Labour export essay

Labor Export Overview of Vietnam in The International Economic Integration
University of Economics HCMC
Faculty of Commercial – Tourism - Marketing
LABOUR EXPORT OVERVIEW OF
VIETNAM IN THE INTERNATIONAL
ECONOMIC INTEGRATION
Nguyen Hai Thy
6th
, December, 2013

Table of Contents
Page
1. Introduction 1
2. Definition 1
3. Benefits 1
4. Risks 2
5. Opportunities 3
6. Challenges 4
7. Facts 6
8. Recommendations 6
9. Conclusion 8
References 9

1
1. INTRODUCTION
As the general trend of the world, the process of globalization has brought new
opportunities for economic growth and social development in our country.
International economic integration enables Vietnam to bring into play the available
resources. Besides natural resources, Vietnam has achieved high growth constantly
over the years by relying on a cheap and abundant labor source.
Up to October 2013, Vietnam population is consisted of around 91 million people,
ranked the world's 13th
, the third of Southeast Asia, and continuously increase with
population growth rate of approximately 1.05 % each year. Moreover, the
population pyramid resembles a triangle with few old people, many young ones, and
those labor age is dominant. Hence, labor is a comparative advantage of Vietnam to
foreign competition, including the developed countries like USA, Japan, and Taiwan.
An effective method to take advantage of labor resources is labor export. Exporting
labor can strengthen economic development for our country and reduce a large
amount of unemployment.
Understanding of labor export situation in our country as well as its competitiveness
and benefits or risk will help us have an overview in this field and rational use of
resources to develop the national economy.
2. DEFINITION
Vietnamese labor export to foreign countries often referred to as Vietnam's labor
exports, the economic activity in the form of the Vietnamese labor supply abroad
under a contract to serve the needs of labor for foreign enterprises.
There are five forms of labor export to foreign countries: agreement signed between
the two governments; labor cooperation and experts; Vietnam enterprises receive
contract, construction project, joint ventures, connect products and investment
abroad; employees directly sign labor contracts with foreign individuals and
organizations and the mainly one is Vietnamese enterprises serve labor supply.
3. BENEFITS
Labor export is considered as an external economic sector brings many benefits to
the economy - society of our country.
At first, Labor export contributes labor to create jobs and improve living standards
for many people. Although Vietnam's economy has recovered and continues to grow,
most people in Vietnam still poverty, unemployment and low education levels. The
desire to improve their lives is the main reason of exporting Vietnam labors to work
overseas. Labor exports could help ease the country's growing burden of
unemployment, as well as alleviate poverty. In some villages which has high rate of
labor exports, many people become rich from poverty, the estimated average of
remittances may reach 40 to 100 billion annually. Others come back home becoming
investors, build businesses and create jobs for local workers.

2
Then, Labor exports also bring a large income, an increase of foreign exchange for
our country. In 2010, Vietnam was ranked 16th among 30 countries have the most
remittances and considered as one of ten countries get the highest income from
export labor.
Another benefit is that exporting labor helps a division of labor access to advanced
technology and machinery; modern management mechanism and style of industry;
and improves their skills. Because of being trained at developed scientific - technical
countries, this would certainly be an elevator that help raising employees’ self-value
to find the much higher salaries when return home.
Also, foreign language, one of significant barriers to investment of foreign
corporations, becomes easy with the employees who used to work abroad. Knowing
foreign languages as well as high skills and experienced work help employees get in
high positions at foreign corporations.
4. RISKS
Besides remarkable benefits, there are also some concerned issues happening
through exporting labor. About policies, structures and management in and out of
country, regulations and legal procedures are not clearly enabling businesses to take
advantage of the law and force workers suffer unreasonably high cost or do illegal
things to get more profit. The legal system of labor export is limited, especially in the
matter of handling errors. The sanctions are not strong and tough enough so that
people seem not respect the law as well as regulations much.
Furthermore, Vietnam ‘s labors still has low educational level and labor export
acknowledge, which is hard to satisfied the international standard and compete with
other labor-intensive countries. Employees may not access to correct information
sources on issues related to labor export’s activities. Workers often find information
through acquaintances that came back from working abroad and ask “middle-man”
with incorrect information. The lack of information makes these workers vulnerable
to scams and do not consider all the benefits and risks.
Moreover, the establishment of the center, organizations is increasing, which makes
the management of the agency become difficult. Currently there are more than 150
enterprises have functions of exporting labor. The business center is opened and
widespread but there is no supervision, strict inspection.
Then, workers may easily face a fraud from bad exporters or exploitation and abuse
of foreign companies. Seeking better pay overseas, many migrants are being
ruthlessly exploited, while relevant agencies lack the means to monitor or protect
them. There are series of risks such as being not able to work abroad after waiting a
long time, and get back the amount deposited, or if there is, only a small part may be
returned. Many workers in Malaysia have to suffer labor contracts fraud, be abused,
beaten or starved. For the labor export to Russia, the employees are very easy to be
fooled and cannot find legitimate place. There are thousands of Vietnam were falling
into "slave labor" in this market. They were kept in the isolated area and worked too

