An apparel factory of the Formostar Garment Vietnam Co., Ltd in Hai Duong province (Photo: VNA)

Hanoi (VNA) – Vietnam’s labour productivity is very low compared with growth need, thus raising productivity is the key to economic growth, experts said at a conference on April 13.

According to Ngo Van Tuan, deputy director of the Party Central Committee’s Economic Commission, the country’s productivity increased by an average 4.7 percent a year during 2011-2017, while the GDP growth was about 6.21 percent and real wage rose by an average 12.59 percent.

“This means production costs in Vietnam is becoming more expensive, which directly affects the country’s competitiveness,” Tuan told the CEO forum 2018 held by the Vietnam Economic Times.

The General Statistics Office (GSO) reported that local productivity has been increasing throughout recent year, but remains lower than regional levels.

By purchasing power parity in 2012, Vietnam’s productivity in 2016 reached 9,894 USD in 2016, equal to only 7 percent of Singapore’s, 17.6 percent of Malaysia’s and 36.5 percent of Thailand’s.

The gap is still expanding, GSO Director General Nguyen Bich Lam said, attributing it to the slow restructuring process of the economy, with the high proportion of the workforce working in the agricultural sector where the labour productivity is low.

[Infographics: VN's labour productivity remains low compared to development demand]

The prevalence of outdated machinery, equipment and technology in the economy is another cause, he said, noting that most domestic firms, particularly private ones, use technology that are two or three generations backward compared to the world’s average.

Furthermore, the capacity of resource management and use is low, as is business administration capacity, according to Lam.

He urged the Government and sectors to make raising labour productivity a leading task to improve the national economy’s competitiveness and sustainable growth.

The Government should set up a national labour productivity committee to coordinate efforts to enhance productivity, and develop a national strategy to help the country catch up with regional countries in terms of productivity.

Deputy director of the Party Central Committee’s Economic Commission Tran Van Tuan was of the opinion that the most effective solution to enhance productivity is to attract FDI into industrial production and services of higher value.

He said the country needs a new strategy and new directions in attracting FDI, in order to allow the FDI sector to play a greater role in technology transfer.

A representative from Deloitte Vietnam Ha Thu Thanh said as the human factor is the first to affect labour productivity, the country needs a human-based approach to productivity enhancement.-VNA