1. Global and national economic contexts
Turning to 2021, the global economic picture has witnessed more “bright spots” as major economies have gradually recovered from heavy losses caused by the COVID-19 pandemic. In the second quarter of 2021, international organizations have all made more positive observations, with the World Bank and the European Union both forecasting the global economic growth of 5.6% in 2021. The International Monetary Fund (IMF) expects global GDP to grow by 6% in 2021. Similarly, the Organization for Economic Co-operation and Development (OECD) forecasts global GDP growth in 2021 to be 5.8%. Major economies in the world such as the United States and China have recorded significant recovery and development.
According to the International Labour Organization (ILO)’s World Employment and Social Outlook – Trends 2021, the labour market crisis triggered by the COVID-19 pandemic is far from over and employment growth will not be enough to offset the damage until at least 2023.The pandemic-induced “shortfall in jobs” is projected to amount to 75 million in 2021 and then reduce to 23 million in 2022. The global job recovery is forecast to accelerate in the second half of 2021, if the pandemic is brought under control. However, this recovery will be uneven due to difficult access to vaccines and the inability of most developing and emerging economies to adopt strong fiscal stimulus measures.
In the national context, the 4th COVID-19 wave from the end of April jeopardized the momentum of job recovery and workers’ income improvement in the second quarter, especially in major municipalities such as Ha Noi, Ho Chi Minh City and neighbouring provinces. In the face of increasingly complicated and unpredictable developments of the pandemic, the Government and the Prime Minister have strongly asked that the current core task of ministries, sectors and sub-national authorities be to effectively deliver the “dual goal” of both preventing and curbing the pandemic, protecting people’s health, ensuring social security and achieving socio-economic recovery and development in the new normal.
The Q2/2021 Labour Force Survey (LFS) findings suggest that the labour market has not shown positive signs as against the first quarter. The labour force participation rate, and the prevalence of informal employment, unemployment rate and time-related underemployment rate have all increased quarter-on-quarter.
2. Impact of the COVID-19 pandemic on the labour and employment
The 4th wave of COVID-19 pandemic has aggravated the negative impacts on workers
In the second quarter of 2021, there were 12.8 million people aged 15 and over negatively affected by the COVID-19 pandemic, including those who lost their jobs, got furloughed, worked alternate shifts, reduced working hours, reduced income, etc. As such, compared to the first quarter of 2021, the COVID-19 pandemic has resulted in at least 3.7 million more workers being negatively affected. The most severely affected are workers aged 25-54 with 75% of the total adversely affected.
Specifically, out of a total of 12.8 million people negatively impacted by the COVID-19 pandemic, 557 thousand people lost their jobs, accounting for 4.4%; 4.1 million people got furloughed/suspended production and business operations, accounting for 31.8%; 4.3 million people suffered the reduction in working hours or were forced to work alternate shifts, accounting for 34.1%, and 8.5 million workers suffered income reduction, accounting for 66.4%.
Workers in urban areas suffered more damage than in rural areas. Up to 21.9% of workers in urban areas, compared to 14.3% in rural areas, were adversely affected.
Almost half (48.1%) of the total unemployed workers reported having had their jobs adversely affected by the pandemic (up 11.8 percentage points compared to the previous quarter). About one fifth of the employed workers (22.6%) reporting having had their jobs adversely affected by the pandemic (up 7.1% percentage points compared to the previous quarter). Finally, of the 23.5 million economically inactive people aged 15 years and over, 3.8% reported having been negatively impacted by the pandemic (down 0.5 percentage points compared to the previous quarter).
Employed workers in the agriculture, forestry and fishery (AFF) sector were least affected by the pandemic, with only 8.9% of workers in this sector reporting having been negatively affected. They were followed by workers in industry and construction sector with 24.6% affected. Workers in the services sector was hardest hit, with a rate of 30.6%
In Q2/2021, the labour force aged 15 and over increased year-on-year, but was lower than in the same period in 2019, before the pandemic broke out.
By the end of the second quarter of 2021, despite the ongoing complicated developments of the Covid-19 pandemic, workers’ and employers’ responses to the pandemic this year have changed substantially compared to 2020, which contributed to a significant increase in the labour force relative to the same period last year.