3
hard in the illegal garment factories. They were badly exploited, seized any
identification and did not have the financial ability to become Vietnam. In early 2012,
a number of labor export illegally in Russia call for help from Vietnam reporters
because of without being paid all year.
5. OPPORTUNITIES
Opportunities for Vietnam labor export remains in the traditional market such as
Japan, Taiwan, Korea, Malaysia ... These countries has growing economy and high
demand in the reception of foreign workers, including labor of Vietnam. Especially in
Japan, the receiving organization as well as the factories here has expressed their
desire to strengthen receiving large Vietnamese trainee upcoming time.
Korea market is expected to attract more workers in recent years. The average
income of employees working in Korea in the highest average from 1300-1700 USD /
month (approximately 26-35 million / month), is also popular from 1000-1500 USD /
month. South Korea will remain the key markets of Vietnam in 2013 and will attract a
large number of workers involved.
Taiwan is currently the leading labor export market of Vietnam. Recently, Taiwan has
loosened its policies for foreign workers, opening up opportunities for Vietnam to
increase labor exports to this market in the near future.
Besides, Taiwan issued a new policy regarding foreign workers in Taiwan. Most of
these provisions create favorable conditions for foreign workers in Taiwan, as well as
encourage Taiwan businesses to hire foreign workers to meet the labor demand in
the booming economic development, reducing rates of laborers quitting and
decreasing unauthorized labor. Most notable is the extension of the adjustment of
reception conditions for foreign workers to supply manpower for some sectors.
Accordingly, 3 new sectors will receive foreign laborers, namely production of plastic
safety caps, toilet cleaning and cosmetics, and 6 sectors will have their foreign
laborer quota increased by 5 percent, namely garment, suitcase production, bags,
frozen meat, bicycle components, printed circuit boards, measuring and
semiconductor packaging.
To prevent the labor brokerage fees from being pushed up too high, since January
7th 2013, Taiwan has officially implemented the provisions on not renewing license
or not allowing the establishment of branches of brokerage firms in Taiwan and not
to renew the license for the labor export company from the countries having high
rates of laborers quitting in the first 3 months after immigration. The preferential
regulations on quotas of foreign workers stipulate that newly invested businesses in
Taiwan can demand more foreign labor, 5-10 percent of the allowed rate, and that
Taiwanese enterprises returning from abroad can add 15-20 percent of the foreign
workers rate. Taiwan Labor Commission also issued revised procedures and support
for foreigners voluntarily returning to their home countries to retrieve their
passports, cash and property that their owners or broker retain from June 11th 2013.

