Educational and family background determinants to employments wage in vietnam

Today, many youth enter the labour market resulting in labour is a critical aspect of Vietnam's development strategy in overcoming persistent poverty and enhancing further economic growt

I would like to special thank Prof Nguyen Trong Hoai, our respectable Dean, who has been interested in our studying during the Master course

Supports from the Vietnam-the Netherlands Programme for MA m Development Economics' staff and classmates are fully acknowledged

Hochiminh city, Mar 2011 Tang Thi Bich Hien

Employment's Wage In Vietnam" is my own work, that is has not been submitted to any degree or examinations at any other universities, and that all the sources used or quoted are indicated and acknowledged by complete references

to worker's age, and a married person is paid higher than other person The findings recommend that parents got better education have positive interaction to their children' wages when they enter labour market

TABLE OF CONTENTS

ACKNOWLEDGEMENT i

I DECLARATION ~ ii

ABSTRACT iii

TABLE OF CONTENTS iv

LIS LIST OF TABLES vi

LIS LIST OF FIGURES vi

LIST OF ACRONYMS vii

• CHAPTER 1: INTRODUCTION 1

• 1.1 Research goals and objectives 2

1.2 Research questions o • • • • • • o o o o o o o o 0.3 CHAPTER 2: LITERATURE REVIEW 4

2.1 Theoretical fratneworks o o o o o o o o o • • 04 2.2 Previous empirical studies 0 • • • • • • • • • • • • • • • • 6 CHAPTER 3: OVERVIEW OF VIETNAM LABOUR MARKET 13

3.1 Employment by age and gender 0 0 0 0 0 0 0 ° 0 14

• 3.2 Employment divided by regions o o o o o o o o o o o o o o o o o o o o o o o o o o o o • o 17 3.3 Employment with education and training 0 0 0 18

3 4 Employment by status 21

3.5 Unemployment 23

CHAPTER 4: THE MODEL 26

CHAPTER 5: DATA 31

5.1 Statistics descriptive analysis ofVHLSSs 32

CHAPTER 6: ESTIMATING RESULTS 35

6.1 Results analysis 3 5 6.2 Test of education attainment dependence 39

6.3 Test of family background dependence 40

6.4 Measurement of goodness-of-fit 40

CHAPTER 7: CONCLUSION 41

7.1 Conclusion 41

7.2 Policy implications 41

7.3 Limitations : 43

REFERENCES 44

APPENDIX 46

Regression results · · · · · · · · · · 46

Definitions 49

LIST OF TABLE

Table 3.1: Labour force participation 14

Table 3.2: Labour force divided by sex, regions (%) 17

Table 3.3: Labour force classified by education(%) 19

Table 3.4: Distributions of status in employment by sex 22

Table 3.5: Unemployed workers (person) 23

• Table 4.1: Variable description 29

Table 5.1 :Mean of wage, age, parents' education and employees' siblings 33

Table 5.2: Group of determinants by binary characteristics in year 2008 by percentage 34

Table 6.1: Models of Log Hourly Wages 35

Table A 1: Construction of Duncan index variable 51

Table A2: Youth labour force participation rates(%) 52

Table A3 :Labour force classified by sexes and regions 53

Table A4: Unemployed workers by age-bands (person) 54

Table AS: Distributions of status in employment by sex 55

LIST OF FIGURE Figure 3.1: GDP growth rate (%) 13

Figure 3.2: Workforce classified by age-bands (person) 16

Figure 3.3: Employed worker's skills(%) 20

Figure 3.4: Workforce vs employed workers (thousand of person) 24

LIST OF ACRONYMS

MOLISA Ministry ofLabour, Invalids and Social Affairs UNDP

VCCI

VHLSS

WTO

United Nations Development Programme

Vietnam Chamber of Commerce and Industry Vietnamese Household Living Standards Survey World Trade Organization

CHAPTER 1

INTRODUCTION

The Doi Moi reforms are widely credited with improving incentives for production and growth Economic integration and the transition to a socialist-oriented market economy provide both challenges and opportunities for the people

in Vietnam Under Doi Moi Renovations, the opening up of Viet Nam to a competitive global marketplace, with rapid changes in information technologies, capital flows, mass media and culture The transition to a market economy in Viet Nam involved a drastic modification of young men and women's transition from school-to-work Today, many youth enter the labour market resulting in labour is a critical aspect of Vietnam's development strategy in overcoming persistent poverty and enhancing further economic growth as set out in a number of documents, such

as the country's ten year national strategy for socio-economic development (200 2010) with its second five year socioeconomic development plan (2006-2010) One

