. Scope and Limitations of the Study

THE QUEST FOR SKILLED LABOR FOR SUSTAINABLE GROWTH IN VIETNAM
by
Le Tien Truong
A research study submitted in partial fulfillment of the requirements for the degree of Master of
Business Administration.
Examination Committee Dr. Truong Quang (Chairman)
Dr. Fredric. W. Swierczek
Dr. Hans Stoessel
Nationality Vietnamese
Previous Degree Bachelor of Mechanical engineering
Hanoi University of Technology
Hanoi, Vietnam
Scholarship Donor Government of Switzerland
Asian Institute of Technology
School of Management
Bangkok, Thailand
April 1997
Chapter 1
Introduction
1. Rationale
The renovation policy (doi moi), starting in 1986, has had a profound and widespread
impact on all aspects of the socio- economic life of Vietnam. The country has maintained an
annual GDP growth rate of over 8% since 1992, and is moving towards achieving the goal of
doubling GDP per capita of about US$200 to day by the end of this decade. Increasing
industrial production has brought a period of recession to an end and has created steady
momentum for further growth. Agricultural production has experienced high growth rates,
which in turn has ensured food sufficiency and significant surplus for export. External
economic relations has been stronger. Society has becomes more dynamic, and started
enjoying improved living conditions. Activities in family planning and population have made
considerable progress. Public health has received increased attention to better serves the
interest of the general public.

However, to sustain this rate of growth, Vietnam is confronting at the same time, with
numerous constraints and difficulties due to serious shortages of a kind of skilled labor that is
able to handle all types of work required in developed industries (Truong Quang, 1996). One
of the most critical difficulties rests in vocational training field in which trained labor accounts
only for a low percentage of the Vietnamese labor force and total population, 10% and 5.53%
respectively. In general, the quality of education and training is still low with regards to
scientific knowledge, managerial skills and creative thinking (Truong Quang, 1996). There is a
serious mismatch between the quantity of educated people and the quality required for the
country development. This situation applies equally both for the formal education as well as
vocational training of the country.
In particular relatively large number of vocational school graduates are unemployed,
while skilled labor is highly needed, and in short of supply. What are the causes of this
paradoxical problem? Are the skills acquired at school of no use to the society? Is the
apparatus of training system inefficiency?
So far, there has been no research undertaken to explain the situation and to
eventually provide a solution for these problems.
It remains to be a difficult and challenging task for the functions concerned to deal with
this problem.
2. Statement of the problem
How to assessment the demand of skilled labor and how to solve the gap between demand
and supply of skilled labor for sustainable economic growth in Vietnam.
3. Objectives of the Study
2
The objectives of the study are:
3.1. To assess the demand of skilled labor in Vietnam
3.2. To identify the gap between supply and demand of labor.
3.3. To identify the factors related to the vocational training curriculum that affects the quality,
skills, knowledge, and abilities of participants.
3.4. To make some recommendations to improve the quality of participant in order to meet
the market demand.

4. Scope and Limitations of the Study
Hanoi and Haiphong are two main cities in north Vietnam with significant potentials for
development and concentrates large labor force with high level of education. This region is
considered the economic hub of the northern part of Vietnam, with a high concentration many
local and foreign socio-economic projects. Therefore, the requirement of labor is very large,
especially of skilled, and specialized type of labor.
Owing to the time constraint, the study was focused only on the aspect of skilled labor
in Vietnam. In order to assess quality of participants from vocational schools in Vietnam,
interviews were mainly conducted in Hanoi, Haiphong. The scope of the interviews in pratically
limited to 2 Education and Training Departments of the MOET, and vocational schools located
in the region, and selected companies that agreed to participate in the project. The interviews
were often conducted with the Human Resource Department and other heads of departments.
5. Research Frame work
The frame work is developed in three stages:
See flow chart in later page.
6. Research methodology
Data are collected by direct interviews and secondary sources.
• Guideline for direct interview.
1. With the Education and Training Departments.
- Human resource development policy
- The effectiveness of education and training management .
2. With the Vocational Schools
- Number of students participants per year.
- Evaluated the quality of training, and curriculum of training.
3. With the companies:
3
- The requirement of labor (type, skills, etc...).
- Number of labor required from now to 2000
- Evaluation the quality of skilled labor. The number of participants graduated from
vocational schools (type,%)

- The need for re-training
- The need for change in vocational school to be more adaptation to the market requirement
• A three - phases methodology has been used as follows:
- Phase one: Collection of secondary data about the overall situation of education system. The
policies of human resource development, the quality of vocational training. The source are
MOET, official reports, newspapers, and magazines.
- Phase two: Interviews at the MOET, vocational schools and companies.
- Phase three: Analysis of data and recommendations.
7. Organization of the Study
- Chapter 1: Introduction
- Chapter 2: Literature Review
- Chapter 3: Human Resource Development Strategy in Vietnam
- Chapter 4: Development in education and training and problems to be addressed
- Chapter 5: The System of Middle Technical Schools and Vocational Schools in Vietnam
- Chapter 6: Findings and Discussion of the Survey.
- Chapter 7: Recommendations.
4
Chapter 2
Literature Review
1. The Contribution of Education and Training to Economic Growth
The concept that investment in human capital promotes economic growth actually
dates back to the time of Adam Smith and the early classical economists, who emphasized
the importance of investing in human skills. In the 1960s, Schultz (1961) and Denison (1962)
showed that education contributes directly to the growth of national income by improving the
skills and productive capacities of the labor force. This important finding led to a flood of
studies on the economic value of investment in education. Research in this area slowed in the
1970s, however, because of a lack of economic growth and a certain ambivalence about the
role of education in development. Recently, the World Bank has expressed renewed interest in
human development, particularly education, as is reflected in its 1980 World Development
Report.