4
Also starting from April 1st, Taiwan has implemented an adjusted base salary;
accordingly, the base salary is increased to VND13.4 million per month. This wage is
applied to all employees (including the last entry before April 1st). In addition,
insurance policies for workers are also adjusted. This is considered a positive sign,
bringing opportunities to increase Vietnam's labor exports to Taiwan in the future.
Besides Taiwan, Macau (China) market is also attracting many Vietnam workers;
especially workers need to do domestic work. Currently, it is estimated that more
than 10,000 Vietnam workers are working here legally.
Nowadays, the situation was relatively stable Libya and began receiving workers
demand Vietnam. To ensure that the interests of employees, some conditions of
contract laborers brought to work in this country will change.
Japan is evaluated as a potential labor export market for Vietnam by large employers
demand and quiet high salary. Working in Japan, workers have more opportunities to
learn and access to modern technology. Recently, recruiting orders from Japanese
for labor of Vietnam is growing strongly
According to Japan International Training Cooperation Organization (JITCO ) , the
demand and supply market and number of Vietnamese student received internships
from Japan is slowly stabilizing and developing along to increase in the number of
business lines. In the first 8 months, Vietnam has exported 8,168 employees to the
Japanese labor market. The industry has also become more diverse as Japan now not
just outsource oversea employees in technical , mechanical but also in some other
industries such as agriculture, electronics assembly , food processing , home
decoration ... This is quite suitable to Vietnamese labor. Number of employees
employed is not limited but it depends on the business’s negotiation and bargaining
skills. The Deputy Director of Department of Management of Overseas Labor - Le Van
Thanh, said , currently there are more than 100 companies send its employees to
Japan to improve their skills and knowledge’s. More than that, number of application
has been increasing over time with the same benefits. On the other side, Japan also
gives priority to Vietnamese labor and jobs. In particular, Vietnam officially agreed to
send nursing candidates to Japan to work and study. This will be a very potential field
for Vietnamese domestic companies to recruit and train employees who are suitable
to requirements of Japanese companies.
6. CHALLENGES
Vietnam’s labor market is in danger of losing its position in the country when the
country officially opens its doors after entering the World Trade Organization (WTO).
According to figures from the Vietnam Labor Export Association, around 70,000
Vietnamese laborers have been sent aboard and sent back 1.5 billion USD
remittance. The figure is expected to increase many fold if they are trained
methodically. However, due to fundamental shortcomings in occupational skills at
present, Vietnamese laborers are weaker than those of other countries in the region.

5
The danger of losing labor market in their country of Vietnamese domestic laborers
will happen if they are not strong enough to compete with their foreign colleagues,
especially when Vietnam officially opens its door at the time of entering into the
WTO. After Vietnam joins the WTO, all economic barriers will be removed, creating
favorable conditions for foreign enterprises to do their business in Vietnam. If the
existing shortcomings of labor forces are not promptly addressed, the danger of
foreign laborers encroaching on the great.
Vietnamese employees are mainly weak in occupational skills, working discipline and
foreign languages compared to laborers from other countries in the region and in the
world. This directly affects the incomes and positions of Vietnamese laborers. The
country now has 43 million employees nationwide, 80 percent of whom are common
laborers. 12.8 percent of the 95,430 guest workers having sent aboard by 64 labor
export enterprises were trained occupational skills. According to VOVNews, apart
from this, laborers’ lack of working disciplines leads to negative points such as failure
to adhere to working principles. Weakness in foreign languages is a big reason why
Vietnamese laborers are paid less than their foreign colleagues.
If Vietnam did not soon work out effective measures to improve the occupational
skills of its labourers, the country’s labour market was likely to have an influx of
labourers from Thailand, China, Laos. Previously, the most attractive element of
Vietnam’s labour market was its low price. However, the advantage at present will
become a disadvantage because workers at cheap prices usually have low working
standards. Therefore, if the working standards of Vietnamese workers remain the
same then the labour market will suffer when big investors pour their money into
Vietnam. Only skilled workers will have chances to get jobs and earn stable incomes.
Therefore, Instead of struggling for skilled workers who working for other
companies, the labour market should train more skilled employees.
Minister of Labor, War Invalids and Social Affairs Pham Thi Hai Chuyen said Japan,
South Korea, Malaysia, and Taiwan have been recruiting a limited number of
Vietnamese workers since the start of 2013 due to the difficult global economic
situation. They are among Vietnam’s traditional labor markets. South Korea,
Vietnam’s second biggest market, has recently stopped hiring Vietnamese after
taking in 1,560 since the start of this year. It is likely that less Vietnamese will be sent
to Japan in 2014, because Japanese companies lowered their quotas for imported
labour.
One reason it is difficult for Vietnamese workers to compete with those from other
countries, such as China or Indonesia is that the rate of Vietnamese workers who quit
before the contract is up is higher than those of other countries. At the same time,
“Airfare from China to Japan is much cheaper than from Vietnam, which is another
reason for Japanese companies to choose Chinese laborers,” the general director
said. Since September 2013, Taiwan has opened its doors to receive Filipino workers
to get back to work so sending Vietnamese workers to Taiwan will no longer be as
advantageous as in the early months, especially the recruitment of female workers