1-of main objectives for Vietnam is to further strengthen its economy and prepare the country for further integration into the world community that need numerous skilled employments

Meanwhile, education has played an important role in preparing knowledge for

an employment prior to joining labour market The linkages between the education and training system and the labour market have to be strengthened to close the gap between the skills in demand and the skills offered on the labour market It is said that a person's successes in seeking a job after quitting school is remarkable affected by the period he have stayed at school As a result, individuals with high levels of education are able to find work more easily, to command higher wages within a given occupation, and also to improve their chances of upward occupational mobility

Harmon and Walker (1995) suggest that educational attainment is the main observed determinant of occupational status, which directly influences earnings Vietnam has been viewed as labour endowment but low productivity because of unskilled or semi-skilled employment Consequently, being employment or unemployment is not hirge distance For example, if an employment gets higher education, he enables to adapt easily with changes of technology in a firm, so that

he has more opportunities to be hired again Additionally, Hamilton et al (2000) proves that workers who receiving more training will receive higher income because their training costs are lower than others without or less training Adversely, he will become unemployment if his company makes changes in technology By finding contribution of education on employment's wage, we can stress the impact of schooling to individual at initial stages

On other hand, children are affected by their family background Father, mother and siblings create an environment that help a member better, otherwise adversely effect by their interactions Meghir (2005) finds that one of factors is parents' education Practically, parent with good education and pay more time for children can be instructor that encourage them to better study and confident in choosing a work If we combine two ideas above, we can find an interesting relationship between wage and family background of a person after quitting school Within this framework, the purpose is to determine the extent to which parents' schooling outcomes feed through into children's schooling The determinants effect

on wage of an employee is obtained by running ordinary least squared model I have utilized data of VHLSS 2006 and 2008 for my thesis The next section will introduce previous relevant empirical studies Section III will present about Vietnam labour market Section IV explores the model and introduces the data in Sections V The empirical findings are reported in Section VI with several sensitivity tests are undertaken, and Section VII provides concluding comments

1.1 Research goals and objectives

The thesis aims to establish a model for examining the relationships of wage

on the basis of employment and family background characteristics Results from this study can be evidences that education directly affect wage and strengthen the impact of family to outcomes of a person From the results, policy recommendations are suggested

1.2 Research questions

In order to reach the goals and objectives, this research IS to answer the following questions:

i How do employment characteristics affect wage?

ii.How do family background characteristics affect wage?

Specially, the thesis aims to answer questions below:

i Is the educational attainment level a key factor of wage?

ii.Does family background affect an employee's wage?

On the other hand, to the extent that the stock of human capital due to prior investments in training increases the productivity of new investments in on-the-job training, additional investments are encouraged If the interest cost of funds schedule has a non-negative slope, optimal investment occurs in the downward sloping portion of the marginal rate of return schedule

Mincer shows that the concave experience earnings profile that we observe in the data is implied by declining investment ratios (i.e., investment relative to potential earnings) According to Mincer, there is an important distinction between age-earnings profiles and experience-earning profiles, where experience means years since leaving school (Mincer and Polachek, 1974) If individuals differ in their level of schooling, they differ in the age at which post-school (on-the-job training) investments begin, and hence the two profiles differ Mincer demonstrates that there would tend to be a positive correlation between schooling and on-the-job

.:

training investments, not because they are necessarily complements, but because "it reflects the dominance of individual differences in factors determining the scale of total human capital accumulation Individuals who invest more in human capital, invest more in both forms of it" (Mincer 1974, p.31 ) That is, those with greater ability and a lower interest cost of funds would tend to have these characteristics for both schooling and on-the-job training Research suggests that there is a positive correlation in dollar investments among all forms of human capital, even though at the margin various types of human capital can be substituted for each other to attain the same earnings

He recognizes that age is relevant if only because of the depreciation of human capital with age, but in the absence of a mechanism for measuring experience independent of age, experience is to be preferred On the other hand, to the extent that schooling raises weeks worked by lowering job turnover, unemployment and absenteeism, controlling for weeks worked biases downward the partial effect of schooling

