Vietnam’s labor force under TPP challenges and recommendations for human resources development in vietnam

LIST OF TABLES & FIGURES Figure 1 Age and sex structure of developed and developing countries 8 Table 3 Underemployment and unemployment rate in the working age, by areas 33 Table 4 The

TABLE OF CONTENTS

Introduction 1

CHAPTER 1 GENERAL THEORY ABOUT LABOR FORCE AND OVERVIEW OF TPP 5 1.1 General theory of Labor force 5

1.1.1 Concept of Labor force 5

1.1.1.1 Definition of Labor force 5

1.1.1.2 Classification of Labor force 5

1.1.2 Factors that effect on Labor force 6

1.1.2.1 The population 6

1.1.2.2 Population structure 7

1.1.2.3 Migrant 8

1.1.2.4 Participation rates in workforce 9

1.1.2.5 Dependency ratio 10

1.2 Human resources and Human resources development 10

1.2.1 Definition 10

1.2.2 Role of HRD in economic development 12

1.2.3 Content of HRD 13

1.3 Overview of TPP 16

1.3.1 History and negotiation process of TPP 16

1.3.2 Scope of TPP 18

1.3.3 Meaning behind the effects of the century TPP agreement 20

1.3.3.1 For developed countries 22

1.3.3.2 For developing countries 22

CHAPTER 2 HUMAN RESOURCES DEVELOPMENT IN VIETNAM 25

2.1 Overview of Labor force of Vietnam 25

2.1.1 The workforce 29

2.1.1.1 The size and distribution of the participation rate in labor force 29

2.1.1.2 The structure of the labor force by age 29

2.1.2 Employment 30

2.1.3 Underemployment and unemployment 31

2.1.3.1 The number of underemployment and unemployment 31

2.1.3.2 The underemployment and unemployment rate 32

2.1.4 Productivity of labor force 35

2.2 Vietnam’s policies relating to Human resources development 36

2.2.1 Policies toward incentive labor of quantity 37

2.2.1.1 The group has not got access to job 37

2.2.1.2 The group who are working 39

2.2.2 Policies toward incentive labor quality 41

2.2.2.1 Policy impacts on mental 41

2.2.2.2 Policy impacts on mind resources 42

2.2.2.3 Policy impacts on physical 42

2.2.3 Policies toward change of human resources structure 43

2.2.3.1 Reasonable structural adjustment policies 43

2.2.3.2 Policies impact on distribution human resources reasonably 44

2.2.4 Policies relating recruitment, income and social welfare 45

2.2.4.1 Policies on recruitment and employment 45

2.2.4.2 Income policies 45

2.2.4.3 Social security policies 46

2.3 Evaluate the Vietnam policies relating to Human resources development 47

2.3.1 Performance 47

2.3.1.1 Evaluate the effectiveness of some specific policies 47

2.3.1.2 General assessment of the implementation of the policies 51

2.3.2 Limitation 53

2.3.2.1 Evaluate the limitation of some specific policies 53

2.3.2.2 General limitation of the implementation of the policies 56

Chapter 3 CHALLENGES AND RECOMMENTDATION FOR HUMAN RESOURCES DEVELOPMENT IN VIETNAM UNDER TPP 58

3.1 Challenges for human resources development in Vietnam under TPP 58

3.1.1 Vietnam in TPP 58

3.1.1.1 Understanding Vietnam’s position in TPP 58

3.1.1.2 The different of TPP and other free trade agreements in Vietnam 61

3.1.2 Overall impact of the TPP on Vietnam 58

3.1.2.1 Trade in goods and services 64

3.1.2.2 Investment 65

3.1.2.3 State-owned enterprises 66

3.1.2.4 Intellectual property protection and environmental protection 66

3.1.2.5 Political impact 67

3.1.2.6 Strategic impact and foreign policy 68

3.1.2.7 Workforce 68

3.1.3 Content of labor commitments of Vietnam in TPP 71

3.1.4 Challenges of TPP for the human resources development in Vietnam 73

3.1.4.1 Labor quality 76

3.1.4.2 Weak implementation of international standards on labor 80

3.1.4.3 The infrastructure and regulatory framework of the labor market 82

3.2 Some recommendations for the government 80

3.2.1 Raise the efficiency and capacity management of the State institution 81

3.2.2 Strong development labor market 83

3.2.3 Innovation education and training to improve labor productivity 85

3.2.4 Increase exports and improve the efficiency of labor export 87

3.3 Some recommendations for the private sectors 87

3.3.1 For employers 87

3.3.2 For employees 89

CONCLUSION 94

BIBLIOGRAPHY 95

DECLARATION

I swear this is my own research Information and research results in my thesis is due

to self-learn, summarized and analyzed in an honest manner, in accordance with the actual situation

Student

Tran Thi Thu Ha

I would like to sincerely thank all of the teachers in the University of Foreign Trade who impart and teach me during the time in MITPL3 course

And I would like to specially thank the colleagues and family for suggestions during the editing essays and encouraging me during the process to finish this essay

LIST OF ABBREVIATIONS

AFTA The Asean Free Trade Agreement

ASEAN The Association of Southeast Asean Nations

APEC Asia-Pacific Economic Cooperation

ATIGA ASEAN Trade in Goods Agreement

EAEU Eurasian Economic Union

EPZs Export processing zones

FTAs Foreign Trade Agreements

GATs Agreement on Trade in Services

GDP Gross Domestic Product

ILO International Labor Organization

ODA Official Development Assistance

RCEP Asia’s Regional Comprehensive Economic Partnership SOEs State-owned Enterprises

TPP The Trans-Pacific Partnership

USTR The United State Trade Representative

UNESCO The United Nations Educational, Scientific and Cultural OrganizationVCCI Chamber of Commerce and Industry of Vietnam

