Vietnamese labor productivity at current prices has surged from VND70 million per employed person in 2011 to VND150.1 million in 2020. The labor productivity rate in 2020 was 2.1 times higher than that of 2011. In 2011-2020, labor productivity increased by VND8.9 million per worker.

The 2022 National Statistical Yearbook released by the General Statistics Office (GSO) showed that in 2011, when Vietnam was seriously impacted by Covid-19, labor productivity soared from VND150.1 million per worker in 2020 to VND172.8 million, an increase of VND22.7 million.

In 2022, productivity surged to VND188 million, up VND15.2 million over the year before. 

The surprising increases in 2021-2022, as explained by the former GSO director general Nguyen Bich Lam, originated from the unusual calculation method applied by GSO. The agency excluded 4.4 million workers who made products for their consumption in the field of agriculture, forestry and seafood.

Meanwhile, the value of the products created by self-production for consumption was counted when calculating GDP to arrive at the labor productivity figure for the national economy. The number of workers making products and consuming products themselves accounted for 8.2 percent of working employees in the national economy.

Labor productivity has been increasing significantly in recent years.

In 2011-2020, the productivity increase at current prices was 5.29 percent, of which the figures were 4.53 percent in 2011-2015 and 6.05 percent in 2016-2020, which exceeded the target set in Resolution 05-NQ/TW (increase must be higher than 5.5 percent).

In 2021, the productivity growth rate was just 4.6 percent compared with 2020 (the figure would be 2.9 percent only if counting the workers producing and consuming products themselves) because the Vietnam’s economy was damaged by the pandemic. The GDP growth rate was only 2.56 percent in 2021, while workers were returning to work after lockdown time.

Vietnam obtained a high GDP growth rate of 8.2 percent in 2022, but productivity just increased by 4.7 percent. The average productivity increased by 4.65 percent in 2021-2022, far below the targeted 6.5 percent per annum growth rate set in the 10-year socio-economic development plan.

This means that in order to obtain the goals for 2021-2025, Vietnam will need to have a productivity growth rate of 7.8 percent in 2023-2025.

Lam commented that productivity has increased, but the increase has been slow, with no breakthrough as expected. This poses a challenge, because productivity determines the competitiveness of the economy

Left behind

If calculating productivity based on the 2017 PPP (purchasing power parity), Vietnam’s labor productivity in 2011-2022 would grow 5.3 percent per annum, higher than Malaysia’s (1.4 percent per annum), Thailand’s (1.9 percent), Singapore’s (2.2 percent), Indonesia (2.8 percent) and the Philippines (3 percent).

Thanks to productivity improvement, Vietnam has narrowed the gap between it and other regional countries with higher development levels.

While Singaporean, Malaysian, Thai and Indonesian productivity in 2022 was 12.4 times, 4.3, 2.1 and 1.7 times higher, respectively, than Vietnam, the gap was narrowed to 8.8. 2.8, 1.5 and 1.3 times by 2022.

If calculating productivity in accordance with 2017 PPP, Vietnam’s productivity in 2022 was estimated to reach $20.4 trillion, just equal to 11.4 percent of Singapore’s, 35.4 percent of Malaysia’s, 64.8 percent of Thailand’s, 79 percent of Indonesia’s and 94.5 percent of the Philippines, and the same as Laos’.

The figures were much higher compared with developed countries: 15.4 percent of the US, 19.1 percent of France, 21.6 percent of the UK, 24.7 percent of South Korea, 26.3 percent of Japan and 59 percent of China.

According to Lam, the figures show that Vietnam is facing great challenges to catch up with developed economies in terms of labor productivity.

If calculating based on 2017 PPP, Vietnam’s labor productivity per working hour in 2021 was $10.2, a relatively low level compared with other ASEAN countries ($74.2 for Singapore, $25.6 for Malaysia, and $15.1 per Thailand), and it was just higher than the $10.1 dollar of the Philippines.

The gaps were even wider compared with developed countries ($70.7 for the US, $58.5 for France, $51.4 for the UK, $41.5 for South Korea, $39.6 for Japan and $13.5 for China).

Manh Ha