In 2020, the country had to undergo a nationwide lockdown of two weeks, with a series of weak-performing and non-essential enterprises forced to close. Informal workers were badly affected and their only option was to stop working because there were no binding obligations between them and their employers. They were forced out of the labour market and as a result the 2020 labour force dropped substantially.
In 2021, the Covid-19 wave has continued to spread, but unevenly affected industrial zones. Formal workers in the industrial zone have been affected but most, although not all, are still contracted by their employers. This makes the labour force in the second quarter of 2021 not decrease as in the same period last year.
The labour force aged 15 and over in the second quarter of 2021 reached 51.1 million people, an increase of 44.7 thousand people compared to the previous quarter and an increase of 1.7 million people compared to the same period last year. Nevertheless, compared to the same period in 2019, the time before the pandemic broke out, the labour force was still 304,000 people lower. When compared with the pre-pandemic annual labour force growth trend, the actual labour force in the second quarter of 2021 was 1.7 million people lower than the normal state. In other words, the COVID-19 pandemic has deprived more than 1.7 million people aged 15 and over of the opportunity to participate in the labour market.
Compared to the previous quarter, the labour force increased mainly in urban areas (up 354.8 thousand people) and male workers (up 36.3 thousand people). Compared to the same period last year, the labour force increased mainly in urban areas (up more than 1 million people) and the female workers (up more than 1.3 million people).
Due to the impact of the COVID-19 pandemic, employed workers in the second quarter of 2021 decreased relative to the previous quarter. Informal employment continued to increase, making the second quarter of 2021 the one with the highest prevalence of informal employment compared to other quarters within the past three years.
Compared to the previous quarter, the size of employed workers in the second quarter of this year did not record a positive growth as against the trend otherwise observed in the years before the pandemic hit. Employed workers aged 15 and over in the second quarter of 2021 reached 49.9 million, down 65 thousand compared to the previous quarter. Of these, employed workers in rural areas were 31.8 million, down 369.3 thousand, female workers were 23.4 million, down 110.4 thousand.
The second quarter of 2021 also recorded strong growth in employed workers (an increase of 1.8 million workers) over the same period last year. However, this cannot be considered an impressive growth achievement because it is compared against the sharp decline in employed workers in the same period last year. In fact, the number of employed workers in the second quarter of 2021 was still lower than in the same period in 2019, the year without the COVID-19 pandemic, by nearly 500,000. If the pandemic is controlled and the economy is fully recovered, then in order to achieve the initial (pre-pandemic) normal state, compared to the same period last year, the size of employed workers this year needs to increase by 3.6 million, not 1.8 million as has been observed. Apparently, the 4th outbreak of the COVID-19 pandemic has pushed 1.8 million workers nationwide into a state of economic inactivity.
In the second quarter of 2021, the number of informally employed workers was 20.9 million, an increase of 251.4 thousand compared to the previous quarter and an increase of 1.4 million over the same period last year. The prevalence of informal employment in the second quarter of 2021 was 57.4%, up 0.3 percentage points from the previous quarter and 1.6 percentage points over the same period last year. Thus, the second quarter of 2021 was the one with the highest prevalence of informal employment compared to other quarters in the past three years. This suggests that the complicated developments of the COVID-19 pandemic have not only deprived 1.8 million workers of job opportunities but also pushed another 1.4 million workers into a vulnerable state due to absence of formal employment.
Services are the sector hardest hit by the pandemic. Compared to the previous quarter, the number of workers employed in this sector decreased in both quantity and share, and the number of time-related underemployed workers in this sector increased.
In the second quarter of 2021, employed workers in the AFF sector were 13.8 million, down 2.25% from the previous quarter and up 3.47% over the same period last year; the industry and construction sector had 16.6 million employed workers, an increase of 3.19% compared to the previous quarter, and an increase of 3.64% over the same period last year; employed workers in the services sector were 19.4 million, down 1.32% from the previous quarter and up 3.79% over the same period last year.