6
will more rigorous. To keep its market share in this potential market, companies
should be careful in selecting, training and giving orientation for employees to
minimize the early return rate.
7. FACTS
Total number of labors that go abroad to work in ten first months of 2013 was
70.253 - according to figures collected from companies. This satisfied 88% of the
planned targets.
In Vietnam, international labor mobility has more than 3 decade long experience.
After the collapse of Eastern Europe block, during the 1990s, Vietnam sought to
access new market places while maintained old ones. At present, the Government
consider increasing international labor mobility a high priority, as mean to increase
employment opportunities, generate more income for workers, and to meet poverty
alleviation & socio-economic development strategic targets.
This activity started in 1980 in the form of labor cooperation with the socialist
countries, when Vietnamese economy is still difficult. The activity has brought many
advantages to Vietnam. Since the mechanism of change in 1991, the labor export
activities flourished, expanding the market to many countries and regions. In the 21st
century, there is a surge of Vietnamese labor export to foreign countries; three main
markets are Taiwan, Malaysia and South Korea.
Taiwan labour market is mainly based on labour supply from Indonesia and Vietnam,
in which, Indonesia dominates the labour supply for the service sector, while
Vietnam is the main supplier for the manufacturing sector. According to the
Department of Management of Overseas Labour, Ministry of Labour, Invalids and
Social Affairs, as of October 2013, 37,394 Vietnamese employees were working in
Taiwan, accounting for more than 53.2 percent of the total Vietnamese workers
working abroad and much larger than the number of employees working in other
markets: Japan 7,130 employees; Malaysia 6,280; Laos 4,549; Korea 4,219, etc. The
figure shows that Taiwan remains by far the largest labour export market of Vietnam.
Vietnamese workers in Taiwan work mainly in the fields of manufacturing,
construction, engineering, textiles, agriculture and furniture. Basic salary is about
VND8-9 million a month. For factory workers, for an extra 2 hours a day, they are
paid an additional 33 percent of salary for each hour, the next hour overtime is paid
66 percent of salary for each hour, overtime on Sundays and public holidays is paid
twice as much as a regular working day.
8. RECOMMENDATIONS
To achieve the social and economic targets and overcome the constraints in this
field, it is necessary to change for new development:
First of all, the labor needs to deploy the propagation and dissemination of the
awareness of the law. When it comes to the need of going to work abroad, laborers
should contact directly with the Overseas Labor Management Department, the

7
Department of Labor, Invalids and Social, or companies having function at labor
export. When the labor had registered by accident to illegal business, they should
notify authorities and coordinate to handle those problems. On the other hand, labor
export information of central and provincial labor services should be improved for
easy access of all clients (companies, training institutions and workers).
Secondly, for the establishment of the labor export organization, Government must
have stricter rules to limit the ones who do not qualify, do not function properly. The
purification of these units will help to limit the negative behavior. The local
authorities having headquarters of the labor export enterprises have to strengthen
inspection and supervising activities and situations of those labor export enterprises.
Capturing on time the actual situation, implementing the law as well as discovering
early derogations are required.
Thirdly, Post Overseas Vietnamese Labor Law rules and regulations to be adopted
and implemented this year should ensure the transparency and simplification of
administrative procedures. Government have to amend, add the legal system more
tightly and fuller as well as issuing policies, laws on prevention and handling
violations with more powerful and more efficient sanction treatment, and have to
push the Law on Overseas Vietnamese Labor and relevant regulations to be
implemented effectively.
Fourthly, operation in labor export is a kind of activity needed the cooperation of
countries having labor export’s relationship. In this collaborative process, we need
to sign international treaties to create the advantages for labor export activities as
well as have the most effective mechanism to protect the rights and benefits of
abroad Vietnamese workers. Besides that, we should take advantage of international
economic expansion to seek for new labor exporting channels.
Fifthly, perhaps upgrading the quality of vocational training is the immediate and
urgent action. Besides enhancing the quality of pre-departure training services,
training institutions should invest fund and human resource to develop and diversify
high-skilled and market-oriented vocational training programs. One of the measures
might explore is to cooperate with businesses to help students to get access to jobs.
The country needs to shift from supplying cheap low-skilled manpower to more
globally competitive and skilled manpower. On the other hand, the Government
should have appropriate funding or loans policies applied to training institutions.
Preferential bank loans and fees policies should be adopted, especially applied to
rural workers so that more of them can have opportunity to join the exported labor
while not falling into the debt burden.
Finally, to serve the longer-term goals, there is a need to develop a national labor
export strategy. Such a big job can only be successful should it be based on a
comprehensive study at the national level. The study should be global-approached,
client-need-based and result-oriented. The output of the study will be used to feed in
the labor export strategy that help tackle the shortcomings analyzed above

