1. International and national economic contexts
In the third quarter of 2021, the world economy continue its momentum of recovery following heavy losses caused by the Covid-19 pandemic. The International Monetary Fund (IMF) expects global economic growth in 2021 to fall below 6% as already forecasted in July.[1] However, in Southeast Asia, GDP growth is forecasted[2] by ADB at 3.1% in 2021, down from the forecasted 4.4% in April 2021 as the region is still dealing with the highly contagious Delta variant.
The International Labour Organization (ILO) estimates the global unemployment rate in 2022[3] to be 5.7%, or equivalent to 205 million unemployed people, surpassing 187 million people in 2019. ILO also forecasts[4] that employment in the ASEAN region will experience the slow recovery due to the severe impact of the Covid-19 pandemic. The ongoing Covid-19 pandemic has caused a loss of over 7% of the working time of workers in the ASEAN region. It is forecasted that the ongoing wave of Covid-19 pandemic will make the labour market in the second half of 2021 in this region continue to deteriorate further.
In the national context, building on the results achieved in 2020, Viet Nam’s macro-economy continued to be stable and started to prosper in the first months of 2021. However, the wave of Covid-19 pandemic that broke out at the end of April, with a new fast-spreading variant that has resulted in dangerous and complicated developments in many provinces, especially in those with key economic zones, has seriously affected the health and lives of people and disrupted the production and business operations. Gross domestic product (GDP) in the third quarter of 2021 was estimated to decrease by 6.17% over the same period last year, the deepest decline since Viet Nam started to calculate and publish its quarterly GDP. The labour market has faced a serious crisis with a series of negative records being set, millions of workers suffering job losses and income reductions. Employment opportunities for workers have become more difficult than ever.
2. Impacts of the Covid-19 pandemic on the labour and employment situation
The Delta variant of the corona virus has had a heavy impact on the Vietnamese labour market in the third quarter of 2021. Southeast is the most severely affected region.
In the third quarter of 2021 alone, more than 28.2 million people aged 15 and over were negatively affected by the Covid-19 pandemic in various forms of job losses, furloughs, alternate working shifts, reduced working hours, reduced income, etc. Compared to the previous quarter, the number of workers adversely affected by the Covid-19 pandemic in the third quarter increased by 15.4 million people. Most of the affected people are of working age, from 25 to 54 years old, accounting for 73.3% of the total affected workers.
Out of a total of more than 28.2 million people negatively impacted by the Covid-19 pandemic, 4.7 million people lost their jobs, accounting for 16.5%; 14.7 million people had to suspend production and business operations, accounting for 51.1%; 12.0 million people had their working hours cut, got furloughed or were forced to work on rotational shifts, accounting for 42.7%; and 18.9 million workers had their income reduced, accounting for 67.2%.
Southeast and Mekong River Delta are the two regions that have been hit the hardest. The number of workers in these two regions who reported to have had their jobs negatively impacted by the pandemic accounted for the highest proportion, at 59.1% and 44.7%, respectively. These figures are much lower in the Northern Midlands and Mountains and the Central Highlands, at 17.4% and 19.7%, respectively.
Workers in urban areas suffer more damage than in rural areas. 46.2% of workers in urban areas are adversely affected by Covid-19 pandemic, while this figure in rural areas is 32.4%.
Nearly half of employed people (48.7%) said their job was difficult due to the pandemic (doubled from the previous quarter, up 26.1 percentage points). More than two-thirds of the total unemployed (80.9%) said their work was affected by the pandemic (up 32.8 percentage points from the previous quarter). Finally, of the 23.7 million people aged 15 and older who were outside the labor force, 14.5% reported being negatively impacted by the pandemic (up 10.7 percentage points from the previous quarter).
mployed workers in the agriculture, forestry and fishery (AFF) sector were least affected with about a quarter (26.4%) of workers in this sector negatively affected by the pandemic, a nearly three-fold increase relative to the previous quarter. Workers in both the industry and construction and the services sectors recorded a much higher level of negative impact, at 53.9% and 62.7%, respectively, double that of the second quarter of 2021.