VGCL General Confederation of Labor

WTO World Trade Organization

LIST OF TABLES & FIGURES

Figure 1 Age and sex structure of developed and developing countries 8

Table 3 Underemployment and unemployment rate in the working age, by

areas

33

Table 4 The unemployment rate of youth who has been trained, divided by

the level of training, quarter 1, 2016

Chart 1 Allocation percentage of the workforce by age in urban and rural,

Quarter 1-2016

30

Chart 4 Vietnam is the second attractive location in the ASEAN to expand

investment

70

Chart 5 Wages and productivity of Asean countries in 2012 76

Introduction

1 Rationale

In recent years, Vietnam has been seeking opportunities to negotiate free trade agreements (FTAs) with strategic trading partners to stimulate the economy growth Although Vietnam FTAs in Asia is in effect, Vietnam still actively looks for opportunities to negotiate FTAs with partners outside the region Among them, negotiating with partners around the Atlantic region is one of the salient agreements Trans-Pacific Strategic Economic Partnership Agreement – TPP is a free trade agreement among twelve Pacific Rim countries This can be seen as the second generation FTAs which establish a freedom space between countries in Asia and Pacific

TPP has a huge adjustment range which consists of comprehensive agreement covering all the main aspects of a FTA, such as exchange of goods, origin regulations, technical barriers, exchange of services, intellectual property right, and the government policies on environmental issues, labor and anti-corruption Currently, labor issues are set out in TPP negotiations include the right of workers to negotiate for all employers, wages, working day, working conditions, conditions of insurance, and rights in signing labor contracts…Some experts believe that Vietnam will have the most benefits compare with the other members in the TPP Chief negotiator of the government of Vietnam said that the TPP will play an important role in improving Vietnam’s position in the region as well as in the international area According to calculations by independent economic experts, in the favorable conditions, TPP can foster GDP of Vietnam increased by 23.5 billion USD in 2020 and 33.5 billion USD

by 2025 1

For the labor market, the labor regulations in TPP help Vietnam to simultaneously achieve the two targets as economic development and social security improvement, thereby it will promotes and maintains the sustainability of the economic reform process in Vietnam For developing countries like Vietnam, the

1

http://m.laodong.com.vn/kinh-te/tham-gia-tpp-gdp-viet-nam-se-tang-them-235-ti-usd-vao-nam-2020-TPP’s regulations, which ensure the freedom of association and collective bargaining, will reduce violation of fundamental principles at workplace It also mitigates inequality of wages, decrease unemployment, reduce the number of strike, and contribute to ensure human rights As a result, it can increase consumption as well as boost economy Besides, the labor commitments in the TPP only apply for labor issues relating to trade, so any country which accused of Vietnam violating labor regulations must be demonstrate that how the violation (if it occurs) affects to the trade relations between the two countries Vietnam expects to benefit from the TPP, but there are a number of difficulties ahead When this agreement was signed, an amount of skilled workers from the other countries will join our labor market and it will put local labor under pressure

For the reason above, this essay choose the subject “Vietnam’s labor force

under TPP: challenges and recommendations for human resources development in Vietnam” to addresses the challenges beside opportunities of Vietnam’s labor market

when implement labor commitments in the TPP Since then, the author will recommend some suggestions for human resources development in Vietnam

2 Status and scope of research

 Status of research

When the TPP agreement be put on the process of negotiations, the economic experts as well as the researchers remark some comments on the TPP’s influence on the economy of all members and particular economic area trade in general view The economists have given the articles and thesis about the impact of the TPP but only on the economy For instance, the author Peter A.Petri and Michael G.Plummer write

the thesis “The Economic Effects of the TPP: New Estimates” – (Jan, 2016); “The

TPP and Asia-Pacific Integration: Policy Implications (June, 2012); The author Ed

Gerwin with his thesis “TPP and the Benefits of Free Trade for Vietnam: Some

Lessons from U.S Free Trade Agreements” – (Sep, 2015) Mention to labor in the

TPP, there are several authors has given their point in some thesis, such as Ronald

C.Brown, Professor of Law (Univ of Hawai’I Law School) “Labor Implications of

TPP” (Jan, 2016) and “Labor Implications of TPP: A Game Changer?” (May, 2016),

or “The State of Labor Rights in TPP Countries của AFL-CIO”

In Vietnam, Dr Hoang Chi Cuong also public a thesis named “The TPP:

Opportunities and Challenges for Vietnam” The fact shows that there have no

specific research on the impact of the TPP to the Vietnamese manpower Therefore, the research which focuses on “Vietnam’s labor force under TPP: challenges and recommendations for human resources development in Vietnam” is an absolutely new research in Vietnam

 Scope of research

Within the limits of the thesis, this research only studies the effects of the TPP for the human resources development in Vietnam, so the writer focus on analyzing indicators reflecting the labor force as well as the effects brought from joining the TPP At the same time, the writer also propose some recommendations for three key factors deciding the workforce, they are the State, enterprises and workers

3 Objective and methodologies of this study

 Objective of this essay

The objective of this essay is to study the current status of Vietnam’s labor force before adhering to the TPP This essay also provides some recommendations and solutions to stimulate qualify of manpower in Vietnam in the context of trade liberalization and labor force in Vietnam be faced with many problems and new challenges

To implement this above objective, this essay sets out details following tasks:

- Systemize theory about labor force and overview of the TPP

- To describe current policies on human resources development and analyze the labor force in Vietnam

- Analyze the challenges in the implementation process of the TPP in Vietnam, and then propose solution to strengthen the competitiveness of Vietnam’s workforce

 Methodologies

Author chooses the way to approach the research problems as qualitative methods This essay mainly use the research tools, such as analysis, synthesis, statistical, listing, comparing and discussion with some experts in Vietnam about TPP

4 Structure of essay

Besides the introduction, conclusion, list of conferences, annex This essay consists of three chapters, as following details:

Chapter 1 General theory about labor force and overview of TPP

Chapter 2 Human resource development in Vietnam

Chapter 3 Challenges and recommendations for human resource development in Vietnam under TPP