Nationally, the number of time-related underemployed workers within the statutory working-age[1] range in the second quarter of 2021 was 1.1 million, an increase of 173.5 thousand compared to the previous quarter and a decrease of 137.1 thousand compared to the same period last year. The time-related underemployment rate of statutory working-age workers in the second quarter of 2021 was 2.60%, up 0.4 percentage points from the previous quarter and down 0.38 percentage points over the same period last year. The faster, stronger, and more difficult-to-control outbreak of the 4th wave of the COVID-19 pandemic has made the time-related underemployment rate of statutory working-age workers in urban areas higher than in rural areas (with 2.80% and 2.49%, respectively). This trend is different from the trend usually observed in previous years with underemployment often higher in rural areas than in urban areas.[2] This suggests that workers in urban areas are under more pressure for employment than in rural areas during the 4th wave of the pandemic.
Among the three economic sectors, the time-related underemployed workers within statutory working-age range in the service sector in the second quarter of 2021 made up the highest proportion with 35.8% (equivalent to more than 410 thousand), and then AFF sector with 35.6% (more than 407 thousand); the industry and construction sector made up the lowest proportion with 28.6% (more than 327 thousand). Compared to the same period in 2020, the number of underemployed workers in the services sector in the second quarter of 2021 increased by nearly 100,000. The outbreak of the pandemic in the second quarter gave rise to pressure on working extra hours among workers in the services sector.
About 879 thousand time-related underemployed workers within the statutory working-age range, or more than three-quarters (76.8%), in the second quarter of 2021 had no professional and technical qualifications. These numbers and rates in the second quarters of 2020 and 2019 were more than 1 million people (83.6%) and about 492 thousand people (82.5%), respectively.
The average monthly earnings by workers reached 6.1 million VND, down from the previous quarter and up from the same period last year. The momentum of recovery and average income growth from workers’ main jobs was disrupted due to the impact of the pandemic.
The average monthly earnings by workers in the second quarter of 2021 reached 6.1 million VND, a decrease of 226 thousand VND compared to the previous quarter and an increase of 547 thousand VND over the same period last year. The average monthly earnings by male workers was 1.44 times higher than that of female workers (7.1 million VND compared to 4.9 million VND); the average monthly earnings by workers in urban areas was 1.41 times higher than in rural areas (7.5 million VND compared to 5.3 million VND). The complicated development of the pandemic in the second quarter of 2021 has interrupted the recovery of workers’ average monthly earnings from the third quarter of 2020 to the first quarter of 2021. The second quarter of 2021 recorded a decrease in workers’ average monthly earnings relative to the previous quarter.
In the second quarter of 2021, most economic sectors recorded a decrease in workers’ average monthly earnings compared to the previous quarter. Workers in the industry and construction sector suffered the biggest impact in income, with their average monthly wage of 6.7 million VND, down 464,000 VND or 6.5% relative to the previous quarter. Workers in the services sector recorded the average monthly earnings of 7.2 million VND, down 291 thousand VND or 3.9%. The average monthly earnings by workers in the AFF sector reached 3.7 million VND, an increase of 80,000 VND or 2.2%. This last sector is the only one with an increase in average monthly earnings relative to the previous quarter.
Despite the decrease in workers’ average monthly earnings as against the previous quarter, compared to the same period in 2020, workers’ average monthly earnings in the second quarter of 2021 have improved. Overall in the second quarter of 2021, workers’ average earnings increased in most industries compared to the same period last year. Some of these industries recorded increases in average income growth compared to the same period last year. They include: wholesale and retail, repair of automobiles, motorcycles and motorbikes – increased by 14.9%, equivalent to 926 thousand VND; construction – by 11.6% or 716 thousand VND; the information and communication – by 11.1% or 1,049 thousand VND and manufacturing – by 7.2% or 441 thousand VND.
The earnings of employees (waged workers) in the second quarter of 2021 reached 6.8 million VND, a decrease of 411 thousand VND compared to the previous quarter and an increase of 455 thousand VND compared to the same period last year. The average monthly earnings of male employees were 1.2 times higher than that of female employees (equivalent to 7.3 million VND compared to 6.2 million VND); the average monthly earnings of employees in urban areas were 1.3 times higher than that of employees in rural areas (equivalent to 7.7 million VND compared to 6.1 million VND).
The unemployment rate of statutory working-age workers increased relative to the previous quarter and hovered around 2%.