The complicated development of the fourth wave of the Covid-19 pandemic has caused a serious decrease in the number of people participating in the labour force. The labour force participation rate was at the lowest level in the past 10 years.
By the end of the third quarter of 2021, the situation of the Covid-19 pandemic had become growingly complicated across the country, causing the social distancing and lockdown measures to be prolonged, forcing a series of non-essential businesses and services to close, resulting in a large number of businesses being heavily affected. Many workers were forced out of the market. The number of people entering the workforce in the third quarter of 2021 suffered a serious decline. The labour force aged 15 and older in the third quarter of 2021 was 49.1 million people, down 2.0 million people relative to the previous quarter and 2.2 million people down relative to the same period last year. Compared to the previous quarter, the labour force in rural areas decreased by 1.4 million people (accounting for 4.4% of the total labour force in rural areas); the labour force in urban areas decreased by 583 thousand people (accounting for 3.1% of the total labour force in urban areas).
The severe decline in labour force participation in the third quarter of 2021 brought the labour force participation rate in this quarter to its lowest level in the last 10 years at 65.6%, down 2.9 percentage points quarter on quarter and down 3.9 percentage points year on year.
During the pandemic, the Southeast region witnessed the sharpest decline in labour force participation rate, with 62.8% (a decrease of 7.9 percentage points relative to the previous quarter and the same period last year), followed by the Mekong River Delta with 65.4% (decreased by 3.3 percentage points and 5.4 percentage points, quarter on quarter and year on year, respectively) and the North and South Central Coast with 66.8% (decreased by 2.2 percentage points relative to the previous quarter and 4.0 percentage points relative to the same period last year).
The fourth wave of Covid-19 pandemic was complicated and lasted for 3 months in the third quarter of 2021, leaving millions of people without jobs. Workers in non-AFF sector continued to be severely affected.
Since the beginning of the Covid-19 pandemic, Viet Nam has experienced four outbreaks, the first and fourth of which have had the most impact on the labour market. The fourth prolonged and complicated wave of pandemic has rendered many businesses no longer able to withstand the impact and leave the market, and tens of thousands of workers return to their home provinces due to job losses. The number of employed workers in the third quarter of 2021 continued to fall to an unprecedented depth, down by nearly 2.6 million people relative to the previous quarter and by 2.7 million people relative to the same period last year. The number of employed workers in the third quarter was 47.2 million, down to the lowest level in many years.
The Covid-19 pandemic in the third quarter of 2021 has affected employment status in most regions, especially in the Southeast and the Mekong Delta. In the third quarter of 2021, the number of employed people in the Southeast region was 8.7 million people, a decrease of 1.5 million people (corresponding to a decrease of 14.5%) relative to the previous quarter and a decrease of 1.3 million people (a corresponding decrease of 13.0%) relative to the same period last year; the number of employed people in the Mekong Delta was 8.4 million people, a decrease of 763 thousand people (equivalent to a derease of 8.3%) relative to the previous quarter and a decrease of 925 thousand people (equivalent to a decrease of 9.9%) relative to the same period last year. In other regions, the number of employed people decreased by less than 4%; especially in the Central Highlands, the number of employed people was almost unchanged relative to the previous quarter.
In the third quarter of 2021, employed workers reached 14.5 million people in the AFF sector, an increase of 673.1 thousand people relative to the previous quarter and an increase of 479.0 thousand people over the same period last year; 15.7 million people in the industry and construction sector, down 952.5 thousand people compared to the previous quarter and 960.1 thousand people down relative to the same period last year; and 17.1 million people in the services sector, down 2.3 million people relative to the previous quarter and the same period last year. The social distancing measures in place that lasted for all the three months in the third quarter have aggravated the labour market and strongly affected the industry and construction and services sectors, with the number of workers in these two sectors decreasing to an unprecedented low in many years. On the contrary, the labour force in the AFF sector has tended to increase, as opposed to the previously observed trends, mainly due to the increasing number of workers who lost their jobs in the southern provinces returning to their localities and working in the agriculture sector.