To construct the human capital earnmgs function, Mincer needed to make assumptions that the investment in on-the-job training in each year declines as years

of experience increase Concerned with "mathematical simplicity and statistical tractability" he shows the development of four functional forms, one for each of the four cells defined by dollar investments (Ct) vs "time equivalent'' investments (kt=CtfEt_J), and linear vs exponential forms of declines in investments (Mincer

1974, pp.84-89) Largely due to data availability (that is, the data on schooling and potential experience are available in years), time equivalent investment ratios are preferred, and for simplicity the assumption of a linear decline is preferred to the exponential decline in investment, even though the latter would have greater consistency with economic theory

The investment ratio/linear decline specification is that kt=ko-(Ko/T*)Tt where

kt is the investment ratio in the Tt year of on-the-job training, k0 is the ratio in the initial year and T* is the number of years of positive net investment in training

:

beyond which kt = 0 Next, if LnEit is the log of earnings of person i in year t and

(i.e., earnings in year t if there is no further investment in on-the-job training EiO) can be expressed as a quadratic function of years of labor market experience)

2.2 Previous empirical studies

Worker's skills directly affects employment's wage and there are many empirical studies examination its correlation Buchinsky and Leslie (2009) introduced a dynamic model of individuals' educational investments that allows them to explore alternative modeling strategies for forecasting future wage distributions Authors use data only on male between the ages of 14 and 65 who were either working or in school from the March Current Population Surveys in the U.S for the years 1964 through 2004 With the goal is to incorporate a realistic forecasting model into an analysis of individual's schooling decisions, the research focuses on incorporating uncertainty about aggregate parameters which are future wage distributions, while presuming certainty over individual parameters such as parameters of the agent's utility function The study contributes an important innovation which is incorporate the role of parameter uncertainty into the decision making process

In words, the risk-averse individual in our framework not only takes into the account the uncertainty of future wage draws (conditional on education and experience), but also the uncertainty in the distributions themselves such as the uncertainty in the parameters of the estimated conditional wage distributions That

·

explains the reason the VAR-Gibbs model is chosen for running regression There are two important issues that this research is particularly well-suited to analyzing Firstly, they consider how individuals with differing degrees of risk aversion make educational choices The result is increasing the degree of risk aversion leads to lower educational investment because education is a more risky investment than experience, at least during the period we study Secondly, the study analyzes the importance of financial resources for individuals considering higher education by examining the potential impact of changes in initial wealth on educational choices

We find distinctive differences across forecasting methods in the fraction of individuals that attend school in any given year, the average level of accumulated education, and the time elapsed until a college degree is completed The study concludes higher initial wealth also increases the speed at which education is accumulated

Hamilton et al (2000) examined how such heterogeneity influences the distribution of output between workers and employers These authors analyzed relationship between profits and wages of a firm to suggest some important findings The study is distinct of the study of Sattinger ( 1993) in considering a labor market in which workers and firms are vertically differentiated In words, they consider a model in which common level of general Human capital is identical while worker's skills vary across workers The innovation allows them to account for some inherent and idiosyncratic characteristics of workers that make the population of equally educated individuals un-equally suitable from the firms' perspective The study also follows a different path by assuming a population of workers who are heterogeneous in the type of work they are best suited for, while firms are also heterogeneous in their job requirements And then they develop a nonhierarchical assignment model that can be viewed as complementary to hierarchical assignment models

Firstly, if firms are not able to identify the skill type of any individual worker, workers who receive less training also receive higher net wages Because firms do

not discriminate between workers on the basis of their type, those with a better match end up with a higher net wage, even though workers have the same level of general human capital and the same ex post productivity, they incur different training costs because of different matches Additionally, as the number of firms increases, equilibrium wages rise because adjacent firms compete for workers who are better matches If the number of firms becomes arbitrarily large, the wage tends

to the competitive level of common level of general Human capital, while profits tend to zero The competitive model of the labor market is thus the limit of the spatial model of job assignment Finally, when common level of general Human capital increases, gross productivity rises while the training cost of each worker decreases As a result, the net wage increases with the level of general human capital, as supported by many empirical studies, while profits decrease be-cause firms lose some of their monopsony power, an effect that overcomes the gain in productivity