The early attempts to measure the contribution of education to economic growth were
based either on the growth accounting approach, used by Denison and others, or on the rate
of return to human capital, an approach adopted by Schultz and others. Growth accounting is
based on the concept of an aggregate production function, which links output (Y) to the input
of physical capital (K) and labor (L). The simple form of production function, assumed in many
of these studies, is a linearly homogenous production function: Y= F(K,L).
If the economic growth is due entirely to increases in physical capital and labor , then
it should be possible to desegregate the rate of growth of output into its capital and labor
components. In this respect, Denison (1962) calculated that between 1930 and 1960, for
example, almost a quarter (23 percent) of the rate of growth output in the United States was
due to the increased education of the labor force.
Schultz’s (1963) method of measuring the contribution of education to economic
growth (that is, in terms of the rate of return to human capital, which he then compared with
the rate of return to physical capital) led him to suggest, as Denison had, that a substantial
proportion of the rate of growth of output in the United States was due to investment in
education. This method has also been used to estimate the contribution of education to
economic growth in developing countries.
The overall conclusion is clear: increase education of the labor force appears to
explain a substantial part of the grow of output in both developed and developing countries
since about 1950. However, these estimates rest on a wide variety of theoretical assumptions
that have been challenged. In particular, it is assumed that the earning of different group of
workers is a measure of their contribution to output; that the higher earning of educated
workers is a measure of their increased productivity, and therefore of their contribution to
economic growth: and that the relationship between inputs and output is a fairly simple one,
which can be analyzed in terms of aggregate production function.
Recent attempts to use econometric techniques to relate inputs to output, however,
have again demonstrated the link between education and growth of output. Recent research
for the World bank, for example, provides evidence of the link between various aspects of
human resource development and economic growth. One such study (Hicks, 1980) examined
5

the relationship between growth and literacy, as a measure of educational development, a life
expectancy in 83 developing countries during the period 1960-1977 and found that the 12
developing countries with the faster growth rate had well above average levels of literacy and
life expectancy. According to these results, not only do literacy levels rise with the level of
national income, but these 12 countries have higher levels of literacy and life of expectancy
than would be predicted for countries of that income level on the basis of the regression
between literacy and per capital income. In the case of Korea and Thailand, the considerable
difference between actual and “ expected” literacy levels suggests that rapidly growing
countries have well developed human resources. It does not, of course, prove the opposite:
that countries with high levels of human resource development will thereby achieve faster
economic growth.
Further analysis by Hicks confirms the existence of a relationship between economic
growth and human resource development, as measured by literacy and life expectancy. Of
course correlation does not prove causation. Its objection automatically weakens any
argument that uses regression analysis to prove that educational development causes
economic growth. To allow for he fact that education, and other indicators of human resource
development, are both the result of an cause of economic development, Wheeler (1980)
devised a simultaneous model, which apply to data for 88 developing countries. This
simultaneous model, takes into accent the interactions, over time, between growth and human
resource development., and tries to separate cause and effect. Test with is model suggests
that education, health , and nuitrion contributed to growth of output not only directly, but also
indirectly, by increasing the rate of investment and lowering the birth rate. Wheeler found that
on the average an increase in the literacy rate from 20 to 30 percent causes national income
(GDP) to increase by 8-16 percent. After examining data for 66 developing countries in a
similar analysis, Marris (1982) concluded not only that education strongly affects economic
growth, but that general investment has less effect on growth rates when it is not supported by
educational investment.
Other research, too, has demonstrated that investment in education complements
investment in physical capital. For example, World Bank research on the links between
education and the productivity of farmer (Lau 1982) has shown that investment in improved

seeds, irrigation, and fertilizes is more productive, in terms of increased crop yields, when
farmers have four years of primary education rather than none. Thus it appears that previous
attempts to measure the contribution of education to economic growth may have
underestimated the effects of education by ignoring its indirect effects. There are other
grounds, too, for thinking that previous attempts to measure the economic contribution of
education may have underestimated the effect of education on growth. There is ample
evidence that education makes both a direct an indirect contribution to economic growth, but
the chicken-and-egg relationship between education and growth can never be fully
established. Nonetheless, strong support can be found for the notion that the most likely
causal link is from education to economic growth, rather than the other way around. The
question of whether it is more profitable to invest in men or machines cannot be answered
simply. Some evidence (see figure 2-1) suggest that in developing countries the average of
return to human capital is higher than the rate of return to physical capital, whereas in more
developed countries, the reverse is true. It is also true, however, as already been pointed out,
that investment in education often complements investment in physical capital and makes it
more productive.
6
15
Annual income per capita.
Source: Psacharoploulos (1973)
Figure 2-1. The Social Rate of Return to Physical and Human Capital, by Level of Economic
Development
Although none of this research shows which type or levels of education are likely to
have the greatest impact on productivity or growth, it does show that spending on education
should be regarded as productive investment, rather than pure consumption. If governments
wish to maximize growth, however they need to know how educational investment compares
with other forms of investment- particularly investment in physical capital and social
infrastructure - and which forms educational investment offer the highest returns. In other
words, educational investment must be evaluated in terms of opportunity costs and the
relationship between cost and expected benefits.

