Meeting Vietnam’s Skilling Challenges

While Vietnam has garnered widespread praise for having expanded access to basic education and registered learning outcomes comparable to that of many OECD countries, the country has performed much less well – even poorly – in skilling its workforce.

This is a problem. Low-cost unskilled labour is Vietnam’s temporary comparative advantage. It is not a viable foundation for re-establishing and sustaining rapid economic growth and breakthrough improvements in living standards, both of which will depend substantially on the country’s ability to move into more productive and higher-skilled industries, and on the expansion of higher-paying jobs. This, in turn, will require steadily expanding supplies of skilled labour.

However, this is not what we observe. On the contrary, despite the country’s celebrated strengths in basic education, Vietnam’s education and training system is, in effect, undermining the country’s prosperity by restricting the expansion of skilling at scale.

Let us start with basic education, where Vietnam’s eye-catching results on the Program for International Student Assessment (PISA) mask damaging inequalities in enrolment, learning, and rates of school completion. Inequalities start early and progressively truncate children’s paths to education beyond the primary level, especially among children from low-income households. While reported primary enrolment rates are high, one in five children aged three to four years old are not enrolled in preschool at all, while the completion rate for lower-secondary education for children from low-income households was just 67 per cent and still lower among disadvantaged ethnic minority groups.

Beyond lower secondary school, other features of Vietnam’s education system conspire to constrain education and training. As of 2022, upper secondary school completion rates stood at just 59 per cent overall: just 51 per cent for boys and 65 per cent for girls across all income groups, only 31 per cent of children from poor households, and less than 20 per cent of children from disadvantaged minority groups, UNICEF reports.

Rather than expanding upper secondary education, Vietnam’s education policies are restricting it, whether through the limited number of school spaces or the prohibitively high formal and informal costs that households must bear. Consequently, many children, including large shares of children from lower-income and rural households, abandon schooling for employment in factories and informal jobs in cities and peri-urban areas — a pattern that offers the promise of short-term income gains for families but perpetuates precarious employment while truncating opportunities for skilling. Much more can and should be done to expand upper-secondary education.

In tertiary education – comprising university, professional, and technical and vocational education and training (TVET) – sluggish enrolment and slow progress on skilling are even more alarming. At just 39 per cent in 2021, Vietnam’s gross tertiary enrolment rate remains well below regional competitors China and Thailand, whose rates were 67 and 49 per cent, respectively. In the meantime, employers continue to report difficulties in hiring university graduates with adequate leadership and managerial, socio-emotional, and job-specific technical skills, reports the World Bank, signalling deficient curricula.

For decades, Vietnam’s government offered public TVET on a very small scale, targeting disadvantaged groups, rather than adopting it as a broad strategic imperative. A rapid and poorly supported expansion of private TVET centres in the 2010s led to the proliferation of low-quality programmes that have struggled with quality assurance and have been prone to financial difficulties, harming the reputation of TVET while adding little in terms of productivity growth. Public and private TVET in Vietnam must be effectively restructured.

To be effective, Vietnam cannot afford to continue its lacklustre approach to skilling.

A well-tuned TVET system that consistently produces skilled and globally certified technicians at scale is a hallmark of rising middle-income and high-income countries. Vietnam’s government appears to now recognise this and plans to shift responsibility for TVET from the scandal-hit Ministry of Labour, Invalids, and Social Affairs to the Ministry of Education and Training (MOET) in 2025, a welcome if belated development. Some call for the formation of a new ministry focused specifically on higher education and TVET.

Whether this occurs, MOET must improve its capabilities for supporting, monitoring, and motivating the expansion of training for productivity growth in tertiary and TVET education across key sectors that are in line with international standards. Already, Vietnam is implementing its National Qualifications Framework and the ASEAN Qualifications Referencing Framework.  

In university education, a more explicit focus on skilling is needed. Expanding collaboration with foreign partners must be encouraged. The Royal Melbourne Institute of Technology (RMIT) – Vietnam’s only international branch campus, along with initiatives by Arizona State University and Vietnam-Germany collaborations, are promising instances of foreign-assisted efforts to align higher education and TVET with labour market needs. Domestically, Vietnam’s FPT University and the Hanoi University of Science and Technology are also successes that can serve as models for skilling workers at scale. (Editor’s note: The former institution’s name, which originally stood for The Corporation for Financing and Promoting Technology, is part of FPT Corporation, a leading technology company in Vietnam.)

Countries that have been effective in addressing skilling challenges have calibrated curricula and programmes to the needs of domestic and foreign employers. To achieve this, Vietnam requires a better coordinated multi-sector strategy. Effective policy must go beyond platitudes at periodic investor forums. It must engage industry, forge education system-industry ties, make use of well executed employer surveys, and offer timely policy adjustments to incentivise skilling in key sectors and population groups.

While managerial decisions are key to investments in human and industrial capital, the government must make a concerted effort to prioritise productivity growth and industrial upgrading. The formalisation of employment can be paired with policies to incentivise skilling for firms and workers alike. Vietnam’s Institute of Industry and Trade’s April 2024 cross-sector forum on skilling was a welcome sign of a more multi-sectoral approach.

Still, inaction, especially in foreign cooperation, is worrisome. Vietnam stands to benefit from working with multilateral and bilateral donors to meet current and anticipated labour market requirements. Regrettably, Vietnam’s government is presently declining technical assistance loans and slow on disbursing existing loans, owing to government gridlock associated with the chilling effects of Vietnam’s anti-corruption campaign, ramped-up security paranoia, and the availability of cheap credit from domestic banks, which offer no technical assistance and are typically in fields with little contribution to skilling.

The math is straightforward. Equipping Vietnam’s population with relevant skills will permit industrial upgrading, increase productivity growth, incentivise investment in strategic sectors and expand gainful employment, thereby improving living standards. While numerous initiatives are underway, most are small-scale and ineffective. To be effective, Vietnam cannot afford to continue its lacklustre approach to skilling. On the contrary, Vietnam requires fresh leadership in the education and training field, and a political commitment to and laser-like focus on skilling that it has so far sorely lacked.

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