ADVANCED PROGRAM IN INTERNATIONAL BUSINESS ADMINISTRATION GROUP 5 RESEARCH TOPIC UNEMPLOYMENT IN VIETNAM DURING THE COVID 19 PANDEMIC

Effects of unemployment on politics and society...10 CHAPTER 2: UNEMPLOYMENT SITUATION IN VIETNAM DURING THE COVID-19 PANDEMIC...12 2.1.. Employed + Unemployed = Labour Force 12.6m + 0.7

FOREIGN TRADE UNIVERSITY SCHOOL OF BUSINESS AND ECONOMICS

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ADVANCED PROGRAM IN INTERNATIONAL BUSINESS

ADMINISTRATION GROUP 5 RESEARCH TOPIC: UNEMPLOYMENT IN VIETNAM DURING THE

COVID-19 PANDEMIC

Table of Contents

INTRODUCTION 4

Reason for choosing the topic 4

Aims and Objectives 5

Study Scope 5

Methodology 5

CHAPTER 1: BASIC RATIONALE 6

1.1 DEFINITION OF UNEMPLOYMENT 6

1.2 CLASSIFICATION OF UNEMPLOYMENT 7

1.3 CAUSES OF UNEMPLOYMENT 8

1.3.1 Unemployment from a Recession 8

1.3.2 The Natural Rate of Unemployment 9

1.4 EFFECTS OF UNEMPLOYMENT 9

1.4.1 Effects of unemployment on the economy 9

1.4.2 Effects of unemployment on employees and their families 9

1.4.3 Effects of unemployment on politics and society 10

CHAPTER 2: UNEMPLOYMENT SITUATION IN VIETNAM DURING THE COVID-19 PANDEMIC 12

2.1 STATISTIC OF UNEMPLOYMENT IN VIETNAM DURING THE COVID-19 PANDEMIC 12

2.1.1 Unemployment rate by area 12

2.1.2 Underutilized labor force 13

2.1.3 Unemployment rate by education level 14

2.1.4 Youth unemployment rate 14

2.2 CAUSES OF UNEMPLOYMENT IN VIETNAM DURING THE COVID-19 PANDEMIC 15

2.3 EFFECT OF UNEMPLOYMENT IN VIETNAM DURING THE COVID-19 PANDEMIC 16

2.3.1 Effects of unemployment on the economy 16

2.3.2 Effects of unemployment on employees and their families 18

CHAPTER 3: GOVERNMENT POLICY AND EXPERT RECOMMENDATION19

3.1 GOVERNMENT POLICY 193.1.1 Policies on monetary 193.1.2 Policies on education & training 193.1.3 Policies to support businesses and individuals impacted by the COVID-19 pandemic20

3.2 EXPERT RECOMMENDATION 21CONCLUSION 23 REFERENCE 24

Table of Figur

Figure 1: The unemployment rate in the working-age in the 2nd quarter of the period 2011 - 2020

by urban and rural areas (Unit: %) 13Figure 2: Working-age unemployment rate by professional and technical qualifications (Unit: %)14

Figure 3: GDP growth rate in Vietnam from 2011 to 2020 (Unit %) 17Figure 4: Policies to reduce unemployment 21 Y

Equation: Calculate Unemployment Rate 6

Reason for choosing the topic

Unemployment is universally regarded as undesirable Unemployment is a state of affairs in which people who are actively looking for work are unable to find work

Unemployment is a global issue that affects both developed and developing countries alike Because of the COVID-19 pandemic, this is more prominent than ever It has gotten worse over time, especially since the global economic crisis, and it has become a threat to social development, whilst consideration must be given to global economics

Vietnam's development in the economy over the past 30 years is remarkable Economic and political reforms since 1986 have spurred economic development, rapidly transforming Vietnam from one of the poorest countries in the world to a low-middle-income country 2019 marked the success of Vietnam's economy for the second consecutive year, achieving and exceeding 12/12 socio-economic development targets (World Bank, 2021) According to The Ministry of Finance, some key factors supporting economic growth in 2019 were: macro-economic stability has been consolidated more firmly; inflation was controlled at a low level, the roadmap for adjusting public service prices had reached the final stage However, Vietnam's economy in 2019 had to face several 3 types of

unemployment are workload or to this 3 types of unemployment are risks such as complicated and unpredictable trade tensions, which continued to affect the global economic outlook and consumption and investment demand from other countries in the world Therefore, the Vietnamese economy will still encounter serious problems when facing an economic shock and in this case, is the COVID-19 pandemic.

