In Vietnam, it is important to know your opportunities and obligations when you recruit and hire people. This article will help you familiarise yourself with the labour process, employer regulations, basic hiring process in Vietnam, as well as the resources that are available for you as an employer.
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Labour Conditions in Vietnam
Over the past decades, Vietnam has encountered accelerated yet comprehensive development. A rapidly booming economy is leading to economic changes as well as the structures of society.
An increasing number of people are now hired in services and manufacturing sectors, contributing to the rise of the GDP. With the continuous economic integration of Vietnam into the world economy, the pace of this change has shown no sign of stopping
Number of Workforces
With approximately 1 million young adults entering the labour market annually, Vietnam has a large base of the labour force. The high value of Vietnamese labours is due to their flexibility of adopting new technology and put them into application, not to mention their diligence and resilience.
However, many foreign and local firms in Vietnam, realise that the workforce in Vietnam is beneficial when it comes to its number – even with the huge young workforce, there are still significant talent and skill gaps between the position and applicants prevailing in industries that require profound language and technologic skills.
As a result, a large number of Vietnamese workers are still engaged in positions or jobs that require relatively lower skilled or blue-collar jobs while foreign nationals occupy management positions primarily.
Wages and Salary
In addition to the great number of labour, another advantage of the Vietnamese workforce is its lower cost.
The average salary in Vietnam is much lower as compared with other regions across the world. For instance, in Hanoi and Ho Chi Minh City, the minimum wage should not be less than USD180 (VND 4,180,000), whereas in many rural areas, the minimum wage is USD126 (VND 2,920,000).
Though the cost is lower, as of 2017, it was recorded that the monthly average salaries for both private firms and foreign companies grew by 3.3% and 13.5% respectively. The following data are some of the areas in Vietnam with highest average salaries:
- Bach Ninh – US$421
- Binh Duong – US$444
- Da Nang – US$452
- Hanoi – US$407
- Ho Chi Minh City – US$456
Have you heard? Minimum wage is to increase in January 2020. Find out the details.
Skill and Education of Labours
As mentioned earlier, many companies in Vietnam, especially foreign-owned limited liability companies, find it hard to hire skilled labour in the country.
The 2019 Global Talent Competitiveness Index (GTCI) assessed that Vietnam is ranked 92 among 125 countries for having the ability to bring in, develop and keep the talent.
This study tells us that Vietnam faces a challenge for not having skilled and talent labours with adequate education qualification, especially in vocational and technical skills
The skilled labour shortage will definitely impair the economic transition from labour-intensive industries to high-tech markets. As a result, the slowdown will affect Vietnam’s competitiveness negatively and hiring a suitable candidate will become more difficult. Currently, approximately 40% of foreign entities in Vietnam have issues recruiting skilled workers.
As you can see, sectors with intensive labours continue driving economic growth in Vietnam. However, as the global economy progresses towards Industry 4.0, the government realises the necessity to bring in effective reforms across all major sectors – in an effort to boost the labour quality and create more competitive edges for the labour market in the country.
In March 2018, the Vietnamese government took steps to increase training in technical and vocational fields to cater to the requirements of the labour market. By introducing Decree No. 49/2018/ND-CP, young adults in Vietnam now have the opportunities to gain the accreditation of vocational education.
The government wanted to achieve the target to provide vocational training to 2.2 million people in Vietnam in 2018. The result was positive – as of the first quarter of 2018, Vietnam has already had more than 1,900 vocational training centres, including 545 vocational schools and 395 colleges.
These institutions offer programs in information technology (IT), beauty services, tourism, fashion, textile and garment, construction, precision mechanics, pharmaceuticals, and hotel management.
Recruitment and Hiring Process in Vietnam
There are many ways to recruit and hire high-quality workforce in Vietnam that you can use once you have your company set up.
One of the most popular ways is to outsource the recruitment and hiring process to a third party. Outsourcing helps organisations to introduce companies to the public and attract a large number of candidates – both locally and internationally.
If you think that hiring foreigners is more ideal for your current business operations in terms of specific skills and knowledge; or because you do not have the time and capital to train an existing employee for that particular skill set, the process of hiring a foreigner does not have to be difficult if you understand its regulations well.
Foreign Employment in Vietnam
In Vietnam, permits such as business visa, visa exemptions, and a resident card will not allow foreigners to work legally. This is because according to the Labour Code in Vietnam, a foreign individual must secure a work permit prior to any of his or her employment in the country.
The only exception for the application of the said work permit is for a foreigner to obtain exemption certification and meet the exemption criteria. For instances, foreigners are the members of the board of directors of joint-stock companies in Vietnam, owners of a single- or multiple-member limited liability company, etc. For detailed information, contact Cekindo.
The Requirements of Recruitment in Vietnam
A work permit is required for a foreigner who wishes to work in Vietnam, and the permit must be applied at the local Labour Department. Besides just the work permit, the foreigner will need to have a residency permit and business visa to stay legally in Vietnam while he or she is employed.
It is mandatory for foreigners who work in Vietnam for more than three months. This permit is valid up to twelve months and can be renewed afterwards.
A business visa is necessary only when a foreigner works in Vietnam for fewer than 3 months. With that being said, a work permit is not necessary for this case.
The application of business visa will need an invitation letter from the partner company in Vietnam.
This document entitles a foreigner to stay in Vietnam during his or her employment. The residency permit has the same validity as the work permit.
Interested in hiring a foreign worker in Vietnam? Make sure to read Insider Tips on Foreign Employment in Vietnam.
Successful Recruitment in Vietnam
To ensure a smooth process of searching for adequate candidates, their selection and overall activities related to recruitment, it is beneficial to outsource this service from the third-party provider.
Fill in the form below, contact Cekindo’s specialists and get a free quotation on your requested recruitment in Vietnam.