VIETNAM'S SOCIO-ECONOMIC DEVELOPMENT No.2

EMPLOYMENT IN RURAL AREAS

NGUYEN VAN THANH and TRAN THI TUYET MAI
* Nguyen Van Thanh and Tran Thi Tuyet Mai are Research Fellows in the Department of Labour and Social Issues, the Development Strategy Institute, State Planning Committee.

1. Little land, dense population – low per capita land area

This is the factor of most important impact on employment status in rural areas, for the majority of rural dwellers live on agriculture. While the agricultural land area increases slowly, the population increases quickly, leading to a continual drop in per capita land area from an already low level.

Source: Vietnam Agricultural Statistical Yearbook, Hanoi, 1993.

The process of industrialization in Vietnam is just making its first unsteady steps. Therefore, it is land dimensions—characterized by a low per capita cultivable area—that have decided and are still deciding the magnitude, structure and efficiency of employment status in rural areas.

2. Economic renovation policy of the Government

The Government of Vietnam started renovating its economic policies first in agriculture and rural areas in the early 1980s. The fundamental objective is to accelerate socio-economic development. Key measures include allocating land and forest areas to households for long-term use, modifying the role of agricultural cooperatives, and supporting the household economy. The reorganization of state-owned enterprises has made a large number of laborers redundant. The 200,000 workers who returned from Eastern Europe and the former USSR, repatriated refugees and demobilized soldiers have all strongly influenced rural employment, as almost all returned to their native villages.

3. Characteristics of labor supply

The labor supply in rural areas is large and increasing. On average, the rural labour force has a yearly addition of 1.2 to 1.3 million young people (annual growth rate over 3%). Up to 40% of people in the labour force have completed a minimum of 9th grade. However, the educational level of household heads remains low (6.38 years on average), limiting initiative and ability to absorb new knowledge.

4. Technical material bases and infrastructure

The amount of electric power per agricultural laborer barely reaches 34 kwh per year; mechanization of soil preparation is only 20%; in over 100 households there are only 0.7 tractors. The "soft" infrastructure (institutional framework, banking and credit system) is still insufficient.

5. Leading role of the informal economic sector

Up to 90% of the rural labor force is economically engaged in the informal sector. Rural dwellers principally undertake self-employment or irregularly work as wage earners in small enterprises (under 10 employees). This has great significance when developing policies for rural job creation.

1. General features

The most striking feature of employment status in Vietnam's rural areas is the high proportion of those who have employment. The unemployment rate has recorded some augmentation but is still low compared with some developing countries. This results from: progressive relations in land ownership (households have land to cultivate); small industry and handicrafts spread throughout the countryside; and the absence of government-funded unemployment benefits—everyone does something to earn income. The most outstanding feature is that the employment rate is considered high while underemployment remains common with different levels depending on region.

2. Identifying underemployment

Applying the criterion of working time (standard: 260 days/year), the actual average working days per laborer in rural Vietnam is always lower. Nearly one third of the total working time of laborers lies unused nationwide. In overpopulated regions the underemployment rate is particularly high (e.g. Red River Delta 38.8%, Mekong Delta 40.1%). The total unused time due to rural underemployment would be equivalent to 8.5 million entirely unemployed people.

Source: Vietnam Living Standards Survey 1992-1993.

3. Structure of employment by economic sector

Since renovation, the sectoral composition of Vietnam's rural economy has changed quickly. The collective and state sectors are being replaced by the household economy. If previously it was the government and cooperatives who bore principal responsibility to create jobs, now individuals have responsibility to create employment opportunities for themselves. The government supports through establishing a favourable legal environment, providing financial assistance and technologies.

Sources: Population Census (1989); Vietnam Living Standards Survey (1993).

4. Structure by economic activity

The structure of employment by economic activity is characterized by slow change, with agricultural production still retaining its role. In 1989, agro-forestry-fishery accounted for 85.25%, industry & construction 5.64%, services 9.11%. The share of non-farming jobs, particularly in industry and construction, despite being originally small, has further decreased in the 1979-1989 period, proving that industrialization has not yet spread to rural areas.

5. Labor market characteristics

Despite the shift to a market-oriented economy, the labor market in rural areas is still in its initial stage. The percentage of "professional" wage earners is small (merely 10% of employed rural labor force). Self-employed laborers spend on average only 20 days per year as wage earners. Labor trading relations are usually temporary, regulated by oral negotiations rather than written documents. The Government has little information and numerous difficulties in regulating this market.

Resolving the problem of rural employment requires both creating more jobs for youth entering working age and expanding employment opportunities for currently underemployed adults. For the immediate period, the agro-forestry-fishery sector still continues to be the main employment sector. This can be done by diversifying the composition of plants and animals, intensifying production, multiplying the number of crops per year and expanding the arable area. Out of 10-11 million hectares of potential land, only some 7 million are currently used; the total area of waste land and bare hills to be afforested accounts for 8-9 million hectares.

The construction sector, particularly housing and infrastructure, is and will be an important scope for rural employment. Processing industries (mainly agro-forestry-fishery products) and the services sector will play an increasingly important role. Key measures include: a) diversifying economic activities in rural areas; b) organizing training and professional development, establishing vocational education centers; c) conducting studies for new patterns of cooperation (inter-familial groups, credit funds); d) setting up a network for mobilizing financial sources and providing credit; e) accelerating the establishment of labor markets and controlling this market; f) formulating and implementing the National Rural Employment Program as part of the Program of transforming the rural economic structure.

The Government implements various programs: the National Employment Fund (Decree 120), Program 327 (afforestation), Vietnam Bank for Agriculture rural credit, the program of transforming rural economic structure, and programs by mass organizations (Women's Union, Farmers' Association, etc.). Coordination and unified monitoring of these programs remain a challenge.