COVID-19's breakout has posed unprecedented problems, and it has been a substantial

influence on Vietnam's economic growth The pandemic caused delays and interruptions in

manufacturing, supply, and commerce circulation, aviation, tourism, labor, and employment Many firms have had to halt operations or go bankrupt, dissolve, or scale down their production and

activities Many others are facing the possibility of losing their employment This will have a direct impact on their everyday lives, as a result of the epidemic Unemployment has become a major topic that people worry about, as well as one of the government's main priorities.

Moreover, the labor market crisis created by the COVID-19 epidemic is far from finished,

according to the International Labour Organization's World Job and Social Outlook – Trends

2021, and employment growth will not be enough to balance the harm until at least 2023.

As a rapidly developing country, Vietnam needs abundant human resources in

different industries The COVID-19 period caused many negative impacts on various sections

of the economy, including the labor force Those effects are expected to lead to unwilling outcomes for the economy Therefore, Vietnam's unemployment problem in the context of the COVID-19 pandemic needs to be taken seriously by the Government

Aims and Objectives

For the reasons mentioned above, the primary goal of this research is to help students

deepen their understanding of unemployment in Vietnam during the Covid-19 pandemic This

research will highlight the basic principle of unemployment and the work labor situation in

Vietnam Simultaneously, based on outstanding concerns, we will also demonstrate some

government policies, and experts’ recommendations to deal with the problem.

Study Scope

Although unemployment is not a new issue in Vietnam, it affected the economy

dramatically during the Covid-19 pandemic Therefore, all research and statistics are focused

on unemployment in Vietnam from 2020 to the beginning of 2021

Methodology

This study's primary methodology is secondary data The data was gathered fromprevious studies and papers, filtered to remove any irrelevant or inaccurate information, andthen used to form our own opinion and assessment

Under each section of the report, all sources of publications and articles are cited

CHAPTER 1: BASIC RATIONALE

1.1 DEFINITION OF UNEMPLOYMENT

Unemployment is the number of people in working age who are without work, but available for work at current wage rates The most common measure of unemployment is the unemployment rate The unemployment rate is expressed as a percentage and

calculated as follows:

Equation: Calculate Unemployment Rate

To understand how the unemployment rate is calculated we can use an example Inthis example, 12.6 million people are employed and 0.7 million people are unemployed Thesize of the labor force is calculated as the sum of these groups

Employed + Unemployed = Labour Force

12.6m + 0.7m = 13.3m

With the unemployment rate being the percentage of people in the labor force who are unemployed, using the numbers in our example and the equation below, the

unemployment rate is calculated as 5.3 percent

Unemployment Rate = (Unemployed / Labour force) * 100

Unemployment rate is the most commonly used indicator for understanding conditions in the labor market The labor market is the term used by economists when talking about the supply of labor (from households) and demand for labor (from businesses and other organizations) The

unemployment rate can also provide insights into how the economy is performing

more generally, making it an important factor in thinking about monetary policy

1.2 CLASSIFICATION OF UNEMPLOYMENT

There are 3 types of unemployment that are most prominent

Structural unemployment is one of the main types of unemployment within an economic system It focuses on the structural problems within an economy and inefficiencies in labor markets Structural unemployment occurs when a labor market is not able to provide jobs for everyone who is seeking employment There is a mismatch between the skills of the unemployed workers and the skills needed for the available jobs It is often impacted by persistent cyclical unemployment For example, when an economy experiences long-term unemployment individuals become frustrated and their skills become obsolete As a result, when the economy recovers they may not fit the requirements of new jobs due to their inactivity.

Structural unemployment tends to be longer lasting than other types of unemployment This is because it can take several years for workers to develop new skills or move to a different region to find

a job that matches their skills As a result, workers who are unemployed because of structural factors are more likely to face long-term unemployment (for more than 12 months).