2. Vocational training
Vocational training means training which impacts the knowledge and skills necessary for a
vocation.(D.Lockwood,1986)
In the recommendation concerning vocational training issued in 1962, the ILO used
‘vocational training’ in very broad context, that is, vocational training as preparation or training
for employments or promotion in all fields of economic activity and , as training not for its own
sake, but one which takes into sufficient consideration employment opportunities as the
means to maximum use and development of human resources for both personal and social
benefit.
The contents of vocational training should not overlap of formal education, although the
two are conducted in close relation with one another. Formal education gives priority to basic
knowledge and understanding and also to the formation of character. Vocational training,
however attaches importance to the teaching of technical skills and knowledge required for a
specific vocation, through actual experience. It is of course important that these are achieved
through a systematic and organized process of training.
Vocational training may have some points in common with vocational education. To
avoid confusion between the two, their differences in purpose and procedure should be taken
into consideration while keeping in mind the close relationship between them.
7
10
5
<$1,000
> $1,000
Physical capital
Human capital
3. Definitions of terms
3.1. Skill
Skill is the transfer of knowledge or perception into action. Skill is practical knowledge
combine with ability. A skill can be improved through practice or training.(Lockwood,1986)
3.2 Need and Want

The first step in any training needs analysis is to differentiate between training wants
and training needs.(D.Lockwood, 1986)
Nowack (1991) discriminates theses two concepts as follows:
- A true training need exists when specific job tasks or behaviors are important and an
employee’s proficiency in them is low.
- A training want may arise when specific job tasks or behaviors are not important and an
employee’s proficiency in them is low.
Training need assessment aims at uncovering an employee’s true training needs and weeding
out training wants. Employees often want training in specific areas that are irrelevant to the job
or inconsistent with organizational objectives.
Four definition of needs
Brinkerhoff (1986) extracts four definitions of need from Stufflebeam’s study
(Stufflebeam, 1977) and indicates that deferent organization contexts an situations will call to
different approaches of needs, and very often, any situation will benefit from multiple needs
analysis perspective. The four definitions are as follows:
1. Discrepancy : This is defined different between an ideal normative, or expected level of
performance, and an actual level of performance. Use of this definition allows for measurable,
precise, and specific need identification, but use of discrepancy definition requires
measurability and previously established expectation level.
2. Democratic : A “ democratic” need, what most people prefer, select or otherwise “ vote” for
is determined by majority rule. Democratic need definition can confuse wants with needs.
Nevertheless, this definition builds consensus.
3. Diagnostic: Diagnostic needs are defined through research and casual analysis. When A
contribute to the achievement of B, then A is needed for B. This definition can help discover
true needs. Furthermore, it introduces the concept of meet and unmet needs. For example, we
cannot completely delete stress while working. The need is, then, to maintain the current low
stress level. This definition allows “ strength” analysis and avoids the trap of need analysis that
searches only for deficits
4. Analytic : Analytic needs are discovered by intuition, insight expert consideration, or even
enlightenment. Analytic needs lead to new level of performance and even allow assessment to

virtuosity because they are not tied by definition to previously set standards, majority opinion,
8
or established knowledge. A weakness of this definition is, however, its dependence on
individual (or small group) expertise.
In reality, surveys of need use the work “ need” as an expression of preference and demand
and not an observable discrepancy in performance produced by lack of skill (Swierczek,
1985). But from an organization perspective, the HRD function should operate and be guide by
policy that encourage the use of all needs definition, and does not preclude the consideration
of any of them.
3.3.Need assessment for training
Why need assessment?
Fierce competition among firms is forcing managers into increasingly complex roles.
They have the burgeoning responsibility for effectiveness and efficiency, sales and research,
profits and growth, competition, government regulations and future markets and services. The
complicated demands being placed on managers have propelled managerial needs
assessment to the forefront of organizational profiles.(Bierkholff,1986)
Many companies allocate large sums of money to training and development. IBM, for
example, spends more than one half billion dollars per year educating and training workers.
Some money goes to train 10,000 workers for new jobs, other expenditures update technical
and scientific workers. Still other outlays prepare workers and managers for future challenges.
If IBM is to get maximum benefit for this staggering expenditure, then efforts must concentrate
on the people and the situations that benefit the most. To decide what training and
development is needed. IBM’s trainers first assess organizational and individual needs. (Davis,
1981).
Need assessment diagnoses problem and future challenges to be met through training
and development. For example, changes in external environment may present an organization
with new challenges. To respond effectively, employees may need training to deal with these
changes.
Ludeman (1991), tried to measure skill for identifying training need. In addition to
improving productivity, a well developed skills assessment program can help measure and

demonstrate the training need.
There is only one concrete way to know, if the training programs are actually making a
difference pre- and post - management of the skills you are teaching, say Nathan and
Stanleigh (1991). they recommend comparing base line performance data with post- training
performance data to know, whether a training program really improved employee
performance.
Parry (1990), emphasizes the importance of providing trainers with feedback about
learners who use job skills. Without feedback it is impossible to know how to revise training
programs for maximum skill development.
Customized skills assessments meet training needs. Questions can be developed so
that each category of skills aligns with a training module. The pre- training feedback is
provided as part of the program and helps focus employees on those are they need to
improve. Six months later, a post training assessment let them know that their efforts to
improve worked.
9
Knowing ahead of time, that they will receive post- training feedback increases
employees’ motivation to implement their development plans and put to work the new skills
they learned in the training program.
Cohen (1990), found a significant correlation between learning and goal setting in the
training process. Pre- training assessment make it easy for participants to see the areas in
which they need to improve the help them set appropriate goals.
Ludeman (1991) uses five assessment stages for identifying training need based on
customized skills. He tries to measure skill and according to the rating criteria, skill
assessments accelerate people’s learning, job performance and professional development by
offering reliable feedback necessary for continuous improvement in addition to improving
productivity. A well- developed skills assessment program can help you measure and
demonstrate the worth of your human resource department.
People must know, what are most critical to their performance and how much, if at all,
they need to improve. Customized skills assessment is used in today’s computer technology
to meet the need for performance that could be more aptly named “continuos people’s