CHAPTER 1 GENERAL THEORY ABOUT LABOR FORCE AND

OVERVIEW OF TPP

1.1 General theory of Labor force

1.1.1 Concept of Labor force

1.1.1.1 Definition of Labor force

The workforce or labor force (also labor force in the United States) is the labor pool in employment It is generally used to describe those working for a single company or industry, but can also apply to a geographic region like a city, state, or country Within a company, its value can be labelled as its "Workforce in Place" The workforce of a country includes both the employed and the unemployed

Labor force is the most important resource which can effect on economic development Understanding in a narrow sense, labor force includes the population

of “working age” and has working capability

The determination of the size and structure of labor resources are implemented through the population censuses, or surveys of labor and employment status annually The method is defined and applied to each period

1.1.1.2 Classification of Labor force

Labor force is reviewed on two aspects as quality and quantity

Quantity of labor is expressed through indicators such as growth rate and size

of workforce

Quality of labor is considered in some aspects, such as health, qualification, experience, labor’s capacity Working capacity is only tied to a certain age limit which is known as the “working age” Some countries define “working age” for men from 15 to 64 years old while others define from 15 to 59, even 10 to 59 years old It

is depended on the level of physical and mental development of the people as well as demand for labor in each country Currently in Vietnam, the labor law issued in 1994 regulate the working age for men from 15 to 60 years old, women from 15 to 55 years old However, not all people in working age are involved in the production processes

The Labor force comprises:

- People who are employed: They are those who work during the survey period including working for family or temporary unpaid leave due to illness, accidents, labor disputes, on vacation or temporary stop working due to bad weather or malfunctioning production line

- People who are without a job, unemployment: They are those who have no jobs during the survey period, including who previously could not find a job because

of sickness, accident temporary and they have no agreement to start a new job after this above period They are also those who temporarily leave or indefinite leave without payment in the place where the job opportunities are very limited Unemployment field also comprises the people who have labor capacity but they are not actively look for work because they believe there are no occasions that opened up for them

1.1.2 Factors that effect on Labor force

The basic factors affect the variation of the population are tradition and custom

of each country, the level of economic development, the level of medical care and the policies of each country with regard to birth control Since then, it affects the size of the population and labor force

Currently, the increasing of world population in different countries is different

In general, the rate of population growth in more developed countries with high living standards is low whereas in less developed countries this rate is high Today, the rate

of population growth in the world is about 1.8%, Asean countries is 2-3% and African countries is 3-4% Currently, 3/4 of the population live in developing countries where have a rapid population growth while economic growth is slow This makes living standards of the population decrease and creates great to jobs on them

- Population size

Demography is often divided into three basic components Teenager includes all children from birth to 14 years old age; Adult population in “working age” includes people from 15 to 60 years old; and elderly population who are over

“working age” In ordinary conditions, the population of “working age” accounts the highest percentage Its scale is more than total of young population and elderly population combined

The population growth in a certain period depends on some major components, such as natural change (birth, death) and net migration (immigration, emigration) Therefore, the population growth rate (r) can be defined as follows:

100

O I D B

Structure of population by age and sex reflect a general picture of fertility, mortality and population growth of several generations, including new generation in the last five to ten years

A useful tool to describe the population structure is the pyramid of the population

Figure 1: Age and sex structure of developed and developing countries

Source: United Nations Population Division, World Population Prospects:

The 2010 Revision, medium variant (2011)

1.1.2.3 Migration

Migration is the movement of people from one territory to another place based

on the standards of space and time

There are two main migration trends:

- Migration from rural to urban areas increases population in cities In more developed countries, this rate can increase the population in urban areas three times compared with in rural areas whereas in less developed countries, this percentage is double

This urbanization process immediately effects on the status of employment in urban areas as well as labor force in both rural and urban areas Most migration come from rural who have low knowledge, so it is not easy to satisfy the recruitment requirement of modern businesses As the result, this added to the urban labor force unemployed gang, and this is a burden for the economy

- International migration:This migration process associates with labor migration

in a short term or long term from developing countries to developed countries

This labor comprises not only simple worker, but also highly educated and experienced people This labor migration process has created the phenomenon

of “brain drain” from the poor countries to richer countries, and it also contributes to increase big gap between the countries

1.1.2.4 Participation rates in workforce

Participation rate in workforce is the ratio between people in working age joining labor force to the total labor force This rate is a profound important to economic growth

There are some concepts about participation rates in the workforce as following details:

- Crude Labor Force participation rate (CLFPR): is the ratio between the economically active population to the total population in the year

GLFPR = 𝐸𝑐𝑜𝑛𝑜𝑚𝑖𝑐𝑎𝑙𝑙𝑦 𝑎𝑐𝑡𝑖𝑣𝑒 𝑝𝑜𝑝𝑢𝑙𝑎𝑡𝑖𝑜𝑛 𝑓𝑟𝑜𝑚 15 𝑦𝑒𝑎𝑟𝑠 𝑎𝑏𝑜𝑣𝑒

𝑇𝑜𝑡𝑎𝑙 𝑝𝑜𝑝𝑢𝑙𝑎𝑡𝑖𝑜𝑛 𝑎𝑔𝑒𝑑 15 𝑦𝑒𝑎𝑟𝑠 𝑎𝑏𝑜𝑣𝑒 x 100

- Age sex specific labor force participation rate (ASSLFPR) is the ratio reflecting the level of participation in economic activity with each gender and different age, it is measured by the number of participants in economic activity

in age of a certain gender compare with the total of population corresponding

to the age of this gender

ASLFPR = 𝑃𝑜𝑝𝑢𝑙𝑎𝑡𝑖𝑜𝑛 𝑚𝑎𝑙𝑒 (𝑓𝑒𝑚𝑎𝑙𝑒)𝑎𝑔𝑒𝑑 𝑥 (𝑥,𝑥+𝑛) 𝑝𝑎𝑟𝑡𝑖𝑐𝑖𝑝𝑎𝑡𝑒 𝑖𝑛 𝑒𝑐𝑜𝑛𝑜𝑚𝑖𝑐 𝑎𝑐𝑡𝑖𝑣𝑖𝑡𝑖𝑒𝑠

