Vietnam's Labour Market in Transition

This report examines the employment structure and structural change (1986-1999) of Vietnam, discusses Vietnam's labour market regulations and examines how Vietnam's labour markets could become more efficient. Vietnam’s labour policies remain focused on control of state enterprises: who they employ, how many, and what they pay them. The Labour Code of 1995 saw a move to extend state worker privileges throughout the economy. This is a futile exercise to establish a welfare state in a country with minimal resources to support one. What it does do, however, is stifle competition and mobility in the labour market wherever it is implemented. State enterprise restructuring must include a fundamental shift in labour policies to be effective. State enterprise restructuring will create unemployment, but the numbers will be small in relation to Vietnam’s total workforce. Further, restructuring aimed at stimulating development of the private corporate sector would create jobs in excess of the numbers lost from Vietnam’s modest state enterprise sector. Without “change friendly” labour and other policies, Vietnam will remain trapped with an allocation of resources which grows less relevant by the day.