improvement”
Mirabile (1991) emphasized a simple approach to skill assessment for training need.
Employees skills assessment can identify the logical, relevant developmental needs of a
company’s work force. No single approach will work in all situations for all firms. But some
kinds of skills assessments is integral to the survival of every organization.
Various developmental resources exist. Each attempts to identify employee’s primary
developmental requirements in the context of their organizations. Ultimately, these resources
may be reduced to set of tools and processes for gathering specific types of information.
Developing the method of assessment.(Swierczek, 1985)
Answers to the following questions can provide the guidelines for the managerial
needs assessment strategy. These question can be used whether the assessment is
conducted internally or by an external consultant.
• What mechanisms are currently in place to disclose business problems?
• Does documentation exist from previous need’s assessments?
• What department within the organization will be involved in the needs’
assessment process?
• Which employees will be involved in the process?
• What budgeted amount is available to pay for costs incurred during the needs
assessment process?
• What time frame does the needs’ assessments have to be conducted within?
• What is the relationship of needs’ assessments to the organization’s overall
strategic plans and the strategic plans of its departments?
After all these strategic questions have been answered, the information can be
translated into a formal needs’ assessment plan: (1) Establishing the goals and objectives of
the needs’ assessment; (2) Identify specific research questions that need to be answered; (3)
Examine time and cost constrains; (4) Consider various sampling strategies; and (5) Review
data collection and analysis techniques.
10
Following are several methods that can be effectively applied to an assessment.
(Swierczek,1985)

1. Advisory Committees: Committees are established to identify training needs to determine
whether the problem might be solved via training or in a different manner, and to prioritize the
needs. The purpose is to provide advice only, not to make decisions. An important side benefit
of the committee approach is generation of enthusiasm from is members for program
participation.
2. Assessment Center: the assessment centers techniques usually takes several days.
Participants engage in variety task, such as in a basket exercise, decision simulations, case
analysis, psychological test, and group discussion. Trainers observe and assess candidate’s
behavior, report their impressions in detail and combine their appraisals into a formal report.
Two kinds of conclusions typically are generated, dealing with a person’s perceived
profitability and suggestions for further development
3. Attitude survey: An attitude survey is an organization poll soliciting managers’ feelings about
a range of organizational and work-related issues. Such a survey can have open- ended
questions with narrative response, or structural questions with more objectives responses.
Because the topics covered are usually general, the data gathered are more useful for
indicating general levels of satisfaction than for generating valid conclusions regarding specific
training needs.
4. Group discussion: this technique involves a series of meetings with managers to crystallize
specific problems, analyze their probable causes, and identify areas in which training could be
of value. Because of its limited structure, this technique is best for primary needs’ analysis or
where more rigorous analytical approaches are not feasible.
5. Interviews: Some trainees individually interview managers to obtain their perceptions of
work problems and are in which they feel they need training. Interviews offer high participation
involvement and capacity to tailor the training solutions more directly towards individuals.
However, the technique is quite costly in terms of the trainer’s time.
6. Behavioral observation: Direct observation of behavior can be done with work tasks of
simulated exercises, and can be conducted by either the trainer or other supervisory
personnel. These methods can be time consuming, costly, and too passive. However, it is
beneficial in its direct focus on job skills and behaviors.
3.4. The Roles of Skill Training

3.4.1. Objectives of training
Dalton and Cosier emphasize several traditional objectives in training programs. They
are Development of skills, Orientation of Skills, and Socialization on Organizational Values.
Development of skills aims at reasonable training of employees so that their skills, at
any level, can be sufficient to meet the minimum requirements of the position. If they cannot
perform this fundamental skill well, it is unlikely that they can behave extraordinarily at some
instances in innovative orientation.
11
But training encompasses a good deal more than providing skills. Orientation of skills
training helps employees figure out the process in the development of their career when they
handle a function in the organization. If there are no skills orientations, employees can develop
their own skills which may not fit with the process used in the future. It is difficult for them to
change their behavior or improve skills at that time.
Socialization to organizational values is another objective that maybe meet by training.
Every employee, no matter how modest their current position, must be aware of these values
presumably through some form of training.
3.3.2. Education and Skill training
Training is an attempt to compress experience. We want to take the knowledge and
skills that competent managers through trial and error over time and compress that learning
into few months (Macher, 1984).
The first stage of training an employee receives is from school. But the responsibility
for building a quality workforce does not end with the school. However, school must provide
well- designed preparation for future workforce.
Kearn writes in his book Winning the Brain Race : education’s goal should be to
nurture, develop, and encourage human intelligence that produces wealth- not property, not
machines, or physical plan... The simple truth is that we can’t have a world-class economy
without world- class workfoce, from senior scientist to stockroom clerks. And we cannot have
world- class schools. ...No companies, no organization can be better than its employees... If
wealth was once measured in gold, silver, and precious stones, it is now measured in what we
know.

People can fulfill their management development in a training session, whether it is
on-the-job training or formal training course. Training completes and extends skills
development after education in schools.
3.3.3. Business and Training
Smith (1992) clarified the close relationship between business strategy and training
orientation of organizations: Like strategic planners conducting environmental scanning,
program developers should identify trends and other factors that will shape a business’s future
and examine their implications. Strategic planners look at the needs of market segments; the
program developers evaluate the needs of executives and middle managers. They imitate the
methodology of strategic planners, but also give input on a major corporate asset- the
strengths and the needs of the top managers.
The size and complexity of business operations today have made training
indispensable in most companies. This trend results in a wide perspective in training. Bedi
(1991) states that no longer focusing narrowly on topics such as accountancy, salesmanship,
or production, modern training program aims at grooming all- round executives by ranging
across many fields of expertise. They focus not only on the company’s current needs, but on
the challenges likely to arise as a result of growth and diversification.
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3.5 Types of Training
A training course can serve as “ general management objectives” or solution- oriented
objectives. General Management Training objectives usually are in human relation terms that
have direct connection to the participating manager’s jobs. Solution- oriented training is aimed
at solving a problem or improving a situation on the line.
Organizations often do not clarify clearly their objective in training. Trainers should
find out which problems the organizations are facing. The more situation the training program
is, the more possible its success would be.
Having set the goals for training, trainers will consider potential alternatives to carry
out training programs. Thamhain (1992) describes briefly 12 popular methods of training:
1. Experimental Learning -This is by far the most prevalent mode of skill development.
especially for technical managers. About 25% of their working time is spent in learning on the

