Economic Update

26 Jun, 2016

Vietnam’s education sector is facing calls to improve soft skills training and better adapt service delivery to meet the needs of a fast-changing and more integrated economy.

Vietnam allocates around 20% of its annual budget to the education sector each year, while further outlays from families are feeding into the burgeoning private education segment. The country’s focus on education has translated into high rankings, particularly in hard skills, at the international level.

In 2012, for example, when Vietnam entered the Programme for International Student Assessment tests for the first time, it surpassed both the UK and US in maths, ranking 17th out of 65 countries.

However, rapid changes in the country’s economic landscape, including the launch of the ASEAN Economic Community (AEC), have fuelled calls for closer cooperation between educators, regulators and industry to ensure that graduates can meet the shifting demands of the marketplace.

Skills gap

At the end of the first quarter of 2016, more than 1m Vietnamese were registered as unemployed with approximately 20% of those individuals holding university degrees or other higher-level credentials, according to data issued by the Institute of Labour Science and Social Affairs at the end of May.

The institute also reported a marked increase in the number of higher education graduates joining the ranks of the unemployed in this period compared to a year earlier, with 35,000 degree-holders added to the list.

A mismatch between qualifications and skills is one reason cited for the high level of unemployment among graduates.

According to Thanh Ding Vu, rector at the University of Technology in Ho Chi Minh City, this mismatch reflects the need for the private sector, the state and the education sector, which is overseen by the Ministry of Education and Training (MoET), to work more closely to better align educational programmes with the changing needs of the economy.

“In the past, university courses weren’t suited to a changing environment,” he told OBG. “Now, the main priorities should be revising the curriculum to include more relevant skills training and creating linkages with industries.”

Another possible solution is to increase collaboration between the MoET, educational entities and employers through the creation of an agency tasked with identifying skills shortfalls, according to Le Thi Hong Len, head of the Association of Chartered Certified Accountants for the Mekong Region.

“There should be an organisation which oversees the workforce and monitors market needs to ensure universities supply those needs,” she told OBG. “We see many graduates not meeting industry needs.”

Improving regional competitiveness

Soft skills such as communication, problem-solving, and creative- and critical-thinking skills are also increasingly in demand from employers.

Vietnam, which ranks 12th out of 76 countries for student skills in maths and science by the OECD, places 59th out of 124 countries in the World Economic Forum’s rankings for human capital or soft skills.

Weak soft skills are one of the causes for lower workforce productivity compared to other countries in the region, according to the Viet Nam National Productivity Institute.

More tertiary education institutions are also moving toward offering courses in English and requiring higher standards for students’ English language comprehension although Vietnamese remains the official language of instruction.

The language push aims at providing a broader soft-skills base and further equipping graduates with the necessary skills to fill employment opportunities both at home and abroad.

With the rollout of the AEC expected to bring even greater regional integration, these soft skill deficiencies – if not remedied – will see the productivity gap between Vietnam and its ASEAN neighbours widen.

Though it will take time, universities are working to adapt to changes in the private sector to help bridge skills gaps through modifications to their educational programmes, which will help maintain students’ competitiveness in the regional market, according to Phan Thanh Binh, president of the Vietnam National University Ho Chi Minh City.

“Vietnam’s business management curriculum, for example, is very much behind our ASEAN counterparts due to the lack of soft skills in our programmes,” he told OBG. “We are all aware that technical command alone does not make a graduate competitive in today’s job market.”

Regulatory changes

Although greater regulatory flexibility could also help the education sector better meet the needs of Vietnam’s expanding economy, some stakeholders cite new legislation as a potential barrier.

One key piece of legislation currently under discussion is Decree 73. First introduced in 2012 Decree 73 sets out the terms and conditions for foreign investment and cooperation projects in education and vocational training.

However, administrators have pointed out that increased bureaucratic procedures may reduce the ability of the industry to adapt to the requirements of the economy. Other stakeholders, meanwhile, have noted key issues in the legislation itself, such as lack of sufficient detail, according to press reports.

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