Secondly, if firms are fully informed about the quality of individual job matches before hiring Since each firm knows the skill type of each worker, firms can make different offers to workers of different skill types The employer just focuses on the sum of wage costs and its share of training costs, while the employee pays attention on the wage net of any training costs she or he must bear Therefore,

it is inessential who pays the training costs in that it is implicitly determined as part

of the bargaining process When firms can make personalized offers based on skill types, workers who receive more training now receive higher net wages However, this is not because they are more productive than others, as in standard human capital models, but because their training costs at alternative firms are lower than others Here workers who are poorly matched with a firm have a better outside alternative than others who are well matched with the same firm, thus increasing these workers' bargaining power

Wage and schooling are also interesting issues for economists besides the U.S Meghir (2005) evaluated the effect of the reform on final educational attainment

and earnmgs He used data of Swedish Level of Living Survey and national education register and the tax record from 1985 to 1996 To apply different in different methodology, sample was divided two cohorts of pupils The first is 10,309 observations who were born in 1948 including 5,235 men and 5,074 women The latter is 9,007 observations that were born in 1953 including 4,525 men and 4,482 women For each group, earnings were collected for the entire 1985- 1996 period A logit model is fitting to consider years of education, level of education as measured by two binary outcomes (whether the final completed level of education was the new compulsory level or any other, and whether the completed level of education was more than the new compulsory level or any other) All changes in educational attainment taken together translate into an increase in years of education

by 0.298 of a year These effects are highly significant Within that group, those with low ability increased their attainment by moving up to the new compulsory level with an almost equal drop in the proportion attending the former compulsory level For those of higher·ability, however, the increase in attainment is reinforced

by a large increase beyond the new compulsory level The overall effect of the reform on earnings at 1.42 percent was small and only significant at the 10 percent level However, this conceals substantial heterogeneity in the effects for different groups of individuals For those with unskilled fathers the reform increased earnings

by 3 4 percent, which is highly significant

Some older studies have attempted to investigate impact of schooling on wage Harmon and Walker (1995) examined the rate of return to schooling on wages and incomes The data set used in this analysis is the U.K Family Expenditure Survey (FES) The sample consists of 34,336 employed males aged 18-64 in the year of interview, obtained from pooling the nine consecutive annual FES cross sections from 1978 to 1986 They follow the Instrument variable dealing with the endogenous issue However, the study relied on the exogenous changes in the educational distribution of individuals caused by the raising ofthe minimum school-leaving age in the United Kingdom (which has occurred twice over the age-spread

Social scientists from several academic disciplines have long been interested in the association between family background and economic and social status during adulthood There are several studies examined wages under effect of family factors such as parental income, parental education, and number of siblings Levin et al., (2007) exploited a very different way that has not been previously used to measure the brother correlation in earnings in two different time periods Specifically, they use two different cohorts of men from the National Longitudinal Surveys (NLS) The NLS data sets contain enough siblings from nationally representative samples

to enable us to detect meaningful changes in the sibling correlation across our two cohorts Using this approach, we find that the correlation between brothers' annual earnings, family income, and hourly wages has increased sharply in the United States for cohorts of young men born between 1957 and 1965 compared with those born between 1944 and 1952 For example, for annual earnings, the correlation has risen from 0.26 to 0.45, and the change is statistically significant The results are robust to a variety of sample selection rules These results are impression, practically, for the more recent cohorts, close to half of the variance in earnings and wages can be explained by family and community influences Although the sibling correlation captures more than just the effects of parent income, we argue that the results also suggest that there has been a decline in intergenerational mobility for more recent cohorts of young men Findings show no change in the correlation in years of schooling between these cohorts, suggesting that a greater association between family influences and educational attainment does not explain this

- - - -

-increase In addition, while the returns to education have risen markedly between these two cohorts, this can only explain a very small portion of the overall increase

in the brother correlation in earnings

Using the same data source from NLS, but Betts (200 1) specifically examines the impact of school resources on labour market outcomes of women by measuring the impact of high school resources on women's educational attainment and

Longitudinal Young women who from aged 37 to 50 for the period from 1991 to

2000 There are totally 2,551 the whites and 801 the blacks participating this study

First stage, Betts fitted an ordered probit model to investigate education attainment