job.
2. Observation of management practice: Rather than learning from your own work
experiences, you learn from the experiences and examples set by others. This method seems
to be practiced by all project leaders. Both the cost and perceived effectiveness of this type of
training are low.
3. Formal On-the- job- Training - this includes specific training programs, often part of a new
job assignment, transfer or new hire. The training usually consists of a combination of closely
supervised work assignment, briefing sessions and some courses, seminars and workshops.
4. Literature Reading - Its important sources of information and knowledge which through
proper on the job application can be transformed into skills.
5. Consulting - They find them helpful, not only for quick problem solving, but also for
experiential learning and skills building through observation and of specific techniques and
practices.
6. Seminar and workshop - These could be in-plant or public offerings. Both cost and overall
effectiveness of these training methods are considered to be medium.
7. Coaching by Upper management - This seem to be particularly effective in the areas of
team building, communication, interpersonal skills, and leadership.
8. Professional Conferences - The conferences are seen as vehicles for quick updates on
new management concept.
9. Formal course (Degree Program) - Managers find these courses an effective way to gain
knowledge and the basis for further skills development, especially in administration,
communication, organization, planning, tracking and measuring of project activities.
10. Special work group - Managers perceiver these activities as highly effective for skill
development, especially in the more intricate areas of team building, communication,
leadership, and project controls.
11. Formal courses (continuing education) - These courses address the special needs of
those enrolled: they are geared toward particular project management application.
12. Job Rotation - Often conducted as part of formal on the job training, job rotation consists of
a deliberate change of job content or are assignment.
Each training method has it own strengths and limitations for skill development. A

combination of various methods could be a good way to enhance the synergistic effect of
training. For example, classroom training in combination with reading and on-the-job
experiential learning can be an excellent way to build skill in any category and at any
performance level.
13
No matter whether an organization needs training for performance-based or non-
performance-based skills, the program should be rooted in the necessity of the organization.
Furthermore, the implementation of the program must be adaptive to the situation of the
organization in teams of human resources and physical capabilities. Such a program can thus
persuade employees to attend training not only as part of the organization’s requirement but
for their own career development as well.
14
Chapter 3
Human Resource Development strategy in Vietnam
1. State of Human Resources Development (HRD) in Vietnam
1.1 Achieved Results
Through the renovation process, the government of Vietnam has given special
attention to education development in order to improve the general educational level of the
populace and also to prepare human resources for their professional roles.
The results of economic development in past years allowed the Government to
mobilize a number of new resources for investment in the social sector. In 1994, the
percentage of state budget expenditure for the social sector was 22.4%- 28.8%, from which
education and training was allocated 10-11%. As a result, HRD has made considerable
progress:
- Despite the fact that the per capita GDP of Vietnam ranks among the lowest in the
world, its Human Development Indicator(HDI) in 1994 is at a medium level (HDI= 0.514). The
education level of human resources is quite high. Only 8.4% of the total workforce have never
attended school (3.7% and 10.2% in urban and in rural areas respectively). 46.4% of human
resources have a minimum of primary level of education (58.5% and 40% in urban and rural
areas respectively). Over five million people graduates from secondary school, which is about

15% of the total human resources. In particular, 89% of human resources are literate, have an
average of 9.5 years schooling and are from the 15-35 age group. Vietnam is fortunate in
having human resources of such quality and, with the appropriate know-how, would be able to
utilize this asset effectively for the industrialization and modernization of the country. ( See
table 3.1)
- In 1993, the number of technicians almost trebled, from 770 thousand in 1979 to
2.246 million persons. The percentage of scientific-technical personnel jumped from 3.6% of
the total labor force in 1979 to 6.8% in 1993. (See table 3.2)
- In 1994, the human resources of Vietnam, some 38.2 million people, amounted to
54.4% of the country’s population. Since 1976 the growth rate of people of working age has
increased 3.1-3.6% per annum, which is three times the growth rate of those of retirement
age. This large and rapidly increasing body of human resources is bearing heavily on the
economy, education/training and employment generation. ( Source: State Planning
Committee)
- In recent years, awareness of job creation has undergone a fundamental change.
Under the new renovation policy there is a more favorable socio-economic and legal
environment for laborers to actively create jobs for themselves and for the others. In order to
generate more new jobs, the government has encouraged the development of small and
medium scale enterprises, and small-scale family businesses. In addition to the positive affect
that domestic and foreign investment has had on job creation, there have been several
government initiatives supporting employment issues, including national funding for
employment generation programs, and concessional credit to farmers. This has resulted in
15
significant changes in employment issues in recent years. During 1991-1994, an average of
more than 1 million jobs were created annually.
(Source : MOET)
As a result, unemployment figures decreased from 8.9% in 1990 to 6.7% in 1994.
However, employment generation remains a critical issues in Vietnam.(See table 3.3)
(Source : YearBook,1994)
1.2 Remaining difficulties

In an underdeveloped economy experiencing rapid growth in human resources and
unsatisfactory development of education and training, great pressure is placed on education
and job creation. In some regions, human resources exceeded the amount of labor required
for production. This creates labor pressure in the agricultural and rural sectors, where
investment resources are still lacking and jobs are scare, thus keeping productivity and
incomes low.
At present, 85%-86% of human resources are working in the economy, while 78.4% of
the total labor force aged 16 and above is working in agricultural and forestry sectors (85% in
rural areas). Numbers in the industrial and service sectors are still low, especially in rural
areas. The professional structure of the labor force is unbalanced. Only 7.6% are employed in
intellectual activity, 9.7% in industry, 8.9% in the service sector, and up to 74% in agriculture.
More than 80% of the labor force is unskilled and untrained. Of the 10% with training, 60% are
concentrated in urban areas.
Trained professionals account for a low percentage of the labor force and total
population, 10% and 5.53% respectively. In general, the quality of education and training is still
low with regards to scientific knowledge, practical skills and creative thinking.
The technical labor force is inappropriately distributed. The non-producing sector
(research, education and state management) account for 65.6% (72% with tertiary and 66%
with technical secondary qualifications) while the producing sector(manufacturing agriculture,
transportation etc.) has 20% of tertiary and 34% of secondary graduates. This constrains the
application of scientific and technological advances to production. (Source : MOET)
Furthermore, training and utilization of human resources with technical skills are not
distributed appropriately among economic sectors, economic components (i.e. different types
of enterprises) and geographical areas. In 1990, only 12.8% of the total labor force was
working in the state sector, although 86% were trained professionals. The non- state
components (joint-venture, co-operative, private and foreign enterprises) accounted for the
remaining 86.5% of the labor force, only 2% of which had some professional training. Thus,
utilization of human resources with specialize technical skills only focused on the state
component; and failed to encourage the non-state components. Trained labor was
concentrated in sectors such as industry, construction and administration, while in others

