households, individuals and
agencies, organizations hiring employees under labor contract ... will be entitled to a
minimum wage increase from 250,000 to 400,000 per / month, depend on each
individual.
Tran Anh Tuan, deputy director of the Center forecasting human resource needs and
labor market information in Ho Chi Minh City said that the fact that many businesses in
Ho Chi Minh City already paid a higher salary level minimum wage. With this
adjustment, peoples living standard does not improve much but some
On the other hand, firms are struggling due to this policy. It is very hard for the small
and medium firms to balance inputs and outputs.

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4.Reference:
TS. Goran O. Hultin - Th.s Nguyn Huyn L, Hong Thy, m Quang Minh
http://mpra.ub.uni-muenchen.de/id/eprint/26996
EconomyWatch.com

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