Cheap labor only an advantage to lure investment in short term
Aside from cheap labor, Vietnam and other regional countries are still attractive to investors in short term thanks to the free trade agreements that they have signed such as the Trans-Pacific Partnership (TPP) and the ASEAN Economic Community (AEC), which remove taxes and help boost trade, said Simon Matthews, ManpowerGroup managing director for Thailand, Vietnam and the Middle East.
However, for a long-term plan, investors will have to consider other factors including labor productivity, Matthews told a meeting to discuss new measures for the industrialization of the Mekong region.
“Low labor cost means low labor productivity. The more investors spend on a market, the more high-quality laborers they hire,” he told the event, which was organized within the framework of the World Economic Forum on Mekong Region (WEF Mekong) to talk about challenges that regional countries are facing and solutions to boost production.
A report by ManpowerGroup on the lack of human resources this year shows that 46% of firms have difficulty recruiting employees in the Asia-Pacific region, he said.
Enterprises usually run into problems when it comes to recruiting qualified people for positions in areas like information-technology, engineering, finance-accounting, or when looking for technical staff, managers, sales directors, machinery operators and researchers.
By 2020, up to 36% of jobs will require laborers to have the ability to deal with complicated issues, 19% of jobs request them to have social skills and 18% need them to have multitasking skills, according to the report.
Another report of Forbes predicts that 65% of children who start going to school this year will have to do jobs that are not available these days due to the rapid development of technology.
Joined by high-ranking leaders of Vietnam and CEOs of many multinational corporations in the region, the conference also heard that labor costs have surged in China but this country has many other advantages for luring foreign investors, such as strong domestic consumption, good infrastructure, and developed supporting industries.
China has spent big on automation and robots to gain an edge over low-cost labor in Mekong countries.
In order to compete with China in luring FDI, Mekong countries should create favorable conditions for investors, Matthews of ManpowerGroup said.
Mekong countries should look at their current social situations and economic goals to develop suitable education programs, he said, adding they should boost courses on soft skills, especially foreign languages, critical thinking and analytical skills, as well as skills to work in an international environment, for young people.