sectors such as agriculture, forestry and fishery, which accounted for 71% of the labor force,
only 7% had training, 83.3% of Vietnam’s population lives in rural areas where infrastructure is
poor, methods of production are still often traditional and living-standards are low. As only
5.6% of the rural population aged 13 and above is vocationally trained, this substantially
impacts the quality of human resources in Vietnam.
16
At present, the labor force of Vietnam accounts for about 50% of the total population.
In next two decades, on average there will be annually more than 1 million new entrants to the
labor force. The preparation of human resources for socio-economic development, meeting
the requirements of the country’s industrialization and modernization and for the continuing
amelioration of its capabilities is becoming more critical. Education and training play a decisive
role. In past years, due to good preparation of human resources through education and
training the economy of Vietnam made some initial advances. However, there are still many
difficult problems, which need to be solved: (Source: MOET)
- Firstly, the quantity and quality of education and training institutions at different levels,
namely, general schools, vocational training, technical secondary schools, and higher
education are still low.
- Education and training of human resources is inappropriate and insufficient for the full
utilization of human resources in carrying out the industrialization and modernization of the
country, especially in the transition period to the market economy.
- Despite the low percentage of trained workers in the total population (5.53%), 12% of
university and higher education graduates are still unemployed. Most non-state enterprises
are in need of additional supplies of technical labor, but as training is insufficient for the real
demand of this sector, graduates are still reluctant to work there.
- Graduates are slow to integrate into the economy. Technical workers take about 3-6
months after graduation to be recruited, while technical secondary graduates take 5-12
months.
- Human resources can only be effectively prepared, utilized and developed with the
active participation of all socio-economic sectors and agencies utilizing the labor force. Up to
now, only modest efforts have been made in identifying vocational training, setting targets and

curriculum, providing facilities and equipment for training.
- In fact, little attention has been paid to retraining, improvement of the educational
level and further development, and these have yet to meet the requirements of changing
economy.
The above mentioned issues indicate that in the past, education and training were not
able to satisfactorily prepare human resources for the country.
2. Overall Objectives on HRD
Vietnam’s policy is encourage human resources as the main factor for fast and
sustainable development. By being people-centered, it hopes to promote the potential of each
individual and of the national community as the whole. Economic growth enhances people's
lives, culture and education, as well as general social progress and equality.
By focusing on the improvement of the populace and the quality of human resources,
Vietnam hopes to enable all of its people to utilize their creativity in contributing to the
construction and development of the country. This will ensure jobs for all, which will in turn
improve the lives of individuals, their families and society as a whole.
The attainment of this objective requires the improvement of the educational and
professional level of human resources, an increases proportion of trained personnel in the
labor force, and the creation of an environment in which workers can improve their
effectiveness and productivity.
3. Specific Objectives
17
3.1. Population development
The HRD strategy will be successful only if it is accompanied by an effective national
program on population and family planning.
The immediate objectives of Vietnam’s population policy are to achieve an average of
2.9 children per couple and a total population of 82 million by the year 2000. This will ensure
that by the year 2015 each couple will only have an average of two children and that the
population is stabilized by the middle of the 21st century. ( Source: State Planning Committee)
This is important and critical issue, which has a direct impact on HRD, education and
training, health and many other significant socio-economic issues of the future.

3.2. Employment generation
In the period 1996-2000 there will be an annual natural increase of one million
laborers, and it is estimated that 7.5 million jobs must be created during that period, excluding
underemployment in rural areas.
.
The employment generation issue will be closely related to and implemented on the
basis of development programs aimed at heightening economic growth, in order to gradually
reduce unemployment and job shortage as well as to assure social stability and security.
(Source: Ministry of Labor, Social Affair and Invalid)
Employment generation is a key issue of HRD, as is the effective utilization of human
resources in the process of industrialization and modernization and economic restructuring. In
the immediate future, rural labor structural adjustments should focus on reducing the number
of workers engaged in cultivation in order to develop handicrafts, industrial, and service
sectors.
Under the market economy with different economic components, the government will
continue to create an environment which encourages the establishment of labor markets,
which gives laborers freedom to choose work, businessmen the opportunity to hire workers
and facilitate job generation and job expansion within the legal framework.
By the year 2000, the overall objective of the country is to create jobs for an annual
average of 1.2-1.3 million workers.
3.3. Improvement of physical strength of human resources
By the year 2000, the average nutrition level in society should be secured at 2,200-
2,300 calories/day/capita. This necessitates fast action in reducing malnourishment among
children and pregnant women, in addition to the improvements in domestic sanitation,
increasing access to clean water (especially in rural areas), greater attention to sanitation and
safety on job sites and prevention of epidemic diseases and AIDS.
3.4 Enhancing the educational level of human resources
18
Preparing human resources to meet the requirements of society through enhancing
educational levels is a task which permeates the HRD process and is the key issue in