𝑃𝑜𝑝𝑢𝑙𝑎𝑡𝑖𝑜𝑛 𝑚𝑎𝑙𝑒 (𝑓𝑒𝑚𝑎𝑙𝑒)𝑎𝑔𝑒𝑑 𝑥 (𝑥,𝑥+𝑛) x 100

1.1.2.5 Dependency ratio

This ratio reflects the economic burden of those who are in working age; have

to work to feed themselves and children or elderly dependents

The higher ratio, the bigger economic burden of the breadwinner Thus, to ensure the living conditions will not diminished, each main labors have to work with more labor productivity than before

Dependency ratio = 𝑃𝑜𝑝𝑢𝑙𝑎𝑡𝑖𝑜𝑛 𝑢𝑛𝑑𝑒𝑟 𝑤𝑜𝑟𝑘𝑖𝑛𝑔 𝑎𝑔𝑒+𝑎𝑏𝑜𝑣𝑒 𝑤𝑜𝑟𝑘𝑖𝑛𝑔 𝑎𝑔𝑒

𝑃𝑜𝑝𝑢𝑙𝑎𝑡𝑖𝑜𝑛 𝑖𝑛 𝑤𝑜𝑟𝑘𝑖𝑛𝑔 𝑎𝑔𝑒 x 100

1.2 Human resources and Human resources development

1.2.1 Definition

 Concept of Human Resources

Human resource, different with other resources such asfinancial or technology resources , is a special indispensable resource This decided the success or failure

of an organization In the existence and development process, human resource is not only subjected by the impact of fluctuations in natural (birth, death ) and mechanical movements (immigration) but also under the influence of a system of rule laws: the law of supply and demand or competition rules

In fact, the concept of human resource is understood very complex This was studied under many perspectives Based on the labor ability of human and the limit

of working age, human resource including people of working age, capable workers without regarding to the status of having or no job Based on the working age and inactive status, the workforce includes people in working age but not engaged in the workforce, such as housewives, students, the unemployed people, immediate beneficiaries and other subjects in addition to the above objects

With these above approaches, the common point of human resource is the possibility

of society in the working age

According to the approach of the United Nations, the "Human resources are all the knowledge, skills and potential of people related to the development of every individual, every organization and the country."

Human resources include unskilled labor force, skilled labor, intellectual labor

With the two approaches to human resource demands on the qualifications and capacity, human resource actually becomes the unit of wisdom matter in the results

of production and social activity Thus the human resource is to be considered not only in quantity but also in quality

From the above analysis, most of generalizations can be understood that human resources category refers to the hidden power of the population, the ability to mobilize participation in the process of wealth creation and spirit to society in the present and in the future Strength and ability are expressed through quantity, quality and structure of the population, especially the number and quality of people is eligible

to participate in social production 2

 Concept of Human resource development

Nadler & Nadler said that HRD, education and training (in the broadest sense) are terms that have the same connotation Two authors defined "human resource development is to increase the experience learning during a defined time period to increase the chances of improvement job performance." Meanwhile, UNESCO uses the concept of HRD in the narrow sense, it supposes that HRD is to make the entire population craftsmanship always fit the requirements of development of the country According to ILO, HRD encompasses a wider scope, not only is the dominance of skilled qualification or training issues in general, but also the development of the capacity and capability to use it on productive employment, as well as career satisfaction and personal life The UN is inclined to use the concept of HRD in the broadest sense, including education, training and use of human potential to promote economic development - society and improve their quality of life

Thus, although there are different expressions, the most common concept of HRD is the process of improving human capacity in all aspects in order to participate effectively in national development processes Human resource development, therefore, has always been a driving force of progress and impact on all aspects of social life

The experience of many industrialized countries previously showed that most

of development gains are not due to the capital increase that was completed production in human capacity, expertise, know-how and management careers Unlike investments in non-human capital, investment in human development is cross-cutting issue, multidisciplinary and it impacts on the lives of individuals, families, their communities and the entire commune Congress in general

1.2.2 Role of HRD in economic development

A country that wants to develop, it needs to have the resources of economic development components such as natural resources, capital, science - technology, and human In these resources, human resource is the most important Human resource plays a decisive role in the growth and economic development of all countries ever Despite rich natural resources, machinery and modern techniques, if a country which has no qualified people who can exploit these resources is unlikely to be able to achieve growth as desired There are three main roles of HR are:

- Human resource detects and creates the resources for development: human detect, exploit and use natural resources to create economic growth; resource

is the result of labor and the accumulation of human activity; scientific resources - technology and human-created

- Human resource plays a decisive role in the use of other resources Quality of human resource is a factor that greatly affects to efficiency of three remaining resources (including capital resources, science and technology, natural resources) Talking of human resource is refer to the overall manpower of a country in which highly qualified human resources are particularly important component, the essence of human resource, and play a decisive role for the success of economic development of a country

- Human resource is the driving force of economic development Human resource itself needs to grow with the increasing requirements, rich and innovative technology subjects, and adjust economic structure to meet the needs of society

Human resource has always played a crucial role for all economic activities in the resources to develop the country's economy Human resource decides

fundamental transformation process, comprehensive production operations, business, society, from using manual labor commonly to using skilled labors together with advanced technology, media and advanced methods in order to create high social labor productivity

Besides, human resource is an "input" element of the manufacturing process and is a participant in the consumer products and services of the society Thus, as part

of the population performing the consumer, human resource becomes agents of economic demand Human resource participates in creating supply and demand as well as directly regulates close relations with economic actors - society created by man

Therefore human resource development plays special role in economic development compared to other resources Human resource development is the process of creating and using comprehensive human capacity for economic and social progress and improving oneself every human being

1.2.3 Content of HRD

One thing needs to emphasize about HRD is mainly improve the quality of HR

of each country and each territory Beside labor factor, the quality of human resource depends on the structure of the workforce in field: technical qualifications, organizational capacity, management and the ability to coordinate to achieve targets Thus, the policy of HRD includes most measures affecting the strength of each employee, organization, and the way to use this energy source for development These are the content about population, health and nutrition, education and training, employment and income, living standard improvement …

