A Landscape of Vietnam Labor and Migration

Vietnam’s economic boom in recent decades has significantly reshaped its labor market and migration patterns. Driven by robust growth, rapid urbanization, and shifting demographics, Vietnam’s workforce is undergoing a dynamic transformation. This article explores the current state of Vietnam’s labor force, its internal and international migration trends, and the complex challenges and opportunities these dynamics present.

1. Vietnam’s Evolving Labor Market  

A Large and Active Workforce

Vietnam boasts a substantial labor force, with approximately 52.4 million people employed in 2024. The country demonstrates a high labor force participation rate (76.4% as of 2023), reflecting the national drive and economic vibrancy. Vietnam’s labor force participation is skewed towards men, with a rate of 53.2% compared to 46.8% for women. Despite recent urbanization trends, a significant portion of Vietnam’s workforce, roughly 62.6%, remains concentrated in rural areas.¹

Sectoral Shifts 

Vietnam’s labor market is undergoing a transformation, with a notable shift towards industry and services. While agriculture, forestry, and fisheries still employ a significant portion of the workforce (26.9%), the share of industry and construction (33.5%) and services (39.6%) has surpassed it.² This trend reflects Vietnam’s growing industrial base and ongoing modernization efforts.

Underemployment and Informal Work

Vietnam’s official unemployment rate for the working-age population in 2023 sits at 2.28%. However, a closer look reveals disparities between urban and rural areas. Urban unemployment is slightly higher at 2.75%, while rural areas show a lower rate of 1.99%.³

An important indicator reflecting the health of the workforce is underemployment – individuals who are employed but not in their desired capacity, receiving too few hours or in employment not reflecting their skills or training. They work less than 35 hours per week and are willing and ready to work additional hours.⁴ Underemployment remains a concern in Vietnam, particularly in rural areas. In 2023, the national underemployment rate for the working-age population is 2.01%. However, this number rises to 2.27% in rural areas, compared to 1.59% in urban areas.⁵ This disparity suggests that while people in rural areas may find work, they are often underemployed in jobs that don’t fully utilize their time, skills or offer sufficient income.

Young graduates and job seekers often face difficulties securing suitable employment, leading to underemployment or informal sector jobs. In 2021, the informal sector employed an estimated 65.1% of the workforce,⁶ characterized by a lack of job security, benefits, and social protection. By 2023, World Bank statistics indicated that 76% of total workers were in the informal sector. Among these 1.9 million informal workers, only 5% participated in voluntary social insurance. The government is making ongoing efforts to formalize this segment and extend social protections, aiming to achieve a social insurance coverage of 60% by 2030.⁷

Skill Development: A Positive Trend with Room for Improvement

Vietnam’s workforce is becoming more skilled. The percentage of trained workers with degrees and certificates reached 27.2%, demonstrating a positive trend in education and training. However, a significant gap exists between urban (42.0%) and rural areas (18.4%).⁸ Expanding access to training programs in rural areas is crucial to create a more balanced and skilled workforce, boosting both individual opportunities and national competitiveness.

Microsoft Vietnam promotes ICT training for rural students. Photo by VIR

Wage Disparities and Social Protection

The national average monthly income for a worker in 2023 is around 7 million Vietnamese dong (approximately 280 USD), but there is a significant gender and regional wage gap. Men earn nearly 36% more than women, and workers in urban areas earn nearly 40% more than those in rural areas.⁹ Addressing these disparities is crucial to mitigate inequality and ensure equitable compensation.

Furthermore, current social insurance covers only 38.8% of the workforce, and 31.18% participate in unemployment insurance.¹⁰ Expanding social protection measures is necessary to enhance worker well-being and security.

2. Migration Trends

Since the Doi Moi reforms, Vietnam has witnessed a surge in migration, encompassing both internal movements and international outflows. These trends are driven by economic opportunities, demographic shifts, and social factors, significantly impacting Vietnam’s socio-economic landscape.

Internal Migration

• Urban Pull: Vietnam has experienced substantial rural-urban migration fueled by rapid industrialization and urban development. Cities like Ho Chi Minh City and Hanoi and surrounding provinces attract young adults (aged 20-39) and those with higher education seeking better jobs and higher wages. The 2019 Census reported over 6.4 million internal migrants, with women constituting a significant portion (55.5%).¹¹
• Considerations: While urbanization contributes to economic growth by filling labor needs in cities, it can strain infrastructure and resources in receiving areas. Besides, migrant workers often face precarious working conditions, with limited access to social protections, such as health insurance and pensions. Additionally, rural areas may experience a decline in their working-age population, impacting agricultural productivity.

International Migration

International migration from Vietnam is influenced by diverse factors, including economic prospects, educational pursuits, and family reunification. Key trends include:

• Emigration: Vietnam has a history of emigration, particularly after the Vietnam War. While rates have stabilized, Vietnamese continue to seek work abroad through labor export programs, especially to South Korea, Taiwan, Japan, and the Middle East. Vietnamese international migrants contribute significantly to the national economy through remittances sent back by migrant workers (approximately $18 billion in 2021, accounting for 4.9% of GDP).¹² The International Labour Organization (ILO) reports a rebound in outward migration for work in 2023, surpassing the government’s target.
• Immigration: Immigration to Vietnam remains relatively low compared to emigration. However, the country does attract skilled professionals from neighboring countries and some investment-driven immigration.

3. Challenges and Future Prospects

The linkage between labor and migration in Vietnam presents both opportunities and challenges. The continued growth of urban centers and the demand for labor will likely sustain internal migration. However, addressing the social and economic issues faced by migrant workers is crucial to ensuring that migration contributes positively to Vietnam’s development.

Policy Responses: To mitigate the challenges, the Vietnamese government needs to implement policies that enhance the social protections for migrant workers, both internally and internationally. This includes improving access to healthcare, education, and housing in urban areas, as well as strengthening legal frameworks to protect the rights of Vietnamese workers abroad.

Sustainable Development: Balancing economic growth with social equity is essential. Efforts should be made to develop rural areas to reduce the need for migration, such as investing in agricultural modernization and creating non-agricultural jobs in rural regions. Additionally, urban planning must account for the continuing influx of migrants to ensure sustainable development.¹³

International Cooperation: As a significant labor-exporting country, Vietnam must continue to engage in international cooperation to ensure that its workers are treated fairly abroad. This involves working with host countries to enforce labor standards and protect migrant workers from exploitation.

Conclusion

Vietnam’s labor market boasts a large workforce, but skills gaps and underemployment persist. Migration fuels growth but strains resources. To thrive, Vietnam must bridge the skills gap, promote formal employment, and incentivize rural development. Success hinges on creating an inclusive labor market with equitable wages and social protection. The choices Vietnam makes today will determine its workforce’s future and economic trajectory.