That model allows interpreting the coefficients as the marginal impacts on years of schooling The predicted impacts of additional school inputs on years of education for black women are in some cases meaningful Most impressively, a 10% increase

in the starting salary of teachers with a bachelor's degree, or $605, is predicted to increase black women's education by about 0.1 year A 10% reduction in class size

is predicted to increase black women's educational attainment by 0.07 year Similar proportional changes in the other two school inputs do not lead to changes in education that are as large The corresponding changes predicted for white women are much smaller: only for teachers' salary and books per student is there a positive measured link between education and inputs, and the coefficients in both cases are much smaller than they are for black women The results showed that no significant connection between school resources and wages is found for while women but school inputs are in several cases significantly and positively related to black women's wages maybe because of smaller sample size Second stage, a probit model is fitted to examine determinants of women's earnings with reference to years of schooling is an endogenous function of personal background proven in the first stage regression Wage elasticities with respect to school inputs are uniformly larger for black women Finally, the impact of school resources on earnings remains constant or in some cases weakens as workers grow older

.-In Vietnam, it is popular to recognize the role of parent to children's education Broadly, family affects strongly children's development both physical and metal elements To study impact of parental and siblings factors on wage of Vietnam's young labour, the research of Dang, Le and Nguyen (2005) is significant

in recent time They strongly suggested that the family serves as an important factor

in determining the employment experience of Vietnamese youth In fact, the family

in which a young person lives is the strongest predictor of his or her future in the job market The significant effects of family economic status, parental occupation, and parental divorce are notable in the analytical results The sample included 6,604 young people aged 15-24 from data of Survey Assessment for the Vietnamese Youth in 2003 (SA VY) This research utilized time series data for analyzing instead

of cross-sectional to look at trends in youth employment Despite data constraints, the research derives from the multivariate analysis of youth employment that allows

us to simultaneously control for the many factors that may affect labour market outcomes They found that educational attainment is also one of the significant factors influencing youth employment outcomes The higher the level of education, the less likely they are to be working at the time of the survey and the more likely they are to look for suit.able employment as high education is found to be an important factor in increasing the probability of unemployment, the results indicate the mismatch between supply and demand for labour services of young people The probability that a young person is employed, unemployed or underemployed is reduced when young people live in better-off families Additionally, he reaches a better position to enter into the labour market Their likelihood to receive job training is enhanced when the father is in a professional or technical job, belonging

to Kinh group and residing in urban centers All these combine to make the placement and promotion of their employment easier in the labour market

CHAPTER3

OVERVIEW OF VIETNAM LABOUR MARKET

Vietnam's macroeconomic performance has been remarkable between 1997 and 2008 (illustrated in figure 3.1) In 2008 due to the impact of global crisis, GDP growth rate dropped steeply over 2% comparison to the previous year An average annual growth rate during this period is 7 16% In line with high economic is employment growth average 2.6 % per year and labour productivity in the country increased steadily, at an average annual growth rate of 5.3 % from 1997 to 2007 (MOLISA and GSO) These trends have been positive, since they suggest that many new labour market entrants or people who changed jobs were taking on more productive work, which can be considered relatively decent as well, including sufficient remuneration, a key component for successful poverty reduction

Figure 3.1: GDP growth rate(%)

- - - · - - - ·

-GOP( all sectors)

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 Year

~-~~ -~ ~-

·~ ~~ Source: GSO, Statistical Handbook, 2009

Until April 1, 2009, Vietnam's workforce got 49.2 million people over 15

workers and 1.5 million unemployed workers The population of Vietnam has been growing at a fast rate with natural increasing ratio yearly is around 11% from 1997

majority proportion in ·labour force Addition, workforce concentrates in rural However, unskilled or less skilled workers become a critical issue of the economy

about employment and jobs, skills, how many people is looking for a job The

3.1 Employment by age and gender

Table 3.1: Labour force participation

of economic activity in Vietnam As suggested in the previous section, this ratio has

population structure, the youth population is roughly equally divided by sex From

i

I

table 5.1, male experienced increasing ratios but decreasing quantity With respect

to labour force participation rates, the women' rate 50.33 % comparison to men' 49.67% in 2008 was slightly higher Decreases in ratios occurred for women, and women held a larger proportion than men did in labour force These are adverse tendency comparison to results of the Population and Housing surveys from 1997 to

2007 (Appendix, table A3 )

Those surveys recorded that all age and sex group experience declining ratios and women held smaller percentage than men did in labour force In the survey last

VHLSS 2006, but there were 35,154 observations in 2008 while labource increased slightly results in the ratio workforce over total samples increased In addition, VHLSS focuses on rural residences where female employment often accounts bigger share Furthermore, women participate in agricultural activities and become the bread-earner of a family They are unpaid family workers or self-employed A large number of these individuals have affected sample size