Stemming from the mentioned above, the basic contents of HRD include:

- HRD in terms of quantity

Human resource of a country or territory, in term of quantity is expressed in population size and structure of gender and age Accordingly, human resource is big when it has large population size, and the percentage of working-age people is high

Of course, in terms of development, we cannot take into the rate of annual population growth This means that in terms of quantity, human resource is directly affected by

population size at the time of the original and population development policies of the country and territory This issue is taking place in two contradictory trends For developed countries, due to factors such as climate, genetics, needs to be free of every personal development, economic conditions, and the help of the scientific - technical so birthrate is very low, while life expectancy is higher, leading to an aging workforce Consequently, human resource lack is at an alarming rate However, birthrate in developing countries remains high, economic conditions, health care and health are slowly improved, resulting in a surplus of labor Consequently, unemployment increases pressure to solve the employment problem

- HRD in terms of quality

The quality of human resource reflects in three aspects: mental, physical and personality, labor discipline

+ Mental development is to develop the intellectual capacity of the employees

It is the process of improving the educational level, professional qualification and profession, creativity and skills, skills of workers in practical activities This process

is affected by many factors, including education which plays an important role in the decision because it is first and foremost product of education Therefore, training is put in strategy place of economic development

Solutions to develop human resource of each country may have different views But the most fundamental problem is that almost countries have devoted special attention

in development policy which is the development of human resources education and training

Human resource development plays a very important role in increasing labor productivity, boosting growth and raising living standards, basically be done through education and training This is especially urgent in decreased labor market conditions due to the impact of the economic crisis Develop and improve the quality of human resources, in addition to improving physical, in substance, are the development of education and training, but the focus is to improve the quality of education and training To develop knowledge-based economy needs the investment in HRD, but the core is the development of education and training, particularly investment in

developing talent American economist, Gary Becker - who was awarded the Nobel Prize in economics in 1992, has affirmed that "there is no public investment brings large investment resources as education Thanks to the investment in human resource development, many countries in just a short time have quickly become the industry development countries

Education, training and raising the quality of human resources are inextricably linked

to each other Education is one of the most basic measures to create the quality human resource, at the same time, the quality of human resource has also become a prime target of education and training

+ Physical growth is to increase the height, weight, longevity, strength and toughness of the nervous, muscular This issue depends on various factors, such as natural conditions, race, income and expenditure distribution method, the environment and working conditions, rest, the health care services (education, health, culture, sports) In particular, the income and health care services play a particularly important role These elements can only be improved on the basis of economic development

+ Personality development and labor discipline are to develop cultural factors, positive spirit and attitude with high self-consciousness, professional passion, activeness and creativeness, ethic, industrial working style, sociability in each employee It is the process of raising the level of awareness of the life value, sense of responsibility, ability to get along with the community to build a healthy lifestyle and industrial working style In essence, this is the process of promoting the traditional values and national cultural identity while absorbing the cultural essence of humanity For the developing regions, this process is influenced by culture and style of the farmers who produce in small level which is residual consequence of centralized management mechanism, especially the downside of the market economy and the integration process

- Improving the efficiency of human resources

Human resource is the source of human asset, therefore HRD will not be considered comprehensive if this resource is not interested and used effectively This

effective using is assessed by the level of full employment of human resources in terms of quantity, quality and time Thus, improving the efficiency of human resources consistent with:

+ investing in employment policies, reasonable income, social insurance welfare policy, remuneration….in order to improve workforce;

+ improving the efficiency of utilization of human resources, or the added value created by manpower using;

+ improving utilization factor of working time;

This process is directly influenced by the situation of supply and demand on the labor market, the quality of human resources and labor policies, and employment…These policies will encourage working spirit and employee’s creativeness

1.3 Overview of TPP

1.3.1 History and negotiation process of TPP

The Trans-Pacific Partnership (TPP) is a proposed free trade agreement among twelve countries with the aim of expanding international economic cooperation, boosting export and attracting foreign investment in Asia Pacific TPP is considered

as the most progressive agreement in history

Twelve members of the TPP include Australia, Brunei, Chile, Mexico, New Zealand, Peru, Canada, Malaysia, Singapore, Vietnam, Japan and the United State

Table 1: Members of TPP

Country Status 2005 agreement Signature of TPP Start of TPP

Negotiations

Singapore Party (28 May 2006) 4 February 2016 February 2008

Brunei Party (28 May 2006) 4 February 2016 February 2008

New Zealand Party (12 July 2006) 4 February 2016 February 2008

Chile Party (8 November 2006) 4 February 2016 February 2008

United States Non-party 4 February 2016 February 2008

Source: https://en.wikipedia.org/wiki/Trans-Pacific_Partnership

TPP derived from the Economic Cooperation Agreement Trans Pacific Strategic (Trans-Pacific Strategic Economic Partnership Agreement – also known as P4), a free trade agreement was signed on 03/06/2005, effective from 28/5/2006 between four countries Singapore, Chile, New Zealand and Brunei

In 2007, the member states P4 decided to expand the scope of this agreement They wanted to negotiate about financial services, investment and exchange with the United States about its participation in extension negotiation of P4 The US also began to research the issues and had internal consultations with the Parliament on these issues

In September 2008, The United State Trade Representative (USTR) announced the decision to participate in negotiations about expanding financial service market with P4 countries In November of the same year, Australia, Peru and Vietnam also participated in the TPP negotiations, bringing the total number of participants to eight countries (in there, Vietnam officially participate as member status from 13/11/2010) From this time, the expanding negotiation P4 was renamed negotiations Trans-Pacific Partnership (TPP)

However, the new TPP negotiations have been delayed until to the end of 2009 because of waiting for the new government of the United State consultations and review participation TPP negotiations In December 2009, USTR announced the decision of the president Obama to continue to participate in TPP Since then, the new TPP negotiations were officially launched