Frictional unemployment is another type of unemployment within an economy It is the period between jobs when a worker is searching for or transitioning from one job to

another Frictional unemployment is always present to some degree in an economy It occurs when there is a mismatch between the workers and jobs The mismatch can be related to skills, payment, work time, location, seasonal industries, attitude, taste, and other factors Frictional unemployment is influenced by voluntary decisions to work based on each

individual’s valuation of their workload

Cyclical unemployment is a type of unemployment that occurs when there is not enough aggregate demand in the economy to provide jobs for everyone who wants to work In an economy, demand for most goods falls, less production is needed, and fewer workers are needed.

With cyclical unemployment, the number of unemployed workers is greater than the

number of job vacancies

In addition to these 3 types of unemployment most often focused on, MintLife

Blog mentions other types of unemployment that you might encounter or experience:

Regional unemployment: This occurs when an industry moves out of an area, or

some other localized condition causes unemployment

Seasonal unemployment: Some jobs only exist during some parts of the year For example, ski instructors might face seasonal unemployment during the warmer months.

Voluntary unemployment: People might be voluntarily unemployed if they are making

enough money from other sources, such as a spouse, inheritance, or investments.

Classical unemployment: Classical unemployment occurs when the rate of wages is too high for employers to afford, so there is a surplus of unemployed labor

In many countries around the world, the causes of unemployment can be divided into two categories: cyclical unemployment, which is caused by the economy being in a slump, and natural rate unemployment, which is caused by factors in labor markets such as

government regulations on hiring and starting businesses

1.3.1 Unemployment from a Recession

The Keynesian economic model emphasizes that both monetary and fiscal policy options are available to address unemployment induced by a recession The prescription for dealing with

a recession is simple: use an expansionary monetary policy to raise the amount of money and loans available, lower interest rates, and boost aggregate demand.

1.3.2 The Natural Rate of Unemployment

In principle, addressing the natural rate of unemployment is simple, but in fact, it is challenging The government can help by giving unemployment and welfare benefits,

enacting rules governing where and when enterprises can operate, and ensuring worker

safety However, in certain circumstances, these well-intentioned restrictions might become

so intrusive that businesses decide to limit their hiring Legislation that imposes high costs

on a company that tries to dismiss or lay off employees, for example, will cause companies

to want to avoid recruiting in the first place

1.4 EFFECTS OF UNEMPLOYMENT

1.4.1 Effects of unemployment on the economy

Unemployment increases government payments for unemployment benefits and food

assistance Simultaneously, governments are no longer receiving the same amounts of income tax as previously, forcing them to borrow money, deferring the costs and impacts of unemployment into the future, or cut back on another spending When people are unemployed, they spend less money,

resulting in a lower contribution to the economy in terms of services or goods supplied and produced, lowering GDP and shifting the country away from effective resource allocation.

Businesses pay a price for high unemployment Unemployment benefits are mostly funded by business taxes When unemployment is high, states frequently attempt to replenish their coffers by raising company taxes, which discourages companies from hiring more

workers Companies are not only facing lower demand for their products, but it is also more expensive for them to keep or hire employees (Simpson, 2020)

1.4.2 Effects of unemployment on employees and their families

Unemployment generates financial difficulty for workers, which has an impact on their families, relationships, and communities The repercussions of unemployment are far-reaching.

Even individuals who are not laid off from their office employment may find that their jobs (as well as their personal life) have been harmed.

Employees Work Harder but Earn Less: In a piece for The New York Times titled

"The Enduring Consequences of Unemployment," it was pointed out that workers who were laid off during the severe early 1980s recession, for example, earned

around 20% less than the average 20 years later

Impact on Retirement Savings: One of the first things to be impacted by the loss of a job is personal savings accounts According to a 2017 research from The Hartford, 42 percent of respondents avoided the market after the 2008 financial crisis, while 26 percent modified their retirement plans

Health problems: The bodily santé of a person may also be affected by unemployment

Unemployment can lead to stress-related disorders such as headaches, hypertension, diabetes, cardiac illness, back pain, and sleeplessness While the chances of unemployed persons

spending money on health expenditure are lower Through skip preventive actions, the danger

of bodily and psychological deterioration is increased.