The prolonged development of the Covid-19 pandemic along with the implementation of Directives 15 and 16 has caused thousands of businesses to face difficulties, resulting in tens of thousands of businesses being dissolved or suspending operations and many only operating at a moderate level with only 30-50% of workers due to the social distancing measures in place. Furthermore, the labour supply for the market has also decreased as workers returned to their home provinces for fear of the pandemic or had to be isolated, leading to a shortage of labour supply in many enterprises. The findings of the survey to assess the impact of the Covid-19 pandemic on a national scale showed that 17.8% of 22,764 businesses experienced a shortage of workers. The highest proportion of enterprises with labour shortage was recorded in the Southeast region, with 30.6%. In this region, provinces with severe labour shortages are Binh Duong (36.9%); Binh Phuoc (34.4%) and Ho Chi Minh City (31.8%). Some industries that reported to have experienced the most severe labour shortages are electronics, computer and optical products manufacturing (55.6%), leather and related products (51.7%), apparel manufacturing (49.2%), electrical equipment manufacturing (44.5%) and textiles (39.5%).
Not only did the Covid-19 pandemic affect the formal sector, reducing the number of workers in this sector, its effect also spread to the informal sector, rendering workers no longer have the opportunity to find informal jobs as previously observed. This leads to many workers being unable to find jobs, including temporary jobs during this period. In the third quarter of 2021, the number of workers with formal employment was 15.1 million people, down 468.9 thousand people relative to the previous quarter and down 657.0 thousand people over the same period last year; the number of workers with informal employment outside of the AFF households was 18.0 million, down 2.9 million from the previous quarter and down by 2.7 million over the same period last year.
The informal employment rate[5] in the third quarter of 2021 was 54.5%, down 2.9 percentage points relative to the previous quarter and down 2.3 percentage points over the same period last year. The informal employment rate in urban areas was 46.2%, down 2.4 percentage points from the previous quarter and down 3.0 percentage points from the same period last year. This same rate in rural areas was 61.8%, down 2.9 percentage points relative to the previous quarter and down 1.0 percentage point over the same period last year.
The wave of Covid-19 pandemic has rendered the rate and number of underemployed workers in the third quarter of 2021 unusually high, especially in Ho Chi Minh City.
Underemployed workers in the statutory working age[6] in the third quarter of 2021 were more than 1.8 million people, an increase of 700.3 thousand people relative to the previous quarter and an increase of 620.0 thousand people relative to the same period last year. The statutory working-age underemployment rate in the third quarter of 2021 was 4.46%, up 1.86 percentage points over the previous quarter and 1.74 percentage points over the same period last year. The statutory working-age underemployment rate in urban areas was higher than in rural areas (5.33% and 3.94%, respectively). This is different from the trend generally observed in the labour market in previous quarters with underemployment in rural areas often more severe than in urban areas[7].
Comparing the statutory working-age underemployment rate among six socio-economic regions in the third quarter of 2021 shows that this rate was highest in the Southeast with 7.73%, followed by the Mekong Delta with 6.10%. Before the pandemic appeared (i.e., third quarter of 2019), the underemployment rate in the Southeast region was 0.37%, the lowest in the country. In the third quarter of 2021, this rate was especially high in Ho Chi Minh City, with 8.50%, 3.6 times higher than in Ha Noi (2.39%). The Delta variant has had the most impact on people working in the Southeast region in general and Ho Chi Minh City in particular, causing the underemployment rate in this region to increase sharply.
Among the three economic sectors, statutory working-age underemployed workers in the services sector in the third quarter of 2021 accounted for the highest share with 36.1% (equivalent to more than 666 thousand underemployed people); followed by industry and construction sector with 35.0% (nearly 646 thousand people); the AFF sector accounted for the lowest share with 28.9% (more than 533 thousand people). Relative to the same period in 2020, the number of underemployed workers in the third quarter of 2021 in the services sector increased by more than 339 thousand people, the industry and construction sector increased by more than 303 thousand people. The prolonged period of social distancing measures along with the complicated developments of the pandemic in the third quarter of 2021 have significantly increased the demand and desire for overtime work among many workers in both the services and the industrial and construction sectors.
The average monthly earnings of workers were 5.2 million dong, a serious decrease relative to the previous quarter and the same period last year. Workers in the Southeast region are the hardest hit with the sharp decline in earnings.