Compared with many other free negotiations, the number of rounds and the time spending for negotiations of TPP considerably larger Besides, there are specific forms of separate negotiations in TPP For instance, the Ministerial meeting discuss issues that cannot solve at the level of technical decisions and need greater political orientation

1.3.2 Scope of TPP

TPP is a special agreement that is a comprehensive agreement and covering a very wide range of international trade, stems from its scale This agreement is a comprehensive and ambitious agreement in all areas, including the elimination of tariffs and other barriers to trade and investment This agreement aims to create favorable conditions for trade and production supply chain development between TPP members It also supports the goal of creating jobs, raising living standards and improving welfare in member states To achieve this, the first time a trade agreement has made a commitment to help address the problem relating to the development of manufacturing and supply chain areas TPP countries also agreed to build a uniform tariff as well as the general rules of origin to help businesses to apply agreement easily

The agreement was built based on the negotiations made in the framework of APEC and other forums Many new and cross-cutting issues including competitiveness and facilitate business, small and medium enterprises, market liberalization in a comprehensive way, the improvement of regulations to strengthen trading and investment ….were included in TPP

TPP includes 30 chapters on trade and related issues of trade, customs, sanitary and phytosanitary measures, technical barriers to trade, trade defense measures, ecommerce, intellectual property, labor, environment; the chapter “horizontal” assures that TPP aims to take advantage of the development potential, competitiveness and comprehensive, resolve and dispute, the term of the exception, and enforcement provisions…

Besides updating the traditional approach to the problem of the free trade agreements previously, TPP also included new trade and crosscutting issues, such as Internet and digital economy, the participation of the state in business investment and international trade…

TPP includes the following contents:

- Merchandise trade (trade in goods): includes issues such as National Treatment, elimination of Customs Duties, non – tariff measures, administrative fees and formalities, agricultural export subsidies, special agricultural safeguard measures, rules of origin, customs procedures, trade remedies, global safeguards, antidumping and countervailing duties, sanitary and phytosanitary measures, technical barriers to trade…

- Competition policy: competition law, restrict or distort competition, competition-restriction agreements, abuse of dominant market positions…

- Intellectual Property: trademarks, geographical indications…

- Government procurement: business contract, build-operate transfer contract, public works concession contract…

- Trade in Services: commercial presence, National treatment, most favored nation treatment, market access, financial service, professional services…

- Temporary entry: immigration measures, immigration clearance procedures, border security, protecting the domestic labor force…

- Transparency: publication, administrative proceedings, review and appeal, contact points…

- Dispute resolution: choice of forum, consultations, conciliation and mediation, arbitral tribunal…

1.3.3 Meaning behind the effects of the century TPP agreement

TPP is considered the most ambitious trade agreement of the century If TPP

is effective, the immediate benefit will be easing tariff barriers since the cost of trade between the parties will reduce significantly

However, many binding regulations also come together with TPP including setting standards for environment and labor, the provisions on intellectual property and especial foreign companies can confront with the decision of local authorities by law All this regulations expect to boost growth for the members, and can push back the dominance of China in the global production

Experts said that TPP as an agreement affecting “40% of the world economy” This is just a simple sum of the GDP of the countries participating in the negotiations The commercial value of goods actually affected by TPP is approximately 13% of the global value One reason why people care about the new standards of TPP because they set a series of global trade regulations in the context of all the efforts to establish new trade laws applying worldwide are almost stalled

Experts suppose that one of the purposes of TPP is to deal with the rise of China To entice the political influence, the government President Barack Obama announced that TPP is a way to force China to join the new trade standards, and supports for the US allies in the region Meanwhile, China has also introduced a new trade agreement with Asia’s Regional Comprehensive Economic Partnership (RCEP) Observers expect that the two groups can compete with each other to promote improved standards such as the right for workers and the reform of state enterprises

The economists predicted that the countries can take the huge benefits after joining TPP are Vietnam, Malaysia and Singapore due to the expansion of market access In theory, the United State could not get more benefit because it has grown and has an open market For the remaining countries, the economic value may decline as export flow look for more efficient channels

Despite the positive growth signals in the first months of 2015, the United States, a leading economy in the world as well as a mainstay of TPP in recent years, has unstable economic growth The statistic showed that the third quarter in 2015 GDP growth of the US reached 1.5% lower than 3.9% gained in the first quarter Meanwhile, spending by the US consumers accounted for over two third of economic activity of this country, growth of 3.2% in the third quarter in 2015, became the main engine of economic growth

In recent years, the TPP member economies such as Vietnam and Malaysia… also witnessed a great development The major economies such as Canada, Australia are not growth so much but still maintain high rankings on the world economic map With such economic context, the TPP is expected to be a “push” for the international trade in particular, as well as the economies of the members in general

China is the second largest economy in the world, and its exchange rate policy has always been the concern of many economists When exchange rate changes make the yuan become weak, the Chinese goods will become cheaper relative to the commodities of other countries As the result, it will promote the export of Chinese goods, and also limit the penetration of foreign goods from other countries into the biggest market in the world This would be a significant disadvantage for the TPP members in next period, especially the two countries in Southeast Asia which have the advantage of cheap labor as Vietnam and Malaysia

For the US, 0.2% in this chart reflect the shift from low quality labor sector to high skill jobs If this prediction comes true, the production of the US will move abroad; in return, the work requires high skills and wages will focus on the US The reduction about 40 billion dollars of manufacturing output accounted for less than 1.4% of the value will be created

TPP is expected to be a strong motivation that promote growth and sustainable development of its members However, because of the economic background of the members is not the same, so the members can be divided into two groups: the highly developed economies such as the United States, Japan, Canada, Australia, and Singapore….and developing countries such as Vietnam, Malaysia, and Peru

1.3.3.1 For developed countries

 Regarding export market expansion: Leading economies such as the US, Japan, Canada …have the opportunity to expand export markets for their goods The tariff barriers or non-tariff is lifted with a very short route that makes the TPP believed to be very strong momentum for exports from these countries