8
(regulatory and policy environment, research and information, labor training and
export services, budget and loans issues etc.).
9. CONCLUSION
This paper sets out to raise the visibility and awareness of the components involved
in labor export to the basic characteristics of labor export in Vietnam.
There are benefits and risks regarding the labor export. It helps to solve the problem
of high unemployment rates and enhances the national balance of payment.
Remittances make up a large source of foreign funds in Vietnam. Gender equality is
also promoted by labour export, because many women have become migrant
workers. However, the “brain drain” is still the foremost concern. Protection of
migrant workers’ rights also draws great attention. The great reliance on the global
market makes the country vulnerable to external shocks.
More and more countries in the world have great increasingly demand on workforce
as Japan, Taiwan, Korea, Malaysia, Macau ... At the same time, these countries
provide continuously policies to support and improve skills for migrant workers.
However, Vietnam is not the only labor intensive country in the world. The labour
resources of many countries such as the Philippines, Indonesia, and China ... are not
only abundant, but also have the language and skills training in accordance with
standards international. Along with the process of international economic integration
in recent years, cheap labor but unskilled as in our country is very difficult to
compete with another developing countries around the world. That is the key
opportunities and challenges with regard to labor export in Vietnam.
Have Vietnam labor become determined resources of success in international
integration or become obstacles in the process of catching up with advanced
countries, this depends on the rise will of our nation , of each business and each
Vietnamese. If there is a logical policy, innovated technnology, creative and studious
people, we will certainly succeed. Otherwise, we will lag far with the witness of high
indicators of poverty and unemployment, low labor productivity and incomes,
resulting in an economic marginalization of the globalization process. Therefore, to
generate further growth in labor export activities , it is necessary for specific
measures of the state , export companies and employees, contributing to accelerate
the country's development in order to be closer to the stormy development of
countries around the world.

9
References
1. Website of Washin Engine Co.,Ltd
http://vtown.vn/en/articles/cate-7.html
2. Website of TMS Human Resource Joint Stock Company
http://tmshr.com.vn/english/ad/Labor-export.html
3. Website of ICO International Joint Stock Company
http://www.icovietnam.com.vn/Pages/1549/introduction.aspx
4. Thanh Nien, the flagship publication of the Vietnam National Youth Federation
http://www.thanhniennews.com/index/pages/20130412-vietnam-ministry-
unlikely-to-achieve-labor-export-target.aspx
5. Asis, M. (2006). The Philippines’ culture of migration. Migration Information Source.
Migration Policy Institute.
http://www.migrationinformation.org/USFocus/display.cfm?ID=364
6. Hugo, G. & Stahl, C. (2004). Labour export strategies in Asia. In Massey, D. and Taylor, J.E.
(eds.). International Migration: Prospects and Policies in a Globalized context. Oxford:
Oxford University Press.
7. IOM (2010). World migration report 2010: the future of migration: building capacities for
change. International Organization for Migration (IOM).
http://publications.iom.int/bookstore/free/WMR_2010_ENGLISH.pdf
8. Website of Saigon Investment Manpower Commerce Import Export
Corporation
http://www.vietnamlabourexport.com/labor-export-news/trang-1.html
9. Vietnam Association of Manpower Supply – VAMAS
http://www.vamas.com.vn/lao-dong-nuoc-ngoai_t229c657tn.aspx
10.Vietnam Manpower Center (VIMAC)
http://vimac.com.vn/newsdetail.aspx?Nid=179&l=1&mnid=19
11.Administration of foreign workers
http://www.dolab.gov.vn/New/Default.aspx
12.Ministry of labor – Invalids and social affairs
http://english.molisa.gov.vn/
13.Vietnam Imports Exports - International Trade - Import Export Gateway.
http://www.vietnamimportexport.vn/import-export/vietnamservices/labour-
export-cua-vidc.html

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