The average monthly earnings of workers in the third quarter of 2021 were 5.2 million dong, down 877 thousand dong relative to the previous quarter and 603 thousand dong lower than the same period last year. The average monthly earnings of male workers were 1.40 times higher than that of female workers (6.0 million VND compared to 4.3 million VND); the average earnings of workers in urban areas were 1.35 times higher than in rural areas (6.2 million VND compared to 4.6 million VND). The complicated developments of the Covid-19 pandemic have seriously affected the lives of workers. Compared to the second quarter of last year, which had witnessed the “bottom” average earnings due to the implementation of social distancing in accordance with Directive 16, the average monthly earnings of workers in the third quarter of this year were even much lower (lower than 329,000 VND). This has been the lowest level of earnings recorded in many years.
Workers in the Southeast region experienced the biggest decrease in earnings. Compared to the previous quarter and the same period last year, the Delta variant has swept away about a quarter of the average monthly earnings of workers in this region. In the third quarter of 2021, the average earnings of workers in this region were 5.7 million VND, down 2.4 million VND (equivalent to 29.8%) relative to the previous quarter and down 1.9 million VND (equivalent to 24.9%) over the same period last year. In particular, workers in Ho Chi Minh City were even more severely affected with the deepest decrease in average earnings, down by 2.6 million VND (equivalent to 31.0%) relative to the previous quarter and a decrease of 2.5 million VND (equivalent to 30.3%) relative to the same period last year. The average monthly earnings of workers in Ho Chi Minh City were only 5.8 million VND, the lowest level in many years.
The second most damaged after those in the Southeast region are workers in the Mekong Delta. The average earnings of workers in this region were 4.5 million VND, down 873 thousand VND (equivalent to 16.1%) relative to the previous quarter and down 623 thousand VND (equivalent to a 12.1% decrease relative to the same period last year). The least affected by the Covid-19 pandemic are workers in the Northern Midlands and Mountains. The average monthly earnings of workers in this region were 4.4 million VND, a slight decrease relative to the previous quarter (down 93 thousand VND).
Compared to their counterparts in Ho Chi Minh City, workers in Hanoi are affected much more gently. The average earnings of workers in the capital city were 7.0 million VND, down about 1.0 million VND (equivalent to 12.5%) relative to the previous quarter and down 342 thousand VND, an equivalent of 4.6% relative to the same period last year.
In the third quarter of 2021, most economic sectors recorded a decrease in the average earnings of workers relative to the previous quarter. Workers in the services sector suffered the most income reduction, with an average monthly earnings of 6.2 million VND, down about 1.0 million VND, equivalent to a decrease of 14.3% relative to the previous quarter; in industrial and construction sector, workers had average earnings of 5.8 million VND, down 906 thousand VND, equivalent to a decrease of 13.5% relative to the previous quarter. Workers in the AFF sector no longer maintained the stable growth rate as observed in the many previous quarters, but also began to sink into a decline. The earnings of workers in this sector were 3.4 million VND/person/month, down 340 thousand VND/person, equivalent to a decrease of 9.2% relative to the previous quarter.
Some economic sectors also recorded the piled up difficulties experienced by workers as their average earnings continuously decreased through each outbreak of the pandemic. They typically include the following: Accommodation and catering services with average earnings down 21.2%, or by about 1.2 million dong relative to the previous quarter; the transportation and warehousing industry with average earnings down 20.3%, equivalent to a decrease of about VND 1.6 million relative to the previous quarter.
The unusual development of the Covid-19 pandemic has pushed the unemployment rate to spike, far exceeding the usually observed 2% figure.
On a national scale, the number of statutory working-age unemployed people in the third quarter of 2021 was more than 1.7 million people, an increase of 532.2 thousand people relative to the previous quarter and an increase of 449.6 thousand people relative to the same period last year. . The statutory working-age unemployment rate in the third quarter of 2021 was 3.98%, an increase of 1.36 percentage points relative to the previous quarter and an increase of 1.25 percentage points over the same period last year. The urban statutory working-age unemployment rate was 5.54%, an increase of 2.18 percentage points relative to the previous quarter and an increase of 1.60 percentage points over the same period last year.