The number of unemployed people of statutory working age in the second quarter of 2021 was nearly 1.2 million, an increase of 87.1 thousand compared to the previous quarter and a decrease of 82.1 thousand compared to the same period last year. The working-age unemployment rate in the second quarter of 2021 was 2.62%, up 0.2 percentage points over the previous quarter and down 0.23 percentage points over the same period last year. Of these, the working-age unemployment rate in urban areas was 3.36%, up 0.17 percentage points and down 0.95 percentage points relative to the respective periods.
In the context where the pandemic has continued to spread, the overall unemployment rate and the working-age unemployment rate still hovered around 2%. In fact, the ongoing raging pandemic with complicated developments has deprived workers of any hope of finding a job. Therefore, when losing a job, instead of actively looking for another job, workers believe that they cannot find a job and choose to temporarily leave the labour force, becoming part of underutilized labour force in the economy. This makes the number of unemployed people not increase in tandem with the number of people who lose their jobs and are pushed out of the labour market and therefore results in the unemployment rate not increasing as high, only hovering around 2% even if the labour market experienced many uncertainties.
The working-age unemployment rates among workers with professional and technical qualifications in the second quarter of 2021 all decreased relative to the previous quarter and the same period last year. Specifically, these rates in elementary, intermediate, college and university and above groups decreased by 0.38; 0.04; 0.69 and 0.14 percentage points, in that order, relative to the previous quarter. Compared to the same period last year, these rates in elementary, intermediate, college and university and above groups decreased by 1.35, 0.37; 0.47 and 0.09 percentage points, respectively. Meanwhile, the unemployment rate in the second quarter of 2021 for workers without professional and technical qualifications increased by 0.38 percentage points relative to the previous quarter and decreased by 0.13 percentage points relative to the same period last year. This situation suggests that when the economy is in shock, unqualified workers encounter more difficulties in job opportunities than those with professional and technical qualifications.
During the pandemic storm, the youth unemployment rate remained high. The rate of youth (15 to 24 years old) not in employment, education or training (NEET) continued to climb.
In the second quarter of 2021, the youth unemployment rate (i.e., 15-24 years old) was 7.47%, 0.97% percentage point higher than in the same period prior to the pandemic (in 2019) and nearly 3 times higher than working-age unemployment rate. The youth unemployment rate in urban areas was 1.5 times higher than in rural areas. That is, in urban areas, for every 100 young economically active people aged 15-24, about 10 people are unemployed, this number is 6 in rural areas.
In the second quarter of 2021, the whole country had nearly 2 million (accounting for 16.7%) young people aged 15-24 not in employment, education or training, an increase of 243,000 people over the same period last year. The youth NEET rate is higher in rural areas than in urban areas, 18.7% relative to 13.3%, and much higher among young women than young men, 19.1% versus 14.4%.
At present, there is still a significant untapped potential labour force, especially the young workers; the utilization of this group of workers has become more constrained in the context of the COVID-19 pandemic.
Labour underutilization[3] rate is an aggregate indicator that indicates the “mismatch” between the supply and demand of labour in the market, reflecting the redundancy in labour supply. In the context of normal economic development, the rate of labour underutilization always exists. This rate often rises when the market suffers from socio-economic shocks.
The rate of labour underutilization in Viet Nam in previous periods stood at just 4.0%. However, the rate has started to increase when COVID-19 pandemic broke out in the country, accounting for 4.8% in the first quarter of 2020 and reached the peak at 6.2% in Q2/2020 when the pandemic strongly attacked. As socio-economic activities gradually rebounded towards the end of 2020, the rate of labour underutilization decreased to 4.4% in the fourth quarter of 2020. Turning to 2021, the 3rd and 4th waves of COVID-19 pandemic spread widely across the country, causing this rate to increase to 5.2% in the second quarter of 2021.
Labour underutilization rate in the second quarter of 2021 in urban areas increased relative to the previous quarter (6.1% versus 5.0%); whereas this rate in rural areas decreased (4.7% versus 4.9%). The majority of underutilized workers are those under 35 years old (53.2%), while those workers under 35 years old account for only 36% of the entire labour force. This shows that Viet Nam still has a significant part of the potential labour force that remains untapped, especially the young workers. In the context of the COVID-19 pandemic, it is increasingly crucial to adopt appropriate policies and measures to capture the full potentials among these workers.
