Labor migration helps to boost Vietnam economy

By Dang Hoa - Oct 11, 2017 | 07:31 AM GMT+7

TheLEADEREasing restriction on labor migration can boost workers’ welfare and deepen regional economic integration, according to the World Bank's report on “Migrating to opportunity” just released.

Labor migration helps to boost Vietnam economy
Labor migration helps to reduce poverty in Vietnam. (Photo: the Internet)

The intra-regional migration in ASEAN in general and in Vietnam, in particular, has increased significantly, especially in the period from 1995 to 2015, which has impacted significantly on its economy.

On average, the remittance sent to Vietnam which significantly helped to reduce poverty accounted for seven percent of its Gross Domestic Products (GDP), compared to ten per cent in the Philippines, five per cent in Myanmar and three per cent in Cambodia. 

Remittance sent to Vietnam in 2017 accounted for seven per cent of GDP (source: WB)

According to World Bank Economist for the Social Protection and Jobs Global Mauro Testaverde, Vietnamese labors mostly migrated to Malaysia as this is one of its traditional markets and also Malaysia’s average monthly wage is triple that of Vietnam. He also said that ASEAN is not a preferable market to Vietnamese when Vietnamese labor migrants accounted for only two per cent of the regional figure. In order to encourage more people to work in regional countries, the government should propose and implement more policies and interventions. 

Besides, the emigration of high-skilled individuals in Vietnam accounting for 10 per cent has created the effects of “brain circulation” which means both contributing to sending and receiving countries. However, the low-skilled labors are not always able to take advantage of the high-salary jobs in ASEAN due to the lack of information.

“With the right policy choices. Sending countries can reap the economic benefits of out-migration while protecting their citizens who choose to migrate for work. Inappropriate policies and ineffective institutions mean that the region is missing opportunities to gain fully from migration,” said Sudhir Shetty, WB Chief Economist for the East Asia Pacific region. Therefore, according to the report, Vietnam will need to evaluate its current policies for incentivizing outmigration to determine whether they are meeting the country’s needs.

The 4.0 industrial revolution brings about economic efficiency, higher labor productivity, product improvements and better competitiveness; however, it will undeniably pose a big labor problem as millions of jobs in many countries including Vietnam will be affected.

Vu Tien Loc, Chairman of the Vietnam Chamber of Commerce and Industry (VCCI) said that nine million Asian people may lose their jobs and 85 per cent of textile-garment and leather-footwear workers Vietnam would face the onslaught of automation in the 4.0 industrial revolution (4IR).

"However, if Vietnam can make the most of its strengths in such fields as tourism, agriculture, and crafts, it can address the detrimental impact of the 4IR as other nations are focusing on mass production," he said.