UNEMPLOYMENT IN VIETNAM

Group members

OUTLINE

Part I : Theories of unemployment Definition of unemployment How to measure unemployment Types of unemployment Consequences of unemployment

Part II: Unemployment in Vietnam from 2008 to 2010 Socio-economic situation in Vietnam from 2008 to 2010 Unemployment situation in Vietnam from 2008 to 2010

Part III: Some solutions

Part I

THEORIES OF UNEMPLOYMENT

Definition

Unemployment is the number of people of working age who are:

without work and have looked for employment in the last 4 weeks and are available to start work within 2 weeks.

waiting to start working in a job already obtained.

Unemployment rate

Types of unemployment

Cyclical or Keynesian unemployment

Frictional unemployment

Structural unemployment

Classical unemployment

Hidden unemployment

Consequences of unemployment Loss of income Loss of income leads to a decline in spending

Consequences of unemployment

Negative multiplier effectsHave a large negative multiplier effect on both the local and regional economy.

Lead to a drop in demand for local services, downward pressure on house prices and ‘second-round employment effects’

Loss of national outputLose potential national output and waste scarce resources.

Negative output gap => powerful deflationary forces on prices, profits and output

Consequences of unemployment

Fiscal costs Falling in tax revenues and higher spending on welfare

payments => increase in budget deficit => the government raise taxation or scale back plans on public and merit goods

Social costs Rising unemployment is linked to social deprivation.

Part IIUNEMPLOYMENT IN

VIETNAM FROM 2008 TO 2010

Socio-economic situation in Vietnam from 2008 to 2010

Difficulties- High speculation on oil, food, gold => high price

- Increasing inflation rate in 1st half of 2008 (up to 144.3%) and arising deflation

- Reduction in FDI

- Decrease in exportation (13.4% in 2008)

- Population grew 1.18%, urban population rose fast (2.85%)

- Consecutive natural disaster: floods, typhoons, epidemic diseases

Overview of Vietnamese economy in 2008-2009

Advantages :

- Economic growth: 5.32%, exceeding target

- Industrial production: increased 7.6%

- Agriculture: bumper harvest

- Stable macroeconomic balance

- CPI: lower than the goal

2. Unemployment situation in Vietnam from 2008 to 2010

In 2008- Decreases in production and service activities and

reduction inmerchandising scale. - 22.3% investigated businesses cut down the

number of labours => 667,000 people lost their jobs. Over 1 million people were unemployed - Unemployment rate: 2.38%- Labour export decreased, especially in some main

markets: Taiwan (33,000), Korea (16,000), Malaysia (7,800-while it was 30,000 in last years) and Japan (5,800)

Unemployment rate and underemployment rate of worker in working age in 2008-by region (According to the Analysis of the General Statistics Office of Vietnam)

In 2009:

- 1.3 million people in working age were unemployment

- Unemployment rate: 2.9%

+ In urban areas : 4.64% (approximately with 2008)

+ In rural areas : 2.25% (1.53% higher than 2008)

- 1.51 million jobs (73,000 oversea jobs) were created (88.8% target of the year)

- Average income per month per employee increased by 14.2% (compared to 2008)

In 2010

- Forecast: Unemployment rate is equal or higher than previous year

- At the beginning of 2010:

+ 40,348 workers at craft villages were jobless + 100,000 labours suffered from reduced working hours

or work shifts + 50% urban labourers faced unemployment risk + Untrained workers and female labours were hard to get

stable jobs

Part III

SOME SOLUTIONS

1. General policies:

Stimulate an improvement in the human capital of the workforce

Improve incentives for people to search and then accept paid work

Government subsidies for those firms that take on the long-term unemployed

Achieve a sustained period of economic growth

2. Solutions in VN

- For voluntary unemployment create more jobs and better salary strengthen vocational training programs

- For cyclical unemployment: apply fiscal policy, monetary policy to increase aggregate demand

- Invest of stimulate to aim at the small and medium enterprises

- Create every condition for unemployment

Solutions in Vietnam

Vietnam General Confederation of Labor (VGCL) has issued 3 essential solution:

Labor federation at cities and provinces help laborers seek new occupations

The VGCL’s career placement centers take responsible for improving the workmanship or draw the trainees

Taking placement of funds from national fund of Confederation for workers who have no job.

- Complete the unemployment insurance system

3. Other solutions Subsidize a certain proportion in wage-fund of

businesses Cut sales tax Persuade the laborers and managers to accept a wage

cutting level to maintain the firm’s employment, through the labor union

Carry out vocational training programs for rural farmers Expandexport labor markets Attach special importance to investment in education

and training Limit population growth.

Conclusion

Thank you for your listening!