Meanwhile, the Population and Housing survey includes all member of a country that shows the result of a population unsteadied of a sample The biggest share of this overall labour force growth occurred among persons in the youth Young people between 15 and 24 years of age comprised 27.99% and 26.45% of the total workforce in 2006 and 2008 respectively One of sources are young people have tendency to prolong study process leading to falling in quantity of participation in works Male's contributions are more than female suggest that men begin working earlier than women do The youth ( 15 to 24 years old) labour force fell over 400 between 2006 and 2008, or 1.54% However, below men's labour force participation, the differential between the two participation rates is much smaller than is the case for many other countries throughout the world For both, labour force participation rates declined between 1997 and 2007 Women's declining participation was most pronounced among youth (15 to 24 years old)

- - - -

-Similar to the labour force participation rate, the employment-to-population ratio in

Vietnam is high if considered from a regional perspective, though it is not as high as

the ratio in East Asia Until 2009, women have still held smaller proportion than

men have in workforce Women labour accounted for 48% comparison to 52% of

men as a trend during 30 previous years (Population and Housing survey 2009)

Comparison to East Asia as well as South East Asia and Pacific labour force,

Vietnam labour force has gradually dropped during this period However Vietnam

changes rapidly than both of them If male participating workforce fell largest in

East Asia, Vietnam is conversely The same trend is found for the South East Asia

and Pacific which female's percentages participate in labour force reducing highest

(ILO, May 2009) If the percentage of men in work force accounts similarly to

countries in region, Vietnam's women account a larger proportion For example,

women took part in work force accounting 79.5% while the Philippines, Indonesia,

and Korea that percentage-was approximately 50% (ILO, 1997-1998)

Figure 3.2: Workforce classified by age-bands (person)

i 2,500

I 2,000

1,500

-+-Male Female 1,000

500

15-19 20-24 25-29 30-34 35-39 40-44 45-49 50-54 55-59

Source: VHLSS 2008

Figure 3.2 states that women and men participating in labour force fluctuate

and gradually fall from aged 15-19, and then they gradually decline The differences

of participation works between male and female begin at aged 15-1 9 The differences fall gradually from aged 20-24 and reach peak at aged 20-24 From aged 40-44 both male and female labour is downward declining and this age-band is the smallest difference After 55 year-old, women have still taken part in works, even though; they contribute more than men do Because VHLSS has been designed for investigating living standards of rural residences, thus rural areas hold bigger percentage in total sample Meanwhile, women are main bread-earners in agricultural activates and unpaid family workers They work at all age-bands and do not retire from agricultural tasks as wages and salaries workers

Table 3.2: Labour force divided by sex, regions(%)

-N~-rth-west· - -··-s-:7"3 -49:"35 -··s(Y_-6·5- -6.-"1"6 -49-:8T

-·-·-s·a:-27 solith· - -··s:7·4 -··s·a:·i·s·· -49-.-82- -··s-.-82 -··s·a:·s6·o;~-

•

From the table 3 2, the lowest level of taking part in labour force is the North West, adversely the Mekong river delta This is contrary because two both development regions the South East and Red river delta get smaller percentage Despite having several very large cities, especially Hanoi, Ho Chi Minh City and Haiphong, with estimated populations totaling about 11 to 12 million, urban areas in Vietnam nonetheless

2006 and 2008 The majority of population concentrates in rural This proportion has, however, been increasing slowly over the years, as cities expand not only in numbers of people but also in geographic dimensions, with more and more people moving out of the countryside into urban areas Thus, the proportion of the urban population in labour force is undoubtedly on a continuous upward trend since 1997

We also find that women take part in workforce higher both in rural and urban areas

Regarding schooling, the literacy rates, knowing how to read and write, among the Vietnamese youth appear to be generally high at the level of over 90% Over the past 25 years, the overall level of literacy rates among youth remained high despite the cut in the State subsidy in education and other social services, following the Doi Moi renovations People enable to read and write accounting high percentage in total workforce In 2006, there are 86.3% equivalent 33,700 of interviewed people are literate The literacy rate continuously rises from 93.2% in 2008 to 93.5% in