education and training development.
3.5. Upgrading and expansion of the professional level of workers
Vocational training for youth aged 15 and above should be expanded and diversified
and access to such training should be guaranteed for those who leave secondary schools.
Scientific- technical staff preparation for industrialization and modernization should be
diversified.
The number and percentage of trained laborers in sectors such as technology,
construction, finance, banking, insurance, law, management and informatics should be
increased, with particular emphasis on the training of senior and expert staff.
The qualitative improvement of foreign languages training for workers to meet
requirements of a open economy needs to be secured.
3.6. Improvement of the human resource structure
In order to achieve an annual GDP growth rate of 11% in the period 1996-2000 and
12.8% in the period 2001-2010, it is necessary to increase the proportion of trained workers
from 10% to 25% in the year 200 and 50% in the year 2010. ( Source: MOET)
In rural areas, the number of work-days per year should be increased from the current
70% to 80-85% in the year 2000, in line with economic structural adjustment and the
diversification of agricultural production to include non-agricultural activities in rural areas.
A gradual readjustment in labor allocation should divert workers from the agriculture
and fishery sectors into industrial, construction and service sectors, while increasing the
quality of workers in the latter sectors.
The upgrading of technological equipment will improve worker productivity and create
a modern, efficient employment sector which can direct the whole economy.
The above objectives of HRD are to be achieved both in general socio-economic
development and in HRD in particular. They are also seen as the concrete realization of
human issues which are the main motivation for implementing the industrialization and
modernization strategy for the years 1996-2000 and beyond.
4. Major Policies and Measures for the Implementation of the Above Set forth Objectives
4.1. Population and family planning
Objectives on population and family planning will be realized by communication with,

and providing information, education and services to the people.
Investment in population and family planning should be increased by using the state
budget, international humanitarian assistance and external loans. The annual investment
target of US$ 0.8 per capita should be assured. (Source : Ministry of Finance)
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4.2. Employment generation
The policy of the government is to encourage all people, all economic components and
foreigners to invest in expansion of business and production to creating jobs.
The government will issue and amend several policies aiming at the creation of an
environment favorable to investment. It is estimated that total investment resources, which
could be mobilized in the period 1994-2000, will be about US$ 48-50 billion (including both
domestic and foreign resources), 80% of which will be invested in industry and infrastructure
in order to generated more jobs. (Source: Ministry of Finance)
The implementation of the reforestation program and the increasing exploitation of
marine resources are serving to creating more jobs for people living in rural and coastal areas.
National funds for employment generation should continue to be expanded by using
the State budget and other resources. The policy on rural credit should be strengthened to
encourage and expand the number of households receiving access to credit.
The system of vocational training and work promotion centers needs to be expanded.
In the next 2-3 years at least one work promotion center per province should be established to
facilitate operation and development of labor markets.
4.3. HRD through education and training
Vietnam needs to renovate the present education and training system by incorporating
the above features in order to meet the demands put on human resources in serving social
development.(Source: MOET)
HRD objectives, with their focus on education and training, can only be implemented
on the basis of a creative action strategy, appropriate to the conditions of Vietnam, and which
is able to attract assistance from international communities.
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TABLES OF HUMAN RESOURCES FIGURES

(Source: Vocational and Professional Secondary Dept. MOET)
Table 3.1- On structure of Labor contingent
Total labor force 100%
Post graduated 0.3%
University, College 20.1%
Secondary technical school 35.8%
Workers having certificates 24.4%
Workers without certificates 19.4%
Table 3.2: Structure of specialties
Graduated from secondary school
Education branch comprises 31.68%
Economic branch comprises 18.03%
Industrial branch comprises 17.86%
Agriculture-Forestry-Fishery branch comprises 15.64%
Medical science, physical education 14.32%
Cultural-Art branch comprises 2.47%
Graduated from university
Sector of natural science comprises 6.8%
Sector of technical science comprises 25.5%
Sector of medicine and pharmacy comprises 9.3%
Sector of Agricultural science comprises 8.1%
Sector of social science (exeptis pedagogy) comprises 17%
Sector of education and training comprises 33.3%
Post graduated University
Natural science 33.77%
Technical science 31.62%
Science of medicines and pharmacy 6.31%
Agricultural science 6.59%
Social science 21.66%
Military science 0.03%

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Table 3. 3: Using trained workers
1. Status of recruitment of workers
Measurement : person
Status of recruitment Total Technician
having
certificates
Technician
without
certificates
Secondary
technical
school
Graduates
and Post-
graduates
Total 3,156,713 773,336 599,513 1,145,446 638,418
1. Stable work 2,774,238 675,086 535,552 995,390 568,255
2.Temporary work 20,495 5,944 7,005 5,335 2,211
3. Unemployment 69,598 23,812 6,654 26,007 13,125
4. Continuing study 13,484 1,442 1,057 6,959 4,026
5. House-keeping 55,495 10,868 10,773 25,374 8,520
6. Unable to work 80,881 21,915 12,473 33,253 13,160
7. Others 142,555 34,269 26,039 53,128 29,121
(Source: Yearbook 1994)
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Chapter 4
Development in education and training and problems to be
addressed
1. Developments in Education and Training