Throughout the board, the stability of children with unemployed parents is lower When

struggling to make ends meet, anxiety can strain the parent-child relationship and take a toll on not only the physical but also the mental health of individual family members Economic and

psychological pressures that can lead to changes in accommodation or family friction can have term adverse effects on children's development (Lindner & Peters, 2016)

long-1.4.3 Effects of unemployment on politics and society

Unemployment also impacts politics and society The more persistent the issue, the more likely society will experience potential negative effects such as lower human capital, higher crime and poverty, and civil unrest

The efficiency of resource uses: A high-unemployment economy does not make efficient use

of all of its resources, particularly labor When people take jobs that are below their

ability level, the economy's efficiency suffers even more Workers' skills

deteriorate, resulting in a loss of human capital

Government policy: Unemployment can cause an increase in calls for protectionism and draconian immigration restrictions Not only can protectionism lead to damaging tit-for-tat retaliation among countries, but trade reductions undermine the economic well-being of all trading partners (Simpson, 2020)

Crime rate: Times of elevated unemployment often correlate both with less

volunteerism and higher crime Elevated crime makes sense, because absent a paying job, people may turn to crime to meet their economic needs

wage-Poverty rate: While one unemployed person will typically not have a significant impact on society, high unemployment rates in certain areas often lead to higher poverty rates and

poorer neighborhoods that amplify the societal impact of unemployment.

Communities with high unemployment rates are more likely to have limited employment opportunities, low-quality housing, fewer available recreational activities, limited access to public transportation and public services, and underfunded schools.

Civil unrest: High unemployment rates can cause civil unrest in a country

Unemployment is associated with political violence and armed conflict in

developing countries (Indeed Editorial Team, 2021)

.

CHAPTER 2: UNEMPLOYMENT SITUATION IN VIETNAM DURING

THE COVID-19 PANDEMIC

2.1 STATISTIC OF UNEMPLOYMENT IN VIETNAM DURING THE COVID-19 PANDEMIC

Before the Covid-19 pandemic, according to the data from the General Statistics

Office, the unemployment rate of the population aged 15 and over was as low as 2.05% In rural areas, the unemployment rate is nearly 2 times lower than in urban areas (1.64% and 2.93%) The majority of unemployed people are aged 15-54 (accounting for 91.7% of

unemployed people), in which, workers aged 15-24 have the highest unemployment rate, accounting for 44.4% of the total number of unemployed people

In the second quarter of 2021, there were 12.8 million people aged 15 and over

negatively affected by the COVID-19 pandemic, including those who lost their jobs, got furloughed, worked alternate shifts, reduced working hours, reduced income, etc

Specifically, out of a total of 12.8 million people negatively impacted by the COVID-19 pandemic, 557 thousand people lost their jobs, accounting for 4.4%

The number of employed workers in the second quarter of 2021 was lower than in the same period in 2019, the year without the COVID-19 pandemic, by nearly 500,000 If the pandemic is controlled and the economy is fully recovered, then to achieve the initial (pre-pandemic) normal state, compared to the same period last year, the size of employed workers this year needs to increase by 3.6 million, not 1.8 million as has been observed (General Statistics Office, 2020)

2.1.1 Unemployment rate by area

According to the General Statistics Office, the unemployment rate in the working-age

in the 2nd Quarter of 2020 was 2.73%, particularly, the unemployment rate in the age in the urban areas was 4.46%, the highest figure in the last 10 years, 1.36 percentagepoints higher than that in the same period last year

working-Figure 1: The unemployment rate in the working-age in the 2nd quarter of the period

2011 - 2020 by urban and rural areas (Unit: %)

In 2021, a year into the COVID-19 pandemic, the working-age unemployment rate in the second quarter was 2.62%, down 0.11 percentage points over the same period last year Ofthese, the working-age unemployment rate in urban areas was 3.36%, down 1.1 percentage points relative to the respective periods (Ha, 2021)

2.1.2 Underutilized labor force

In the context where the pandemic has continued to spread, the working-age unemployment rate still shows the sign of increase: The working-age unemployment rate in the second quarter of 2021

was 2.62% However, according to the “Report on the impact of covid-19 on labor and employment” (2021), the ongoing pandemic, with its complicated developments, has robbed workers of any hope of

finding work As a result, after losing a job, workers believe they will be unable to find another job and choose to leave the labor force temporarily, becoming part of the economy's underutilized labor force This makes the number of unemployed people not increase in tandem with the number of people who lose their jobs and are pushed out of the