The statutory working-age unemployment rate of 3.98% is the highest increase witnessed in the past 10 years, making it even more difficult for workers to find a job. Prior to the pandemic, although there were periods when the economy faced many difficulties, the unemployment rate still increased only to 2.82% (in the first quarter of 2011). In 2020 and the first 6 months of 2021, despite being heavily impacted by the Covid-19 pandemic, the national unemployment rate still fluctuated around 2%, with the highest level recorded in the second quarter of 2020 being 2.85%.
Southeast and the Mekong River Delta are the two regions that record the highest unemployment rate in this quarter, much higher than the national average. Over 6% of working-age workers in these two regions have been actively looking for jobs but still cannot find one. Before the outbreak of the Covid-19 pandemic (third quarter of 2019), this rate had been only 2.33% in the Southeast region and 2.28% in the Mekong River Delta. In the third quarter of 2021, this rate was especially high in Ho Chi Minh City with 9.93%, 4 times higher than in Ha Noi (2.49%).
Compared to the same period last year, the statutory working-age unemployment rate among workers without professional and technical qualifications and those with elementary qualifications in the third quarter of 2021 both increased, by 2.39 and 0.72 percentage points, respectively. Meanwhile, the statutory working age unemployment rate among workers with intermediate or higher qualifications decreased relative to the same period last year (the unemployment rate decreased by 2.53 percentage points among those with intermediate qualifications, decreased by 3.66 percentage points among those with college qualifications, and decreased by 1.79 percentage points among those with university or higher qualifications). This situation shows that unskilled or low-skilled workers face more difficulties in job opportunities than those with higher technical and professional qualifications in the face of socio-economic shocks.
Youth unemployment rate (15 to 24 years old) remained high. The rate of youth (15 to 24 years old) not in employment, education or training (NEET) continued to climb.
In the third quarter of 2021, the youth unemployment rate (15 to 24 years old) was 8.89%, 0.75 percentage points higher than the same period last year and 2.2 times higher than the statutory working-age unemployment rate. The youth unemployment rate in urban areas was 1.8 times higher than in rural areas. Specifically, in urban areas, for every 100 young people aged 15-24 engaged in economic activities, there were about 13 unemployed people, this corresponding number was 7 people in rural areas. The youth unemployment rate in Ho Chi Minh City in the third quarter of 2021 was 15.12%, 1.7 times higher than that of Ha Noi (8.85%).
In the third quarter of 2021, the whole country recorded nearly 2.4 million (accounting for 19.6%) young people aged 15-24 not in employment, education or training, an increase of 642 thousand people over the same period last year. The rate of youth (15 to 24 years old) not in employment, education or training (NEET) was higher in rural areas than in urban areas, 21.0% compared to 17.4% and higher among young women than young men, 21.5% versus 17.8%.
Compared among six socio-economic regions, the NEET in the Northern Midlands and Mountains was the highest with 26.1%, followed by Mekong River Delta with 25.6%, up 18.6 and 6.5 percentage points respectively over the same period last year. This rate in Ho Chi Minh City in the third quarter of 2021 was 21.1%, 2.2 times higher than in Ha Noi (9.5%). Compared to the same period last year, this rate in Ho Chi Minh City increased by 10.5 percentage points, whereas in Ha Noi, it decreased by 0.2 percentage points.
The rate of labour underutilization doubled from the previous quarter, much higher than the increase recorded in the second quarter of 2020.
The labour underutilization rate[8] in the third quarter of 2021 was 10.4%, nearly double that of the previous quarter and the same period last year (Q2 of 2021: 5,2% and Q3 of 2020: 5.5%). For many years, the labour underutilization rate in Viet Nam had constantly stood only 4%. From the first quarter of 2020 to the end of the second quarter of 2021, this rate began to increase and reached a peak of 6.2% in the second quarter of 2020. In the last months of 2020, when socio-economic activities gradually returned to a new normal, this rate dropped to 4.4% in the fourth quarter of 2020. However, the Covid-19 pandemic in 2021 especially in the third quarter once again increased this rate significantly, surpassing the record of 6.2% set in the second quarter of last year.