2009 (Population and Housing survey) We can say that compulsory primary education and eliminating illiterate policy was deployed effectively leading to

if we compare 94.7% in 2006 and 94.8% in 2008 The table 3.3 will illustrate details

of labour force's education

Table 3.3 shows that it is much different in educational attainment among regions Mekong river delta, a leader in rice export, is ranked the first in number of persons who do not have any certificates and are Primary graduated Red river delta

was the first of number of persons who graduated High school including Lower and Upper

Table 3.3: Labour force classified by education (%)

higher

delta

IN-~rth w~~t _ - -32:02 -4ii2 -2-i-.-62 -2-~03 -ij9 -o-:-i-2

The figure 3.3 states that almost persons are in working age are unskilled workers because over 95% of labour force did not attain vocational training excluding workers who get College, BA degree Consequently, job becomes challenges to youth Under strategy of Vietnam youth development 2010, creating more jobs is an important request Millions of young people living in urban are seeking jobs while majorities of young people have been working around 75% of their time in a year The ratio of 2008 is higher than 2006 can be explained by the global crisis has negative affected household's earnings resulted in many of students have to quit schools and become workers without training

Figure 3.3: Employed worker's skills(%)

•

management club this year, up to 50% of enterprises have been interviewed said that they often train again for recruits as employment's skills are not matched to firms' requirements The sample includes companies running in printing, aquatic processing exporting, fabric and garment, electric, and tourism, and electronic We are short seriously high skill employment, especially employment in manufacturing with 67% Therefore, majority of jobs are of a subsistence nature and manual employees in occupation, for instance, manual works comprise 67.31% of total works in 2008 ( VHLSS 2008)

During the period from 2006 to 2008, workers who are trained getting a very small piece in total employees There are 4.26% of employed workers spending vocational training in 2006 But it fell to 1.81% in 2008 One of reasons may be the global crisis has enforce many students quitting schools to joint labour markets The issue is raise there are too much labour enter the labour market without training leading to they are only fitted for manual jobs such as labourers or farmer labourers That is explained for the status manual works do account the majority proportion in total occupations But these occupations often end in short time or very short time such as a week or a month They also are seasonal works which are paid a few wages

3.4 Employment by status

Status-in-employment data distinguish between four categories of employed persons: those working for others and therefore earning wages or salaries; those who are self-employed, either as employers who hire others (wage or salaried workers) to work for them or on their own account; and persons who are unpaid family workers, also termed "contributing family workers" This last group, as suggested by the "unpaid" aspect of the group's identity, work without pay in the family farm or business and, hence, are assisting the business owner/operator in earning profits These persons are often the spouses, sons and daughters of the business owner/operator, but also may be members of the extended family, such as grandparents, cousins, nieces, nephews, aunts or uncles

•

Under data of VHLSS, we can classify status-in-employment as four categories: wage and salaried workers, employers, own-account workers and unpaid family workers In 2006, very few employed persons were identified as

"employers" accounting only 0.34% comparison to 0.43 in two years following (Appendix A5).The largest group over the years has been wages and salaries workers comprising from 44.72% to 45.33% of total employment Next, unpaid family workers are from 44.11 to 44.38% Self-employed workers fell from 10.83 to 9.85% Combined, the last two groups called vulnerable employment also fell from 54.94 to 54.23% in 2008 The proportions of self-employment and unpaid family worker have reduced gradually but they still held the large ratio More than half of all employed women were unpaid workers in the family business comparison to male workers

Table 3.4: Distributions of status in employment by sex

it means quite explicitly that more than half of all employed women in Vietnam did not receive earnings for the work they performed (details see Appendix table AS)

We can say that women suffer more than men in terms of vulnerability in Vietnam because of 78% of their total employment was in the own-account and unpaid

family worker, compared with a still very high 75 per cent among men (ILO, 2007) More significantly, women's employment is heavily concentrated in the unpaid group Vietnam has a large proportion of its employed working as unpaid family workers Unpaid family workers as well as own-account workers have a lower likelihood of having formal work arrangements, and are therefore more likely to lack elements associated with decent employment, such as adequate social security and a voice at work It is very often the case that high vulnerable employment rates give an indication of widespread poverty in a country

3.5 Unemployment

Table 3.5: Unemployed workers

under 60 who are not employed holding 21.29% of total labour force The ratio is very big as sample included rural residences while rural is ranked the first in unemployment rate The report also stated that the group from aged 15-29