 Regarding the participation of public procurement market in other countries: Under the TPP, public procurement market in developing members is opened This is a great and potential field for developed countries with long experience and strong financial resources

 Regarding the investment and economics growth: Besides affecting to export, TPP also is expected to affect many aspects of the developed economies In particular, the TPP still brings certain economic benefits although not so big profits According to the research by Petri (2011), by means of computable general equilibrium (CGE), expected to 2025, if the TPP is successful, the US GDP will increase by 0.15% and social welfare will increase by USD 40 billion compared to the absence of the TPP

1.3.3.2 For developing countries

 Regarding the exports of goods: Once the TPP has effect, the developing countries will be benefited a low tax rates, almost equal to 0% in the majority

of items This will create strong momentum for export activities This is also paramount important for Vietnam because China, which has the huge advantage of cheap labor and exporting textile like Vietnam, is not member of the TPP As the result, export goods from Vietnam have more benefit in TPP market

 Regarding market access: In theory, developing countries are easier to access

to foreign markets in the areas of investment and services However, because

of limited possibilities so investment from developing countries to others will not have advantage compared to the other countries This will be a field that the low level economies need to concentrate more to exploitation in the future

 Regarding benefits from cheap imported goods: Besides the benefits can be harvested from foreign countries, the domestic market itself also has a number

of benefits when participating in the TPP Thanks to reducing import duties, domestic consumers will have chance to access to foreign goods with more reasonable prices The production of the domestic industry will also get the input materials imported from the partners with cheaper prices This will help

to reduce production costs and improve the competitiveness of the output products This is especially meaningful for developing countries as Vietnam when the proportion of imported inputs key of export sectors remain high

 Regarding benefits and services investment: For developing countries, foreign investment is paramount important because it is a powerful momentum for economic development Specifically, in the field of services, investment wave from the TPP countries promises to bring new level for service quality as well

as creating strong market competition forced domestic businesses improve and develop According to estimates by Dr Nguyen Duc Thanh, thanks to TPP, investment in Vietnam will increase approximately 27% equivalent to USD 11.5 billion This is the largest number compared with other TPP members According to this study, investment in other countries in developing country groups such as Malaysia or Peru will increase by 6.28% and respectively 0.55%

 Regarding benefits from institutional reform: Institutional reforms in order to meet the general requirements of the TPP also bring benefits for developing countries Joining TPP is a chance for these countries to revise the legal system and state agencies With the effect in a covering scale, the TPP will help the legal system and institutions of these countries to become more consistent and

harmonize with the regulations and international law This will bring term economic implications for the economy

long- Regarding transparency in public procurement: TPP also requires opening public procurement Once this term is implemented, public procurement of developing countries who usually considered as lack of transparency would become fair and transparent, especially Vietnam

 Regarding environmental protection and labors: The environmental requirements and labors in TPP are also opportunities for these countries to protect the environment and quality of life It also helps the countries to avoid bad effects from economic cooperation, such as consequence from importing

or investing backward and polluted production lines as as well as life quality

of low-wage labor while they are heavily exploited, this cause political and social destabilization

CHAPTER 2 HUMAN RESOURCES DEVELOPMENT IN VIETNAM 2.1 Overview of Labor force of Vietnam

Vietnam’s population in 2016 is 93,421,835 people, in which number of people in working age is about 54,382,300 people There is average 1,5-1,6 million youth entering the labor force yearly This is a very important factor to renew the workforce in the direction of “rejuvenation”, a factor to increase labor productivity and economic growth Under demographic perspective, this is a paramount important factor

Vietnam workforce are reviewed according to the following criteria:

 Count to the Quarter I, 2016, there are over 70.6 million people aged 15 and older, in which 54.4 million people belong to workforce (this number does not include people living abroad during survey period) Although the urbanization process in Vietnam has been taking place, the rural labor force still dominates, accounting for nearly 68.1% the workforce

 The participation rate in workforce is 77.5% Differences participation level

in economic activities between urban and rural areas are significant, about 10.0 percentage points (71.0 % and 81.0%) Compared to Quarter 4, 2015, the level

of participation of economic activities of male and female slightly decreased Participation rate in labor force was 82.8% male and 72.6% female However, gender differences rose by 0.7 percentage points (9.5 percentage points compared with 10.2 percentage points sequentially)

 By Quarter I, 2016 there were 53.5 million people employed, and about 1.12 million people unemployed

 The rate of employment in population 15+ is 75.9% The gap in the ratio of employment between urban and rural areas still exists and is higher than previous quarter The rate of employment to the urban population is 69.0%, lower than this ratio in rural areas is about 10.7 percentage points

 Considered the number of working hours, there are more than 895.1 people unemployed Number of people unemployed increased sharply compared with

the previous quarter, about 68.5 thousand people, in which 86.2% unemployed currently living in rural areas

 In Quarter I, 2016, the unemployment rate who over 15 years increased slightly comparing to the Quarter I last year (2.05% versus 1.99% and 2,27 in sequentially) The number of unemployed people over 15 years has increased about 25.6 thousand people compared to the previous quarter

 Unemployment rate in the level from 15 to 24 years old was 6.63%, down slightly compared with Quarter IV, 2015 Number of youth unemployment account for 48.4% of all unemployed in all country In particular, the proportion of urban areas is lower than in rural areas (42.4% and 57.6%) Unemployment rate in youth accounts for 25% of all unemployed people in the country

Table 2: Some key indicators of the labor market

be count for the people from 15-24 years old

Source: Investigation report on Labor and employment in 2016

2.1.1 The workforce

2.1.1.1 The size and distribution of the participation rate in labor force

According to Investigation report on Labor and employment in 2016, in quarter 1, 2016, the workforce from 15 years old and above in the whole country is estimated at 54.4 million people, in which 68.1% come from rural areas The North Central; Red River delta and South Central coast are the two areas with the largest labor market in the country (21.9% and 21.8% sequentially), followed by Mekong Delta (19.1%) So, there regions occupied 62.8% of the total national workforce Woman labor is about 26.2 million people, accounted for 48.1%