The labour underutilization rate in the third quarter of 2021 in both urban and rural areas nearly doubled that of the previous quarter (13.3% in urban areas compared to 6.1%, and 8.7% in rural areas compared to versus 4.7%). The majority of workers who are not utilizing their full potential are those aged 15-34 (45.2%), while the labour force of the same age group accounts for only 34.5%. This suggests that Viet Nam still has a large number of untapped potential labour force, especially young workers, and that in the context of the Covid-19 pandemic, it has become all the more important to study and devise appropriate policies to capture the full potentials this group of workers has to offer.
The number of subsistence workers in AFF sector has increased significantly.
The number of workers in AFF sector making products and services for the main purpose of household consumption (commonly referred to as subsistence workers[9]) in the third quarter of 2021 was 5.2 million people, an increase of nearly 1 million people relative to the previous quarter and an increase of nearly 2 million people relative to the same period last year. This number of workers mainly increased in rural areas. Nearly two-thirds of subsistence workers in the third quarter of 2021 were women (62.9%). Subsistence workers were mainly aged 55 and older (accounting for 47.4%). The data also shows that, out of 5.2 million subsistence workers, more than 700 thousand people said to have been negatively impacted by the Covid-19 pandemic (accounting for 13.9%).
On average, each week subsistence workers spent 18.2 hours on agricultural work (equivalent to 2.6 hours/day) and 16.7 hours on housework (equivalent to about 2.3 hours/day).
Not only did female subsistence workers spend more average working hours on housework than male counterparts, their average working hours on agricultural work were also much higher than that of men. On average, female subsistence workers spent 19.7 hours each week on unpaid work in the family while this figure for men was 11.6 hours.
Most subsistence workers do not have diplomas or certificates (accounting for 92.9%). In the context of an increasingly demanding labour market that puts high requirements for technical competencies and skills, plus strong outbreaks of the Covid-19 pandemic that greatly affect the employment situation, it will become even more difficult for this group of workers to secure jobs in the labour market.
3. Conclusions and recommendations
The fourth outbreak of the Covid-19 pandemic has put heavy pressure on all facets of the Vietnamese economy in general and the labour market in particular. This fact poses great challenges for the Government in its efforts to achieve the growth targets for 2021. In the light of this situation, the General Statistics Office would like to propose a number of solutions to remove difficulties for the labour market in the context of the ongoing and unpredictable developments of the Covid-19 pandemic, as follows:
– Strictly implement applicable measures to bring Covid-19 under control, especially in big cities and provinces with many industrial parks. Strengthen the vaccination strategy by availing of all possible resources to ensure sufficient Covid-19 vaccination for the people towards a community immunity mechanism as soon as possible.
– Implement effectively the relief support packages for businesses and workers to recover from the pandemic; develop and implement programmes and policies that encourage workers, especially young people, to actively and promptly study and upgrade their qualifications and acquire necessary skills in response to the growing requirements of business and production recovery of the economy.
– The Government should formulate policies that encourage provinces to set up official and specialized information channels to update businesses and workers on strategies for economic development, policies for supporting and attracting workers, and local testing and outbreak control plans so that they can take initiative to formulate their own plans for production recovery and development.
[1] Source: https://www.reuters.com/business/imf-sees-global-gdp-2021-slightly-below-prior-forecast-6-2021-10-05/
[2] Updated edition of Asian Economic Outlook 2021, September 2021.
[3] Source: https://www.ilo.org/global/about-the-ilo/newsroom/news/WCMS_794834/lang–en/index.htm
[4] Source: https://www.ilo.org/hanoi/Informationresources/Publicinformation/Pressreleases/WCMS_816652/lang–vi/index.htm
[5] The informal employment rate including agriculture in the third quarter of 2021 was 68.1%, down 0.7 percentage points from the previous quarter and down 0.4 percentage points from the same period last year.
[6] Statutory 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).
[7] In the third quarter of 2020, the underemployment rate was 1.96% in urban areas and 3.14% in rural areas. In the third quarter of 2019, the underemployment rate was 0.63% in urban area 1.63% in rural areas
[8] 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.
[9] “Subsistence workers” means workers in the AFF sector that make products and services for the main purpose of individual and household consumptions.