In the second quarter of 2021, the number of subsistence workers in the AFF sector recorded the highest increase in many recent years.
The whole country currently has 4.2 million people aged 15 and over who are subsistence workers in the AFF sector, accounting for 5.7% of total population aged 15 and older. Compared to the previous quarter and the same period last year, the number of subsistence workers in the AFF sector in the second quarter of 2021 increased by a respective 0.6 million and 0.5 million. Most of the subsistence workers are in rural areas and two-thirds of them are women. Subsistence workers are mainly aged 50 and over (accounting for 57.3%). The data also indicates that, about 200,000 out of 4.2 million subsistence workers said that they are currently still affected by the COVID-19 pandemic (accounting for 4.4%).
On average, subsistence workers spend 19.4 hours a week on agricultural work (equivalent to 2.8 hours/day) and 16.6 hours on housework (equivalent to 2.3 hours/day). Not only do female subsistence workers participate in housework more than men, but their average working hours spent are also much higher than that of men. On average, female subsistence workers have to spend 19.6 hours a week on unpaid work in the family while this figure for men is 11.5 hours.
Most subsistence workers do not have diplomas or certificates (accounting for 93.4%). In the context of an increasingly demanding labour market that places high requirements for expertise and skills plus a strong resurgence of COVID-19 pandemic that greatly affects the labour and employment situation, the opportunity for this group of workers to find a job in the labour market will become increasingly difficult.
3. Conclusions and recommendations
In conclusion, the findings on the labour and employment situation in the second quarter of 2021 have reflected the difficulties and fluctuations of the country’s economy in general and labour market in particular over the past months. These difficulties pose a great challenge to the Government’s efforts in striving to successfully accomplish the dual goal: both economic development and victory over the pandemic. In light of this situation, the General Statistics Office hereby proposes a number of solutions to address difficulties for the labour market in the context where the pandemic is still getting complicated and unpredictable. These proposed solutions include:
– Continue to consistently implement the dual goal, both taking bold actions to effectively prevent and control the pandemic and addressing difficulties for the business community and workers. Accelerate the vaccination to achieve herd immunity, especially with priority given to frontline workers, workers in industrial parks and export processing zones to maintain production operations and prevent interruption in the global value chain.
– Implement effectively 12 support policies for workers and employers experiencing difficulties due to the COVID-19 pandemic in the spirit of the Resolution 68/NQ-CP dated July 1, 2021. Priority should be given to the effective implementation of support policies for workers suffering temporary contract suspension, furlough and termination; and providing training support to stay in employment for workers.
– Design programs and policies to encourage youth and young workers, especially those not in employment, education or training to actively study and obtain their qualifications to be ready to participate in the labour market bringing along with them the necessary skills in response to the requirements of the economy in the era of IR4.0.
– Enhance the role of Employment Service Centres across the country in order to strengthen the linkage between labour supply and demand, create confidence for workers about job opportunities, shorten the job-finding time for workers and recruitment and selection time for employers, increase the labour force participation rate, and contribute to economic growth and create jobs for workers.
– Provided targeted support to disadvantaged groups in society (labourers, small traders, informal workers, etc.) because these are particularly vulnerable groups when social distancing measures are in place, with various forms of practical assistance; to minimize negative social impacts (i.e., social evils and thefts,…).
[1] Working-age includes: male from 15 to 59 and female from 15 to 54 (from 2020 and earlier); Male from 15 to 60 years old 3 months and female from 15 to 55 years old 4 months (as from 2021 – according to the 2019 Labour Code).
[2] In the second quarter of 2020, the time-related underemployment rate was 2.36% in urban areas and 3.32% in rural areas. In the second quarter of 2019, the time-related underemployment rate was 0.9% in urban areas and 1.54% in rural areas.
[3] Workers who have a need to work but do not have enough work (also known as underutilized workers/labour underutilization) include the unemployed, underemployed, and those outside the labour force who are available for employment although they are not seeking or who are seeking employment although they are not immediately available. Labour underutilization rate is expressed by workers who have a need to work but do not have enough work as a share of the total workers with a need to work in the economy.