1.1. Development in education and training prior to 1993
In the early 1980s, under the difficult conditions of the socio-economic development of
the country, education and training experienced a serious shortage of financial resources and
infrastructure. Just after 1986, due to the dramatic changes of renovation process, education
and training which used to employ centralized methods of management, had to face new
difficulties. Crèches and kindergartens, which had been subsidized by the cooperatives
collapsed. In general education, students dropped out of school and teachers abandoned their
profession. The scope of vocational, technical secondary and higher education had been
limited. Resources for education and training were seriously reduced. The quality of education
and training fell. Management in education and training institutions, as well as that of all
sectors, was unable to adapt to the new circumstances.
In the resolutions of the VIth and the VIIth congresses of the Communists Party and
those of the important meeting of the National Assembly, the Government and the Central
Party Committee emphasized the importance of education and training and identified and
enacted orientations and policies for further development of education and training in the new
socio-economic climate. Following these orientations and policies, teachers, management staff
in the education sector, students and their parents, in collaboration with all sectors and
concerned agencies, persisted in overcoming difficulties, stimulating creative initiatives, and
renovating the education and training sector to make it compatible with the renovation process
and better able to respond to the requirements of the nation.
In the years 1991 and 1992, with assistance from UNDP and UNESCO, Ministry of
Education and Training implemented the project “ VIE/89/022- Education and Human
Resource Sector Analysis”. The project identified seven urgent issues which needed to be
addressed within the education and training system: (Source: MOET)
• Decline in quantity and quality at all levels of the general education system
• Poor linkage between vocational technical education and production and
employment.
• Irrelevancies of higher education to and poor linkage with research, production and
employment.
• Weaknesses in and constraints upon teaching staff.

• Lack of financial resources and infrastructure for education and training, and low
efficiency in their utilization.
• The inappropriate nature of the organization and management of the education and
training system and its relationship with the legal system
• Inadequacy of education and training in a changing society.
The project also identified 20 programs with 44 priority projects to be implemented
from 1995 up to the year 2010 so as to address the above- mentioned problems.
23
Between 1993 and 1995, the Government has undertaken a series of important
changes in the education and training sector.
1.2. Developments in Education and Training since 1993
The weaknesses described above have started to be addressee. Numerous positive
improvements have created favorable preconditions are orientations for strengthening
education and training in this new stage of national development.
The period since 1993 has been marked by increasing scope in all levels of education
and training. Numbers in informal classes and short courses in informatics, foreign languages
and vocational training have risen rapidly. There have been significant achievements in
illiteracy eradication and univesalization of primary education.
The education and training system has been restructured to be more comprehensive,
diversified, flexible and compatible with the market economy and education and training
system throughout the world. The network of general, professional, and higher education was
reorganized so as to allow effective utilization of teachers and infrastructure.
Various improvements in the quality of education and training include advances in
political, moral and physical education, the enhancements of profession-oriented education,
the expansion of subjects to include foreign languages, music, drawing, informatics and
sports, the diversification of secondary education in several streams (conducted on trial basis),
and the facilitate better integration into the international community.
The use of schoolrooms in three shifts has been gradually reduced; additional modern
schools have been constructed; great efforts have been made for school maintenance e and
for a better provision of learning aids such as laboratory equipment, and computer.

Although the portion of state budget allocated to education is modest, it has shown a
steady increase over the last four years. The policy on participation of the whole society in
education facilities the mobilization of funds supplementary to the state budget and
significantly benefits the development of education and training.
Consolidation and expansion of education and training in ethnic minority and in remote
or less developed areas has achieved positive results through the construction of boarding
schools.
Several important education and training developments over the last three years have
been observed:
1.2.1. Restructuring of the national education system
On 24 November 1993, the Prime Minister issued Decree No.90CP which defines the
general framework for the national education system and determines academic degrees,
diplomas and certificates of education and training in the Socialist Republic of Vietnam
This restructuring aims at creating better conditions for the implementation of a
number of important goals during the coming decade:
- Consolidating primary education, which is legally compulsory for all and will be
universalized in most regions of Vietnam by the year 2000, and in areas presenting specific
difficulties by the year 2005.
24
- Better integration between general secondary education and technical education and
vocational training.
- Promoting the development of higher education both qualitatively and quantitatively
by diversifying its structure and delivery modes in accordance with international standards in
teaching and research
- Creating favorable conditions for the implementation of life long education, thus
promoting equal access to all levels of education
Building on this new national education system, provinces and cities have been
reorganizing their own school network. In particular, 1st level schools have been separated
into primary and lower-secondary schools. In 1993, 8734 schools were segmented and the
total number of newly formed schools is 10137

The number of semi-public and community general education schools has rapidly
increased from 187 in 1993 to 230 schools in 1994. There are seven community universities
People-founded) opened in Hanoi (3), Ho Chi Minh City (3) and Danang (1).
1.2.2. Promoting the diversification of pre-school education
A significant decrease was observed in kindergarten enrollments between the
1989/1990 and 1991/1992 school years. Since then, kindergarten enrollments have started to
increase, and in 1993/1994 they surpassed the numbers for 1989/1990. Despite this, the
number of kindergarten teachers is still on the decline due a lack of appropriate policy.
Currently, emphasis is placed on the diversification of pre-school education with main
focus on promoting privatization and community participation.
1.2.3. The eradication of illiteracy and universalization of primary education
Vietnam is making significant progress towards the universaslization of primary
education. Since 1993, this level has experienced qualitative and quantitative development.
Drop-out rates decreased from 12.7% in 1989/1990 to 6.58% in 1993/1994 while repetition
rates diminished from 10.6% in 1989/1990 to 6.8% in 1993/1994. (Source:MOET)
One of the major objectives of the national program Education for All is to completely
eradicate illiteracy in the 5-35 age group, and to universalize primary education for children of
6 to 11 years. By 1994, 35 out of 53 provinces/cities, 157 out of 450 districts/towns, and 3700
out of about 10,000 communes had attained the criteria of illiteracy eradication and
universalization of primary education. In the 15-35 age group, close to 80% have completed
primary education, although in mountainous and remote areas(Source:MOET)
1.2.4. Halting the decline in secondary enrollments, diversifying secondary
education and creating centers of excellence
The report of the Education and Human Resources (EHR) sector analysis drew
attention to decrease in student enrollment in both lower- and upper secondary education
from the 1989/1990 school year and pointed out that this might only be a temporary
phenomenon caused by the transformation to a market economy. This assessment appears to
be correct.
Since 1992/1993, the temporary decrease in secondary enrollment has come to an
end. In 1994/1995, overall enrollment in secondary schools surpassed figures recorded for all

previous years.
25