At the national level, the rate of labor force participation is 77.5% The participation rate of population in urban and rural area are still significant differences with 10.0% point gap (81.0% and 71.0%) The participation rate of women is 72.6% lower 10.2% compared to men workers (82.8%) Notably, the participation rate in the workforce in Northern midlands and mountainous (84.6%) and Highlands (84.4%) accounted the highest proportion in the country while the lowest rate belongs to the Red River delta and the South East where there are two largest economic-society centers of the country, Hanoi and Ho Chi Minh City

2.1.1.2 The structure of the labor force by age

The structure of the workforce by age group reflects the demographic situation

as well as shows the economic-social situation The workforce in the country is relatively young, with a significant market labor aged from 15-39 (currently accounted for 51.4%)

Chart 1: Allocation percentage of the workforce by age in urban and rural

Quarter 1-2016

Source: Investigation report on Labor and employment in 2016

Chart 3 shows that there are clear differences between urban and rural areas, while in rural areas, the percentage of young population (aged 15-24 years old) and older people group (aged over 55 years old) was higher than for urban area, but in contrast with the main labor group (from 25-54 years old) This partly reflects the difference in the quality of the labor force between urban areas and rural areas This face is due to the young population in urban areas have joined the labor market later because they have a longer period of education while people in rural area usually join labor market early but leave the labor force later rather, as partly influenced by the characteristics of the type of rural job

age

the country, labor in rural areas accounted for 683% (corresponding about 36.4 million people), women labor accounted for 48.3% (relative to 25.7 million people) Comparison between the areas, the Red River Delta and the North Central and South Central Coast are the two regions occupying the biggest employment in the labor market (total accounted for half employed of the country, reached 21.9 and 21.8% sequentially), followed by the Mekong Delta and the South-east (18.0% and 17.0% sequentially)

The employed labor rate in group 15+ reached 75.9% Gaps in employment rate between urban and rural areas as well as men and women still exist (10.7 and 9.5 percentage points) Considered as region, the data shows that the employment rate in the Mountainous midlands and northern mountainous and Highland areas are still highest (reached 83.6%) while this ratio is lowest in Red River delta and the South-east, where there are two largest developed centers Hanoi and Ho Chi Minh City (approximately 73.2% and 71.7%)

The proportion of employed labor between economic sectors for each area The data showed that the South-east, especially in Ho Chi Minh City the economic structure following the modern development direction with the proportion of employed labor in the industrial sector, construction and services continue to rise (about 98% of the total work force in the city) In mountainous and coastal areas, the proportion of employed labor in the sector “agriculture, forestry and fisheries” are quite high, and the highest rate in this sector is highland with 72.4%, followed by the Northern midlands and mountainous with 64.5%

2.1.3 Underemployment and unemployment

2.1.3.1 The number of underemployment and unemployment

To Quarter 1, 2016, the total workforce in the country has more than 895.1 thousand underemployed and 1.12 million unemployed people Typically, underemployment is always a common issue in rural areas According to results of Quarter 1, 2016, there is 86.2% underemployed labor living in rural areas with the ratio of men more than women (51.3% and 48.7%) In contrast, the unemployment is more interested in the urban areas Although the proportion of urban unemployment

is lower, only about 45.0% of total number of unemployment in the country

Additionally, the date shows that unemployment rate of male is more than of female (59.6% and 40.4% sequentially)

Considering unemployment by the level of knowledge, there is more than 38.7% unemployed people are trained professionally or vocationally from 3 months upwards In particular, the people from the college level and above accounted for the biggest rate (44.7%) of the unemployed people of whole country.3

Youth is considered as one of the vulnerable labor groups easily affected by the fluctuation in the labor market Thus, youth unemployment has always been considered a concern of society In Quarter 1, 2016, the number of unemployed youth aged 15-24 years old accounted for 48.4% Notably, the number of unemployed youth

in urban areas is lower than in rural areas (42.4% and 57.6%) This is the result of a preponderance of education opportunities as well as job opportunities in urban areas

Considering the knowledge aspect, 55.1% unemployed labors are the people who passed at least a vocational training from 3 months upwards (this rate is equivalent 238.1 thousand people) and all of them are youth In which, the dominant rate belongs to the youth graduated college (75.7%) In addition, about 25.0% (equivalent to 223.6 thousand people) in total over 895.1 thousand underemployed labor in the whole country is youth aged from 15-24 years old

2.1.3.2 The underemployment and unemployment rate

The underemployment and unemployment in the working age count for male from 15-59 years old, and for female from 15-54 years old

Quarter 1, 2016, the unemployment rate in the working age of all country reached 2.25% In which, urban areas (3.08%) is higher than in rural areas (1.83%), and the disparity in unemployment rate between men and women is almost negligible, only about 0.55% However, this rate between regions is quite different The region with the lowest unemployment rate is still Highlands (around 1.09%, lower 2.06 times compared to the national average – 2.25%), followed by the Midlands-North

3Investigation report on Labor and employment in 2016

mountainous (1.36%) The areas have the highest unemployment rate are Mekong Delta, North central and Central coast and the Red River Delta (2.69%, 2.60% and 2.40% sequentially)

Currently, due to the economy of the country is in difficult period so the unemployment increased In quarter 1, 2016, the unemployment rate compared to quarter 4, 2015 was slightly increased 0.07 percentage points (from 2.18% to 2.25%), and if compared to the same period of 2016, this ratio is lower than 0.18 percentage points (2.25% versus 2.43%) This can be explained that Vietnam is an agricultural country; the economic development level is low so the living standard of the people

is not high Therefore, the people often accept to do every kind of jobs including work with low income or unguaranteed working conditions to feed themselves and their families rather than waiting for a better job with a long time

Table 3: Underemployment and unemployment rate in the working age, by areas Unit: %

The underemployment rate The unemployment rate

Investigation period

All the country Urban Rural

All the country Urban Rural