Need a multi-dimensional view on the current worker situation in the area of FDI

It is necessary to shift the direction of attracting FDI in the coming time in the direction of increasing the quality and quickly increasing the high-tech industry. Photo: Bui Nu.

Low growth rate

Speaking at the workshop, Deputy Minister of Planning and Investment Vu Dai Thang said that in the context of the fourth industrial revolution is going on strongly and the competition to attract FDI has become fiercer, Vietnam determines that the attraction of FDI in the coming time must shift from quantity to quality, attracting high technology, friendly to the environment and especially gradually shifting the foreign investment attraction from the advantage of cheap labor cost to competitiveness with high quality resources.

"Therefore, we need to review and evaluate the current status of labor in the FDI sector over the past few years on the achievements, constraints, weaknesses, and causes of them. This is a breakthrough in order to improve the quality and efficiency of labor in the FDI sector, taking full advantage of most of the world's FDI flows tending to Asia, including Vietnam", said Vice Minister Vu Dai Thang.

Assessing the situation of FDI attraction in Vietnam in recent years, Dr. Le Van Hung, Institute of Economics of Vietnam said that FDI plays an important role for productivity growth of the recipient country. In terms of direct impact, FDI has helped to shift the structure of domestic labor from the low-productivity sector to the more productive ones.

In addition, recipient countries expect that FDI enterprises with the advantage of technology, market and management will have higher labor productivity than those in the domestic sector.

In terms of indirect effects, FDI inflows have a spillover effect on technology and skills in the domestic sector through productive links between the two sectors. Moreover, the presence of the FDI sector raises competitive pressures forcing their domestic firms to improve. As a result, the FDI sector will create spillover effects for the domestic sector and indirectly improve overall labor productivity.

Notably, according to Mr. Hung, among all economic sectors, the FDI sector always has the highest labor productivity compared to the state and non-state sectors, especially when compared with the non-state sector. The main factor leading to the disparity is that the FDI sector is concentrated mainly on the processing industry, while the domestic sector is mainly concentrated on the agricultural sector and the informal sector, those with extremely low labor productivity.

"However, although the domestic sector has much lower labor productivity than the FDI sector, the growth rate is twice as high. This shows that the FDI sector is slowing down the overall productivity growth rate of the economy. In other words, the FDI sector in Vietnam mainly contributes quantitatively, but its contribution to quality is still low. With mainly focusing on assembly, less use of skills and creativity in production can be the main reason leading to low labor productivity growth of the FDI sector.

Attracted by high quality labor

The presence of FDI sector has helped create greater competitive pressures, forcing domestic firms to reform, from that to improve productivity. As a result, many of the companies that are not competitive enough must leave the industry such as Vinaxuki, Hanoi Electronics Company (later Orion-Hanel Picture Tube Company). In contrast, many companies have successfully competed as An Phuoc Garment Company, Viet Tien Garment, May 10...

In order to improve the efficiency of labor productivity from the FDI sector, Dr. Le Van Hung recommends that Vietnam should pay attention to the quality of FDI instead of quantity. In the coming period, the FDI attraction should be closely linked with the national development strategy, with the top priority of attracting a number of sectors and areas with comparative advantages by regions, especially giving priority to enterprises relating to deep processing, high technology, new energy to create large spillover effects on the economy in the long term.

At the same time, according to Mr. Ngo Duy Hieu, head of the Department of Labor Relations of Vietnam General Confederation of Labor, in attracting investment, the State should build orientations and policies in selecting and attracting investment partners, especially attracting foreign investment. In which, it should pay attention on attracting partners who have modern technology, good governance, high sense of law observance; prioritize the attraction of investment partners in a number of hi-tech branches and products, creating great value.

Mr. Pham Van Cong, deputy director of the Dong Nai Department of Labor, War Invalids and Social Affairs, said that it is necessary to shift the direction of attracting FDI in the coming time in the direction of increasing the quality, especially attention should be paid to attracting supporting industry projects.

In addition, it is necessary to develop some eco-industrial parks aiming at attracting FDI enterprises and domestic enterprises of the same sector and field, which are able to link and support each other. For example, the Central Highlands could build separate industrial parks for coffee and rubber processing enterprises; the Mekong Delta has its own processing plant for finished products related to seafood, fruit or products from rice.