Competitiveness of vietnamese labor export in north east asia market a comparison across asean countries

81 27 Mean Distribution of Respondents’ Perception in Terms of Compliance with Labor Contract by Industrial Working 28 Mean Distribution of Respondents’ Perception in Terms of Average Ev

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_

A DISSERTATION Presented to the Faculty of the Graduate School Southern Luzon State University, Lucban, Quezon, Philippines

in Collaboration with Thai Nguyen University, Socialist Republic of Vietnam

Submitted in Partial Fulfilment of the Requirements for the Degree

DOCTOR OF BUSINESS ADMINISTRATION

A program offered by Southern Luzon State University,

Republic of the Philippines in collaboration with

Thai Nguyen University, Socialist Republic of Vietnam

has been approved by Oral Examination Committee

CECILIA N GASCON, PhD

Chairman

Accepted in Partial Fulfilment of the Requirements for the Degree

Doctor of Business Administration

_ WALBERTO A MACARAAN, EdD

Date Vice President for Academic Affairs

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This is to certify that the research work / dissertation entitled

COMPETITIVENESS OF VIETNAMESE LABOR EXPORT IN NORTH-EAST ASIA MARKET: A COMPARISON ACROSS ASEAN COUNTRIESorally

defended/ presented under the DBA Program jointly offered by Southern Luzon State University of the Republic of the Philippines and Thai Nguyen University of the Socialist Republic of Vietnam, embodies the result of original and scholarly work carried out by the undersigned

This dissertation does not contain words or ideas taken from published sources or written works by other persons which have been accepted as basis for the award of any degree from other higher education institutions, except where proper referencing and acknowledgement were made

_Hoang Van Hung- Tom Cruise Researcher/Candidate

Date Orally Defended: _

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The researcher wishes to extend him most since gratitude to the following people who made this piece of work a reality

Dr Cecilia N Gascon, President of Southern Luzon StateUniversity,

Republic of the Philippines, who made possible the linkage with Thai Nguyen University and the offering of Doctor of Business Administration, through the ITC-TUAF;

Dr Dang Kim Vui, the President of Thai Nguyen University, who made the linkage with Southern Luzon StateUniversity, Republic of the Philippines and the offering of Doctor of Business Administration, through the ITC-TUAF;

Dr Alice T Valerio, for her support and supervision throughout my graduate study program Her kindness and daily instructions in the last three years are greatly appreciated and this dissertation is as much her work as mine

Prof.NordelinaIlano, Director, Office for International Affairs of URS for her support to the DBA1 students;

Dr Tran Thanh Van, the Dean of the Graduate School of Thai Nguyen University, for his assistance and encouragement to pursue this study;

Dr Dang XuanBinh, the Director of International Training Center, for his assistance and encouragement to pursue this study;

Dr Nguyen ThanhHai, the Vice Director of International Training Center, for his assistance and encouragement to pursue this study as DBA Class Manager

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extended throughout the graduate studies in Thai Nguyen University, Vietnam;

To his ever dearest friends for their kindness and remarkable support;

To his family, for their support, encouragement for being the sources of greatest inspiration, which made his career a success

Hoang Van Hung

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This piece of work is dedicated

To My Family

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PAGE

TITLE PAGE ……… i

APPROVAL SHEET ……… ii

CERTIFICATE OF ORIGINALITY ……… iii

ACKNOWLEDGEMENT ……… iv

DEDICATION ……… vi

TABLE OF CONTENTS ……… vii

LIST OF TABLES ……… ix

LIST OF FIGURES ……… xii

LIST OF APPENDICES ……… xiii

ABSTRACT ……… xiv

CHAPTER I INTRODUCTION Background of the Study ……… 1

Statement of the Problem ……… 6

Objectives of the Study ……… 7

Hypothesis of the Study ……… 8

Significance of the Study ……… 9

Scope and Limitations of the Study ……… 10

Definition of Terms ……… 11

II REVIEW OF LITERATURE ……… 15

Conceptual Framework ……….… 47

III METHODOLOGY Research Design ……… 49

Locale of the Study ……… 50

Sampling Method……… ……… 50

Respondents of the Study……… 53

Data Collection……….…….… 54

Research Instrument ……… … …….…… 55

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Methods of Analysis ….……… … …….…… 57

IV RESULTS AND DISCUSSIONS ……… 60

V SUMMARY, CONCLUSIONS AND RECOMMENDATIONS Summary ……….……… 114

Conclusions ……… 117

Recommendations ……… 118

REFERENCES ……… 121

APPENDICES ……… 125

CURRICULUM VITAE ……… 137

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1 Labor Export of Vietnam to North-East Asia, 2008-2012 … 51

2 Percentage Labor Import of Japan, 2008-2012 ……… 52

3 Percentage Labor Import of Taiwan, 2008-2012……… 53

4 Distribution of the Respondents by Working Area, 2012 … 54

5 Descriptive Interpretation of the Likert Scale Rating ……… 56

6 Profile of Respondents ……… 61

7 Test for Reliability of Academic Performance Variable …… 62

8 Mean Distribution of Respondents’ Perception in Terms of

Academic Performance by Country ……… 63

9 Mean Distribution of Respondents’ Perception in Terms of

Academic Performance by Industrial Working Sector …… 64

10 Test for Reliability of Technical Skill Variable ……… 66

11 Mean Distribution of Respondents’ Perception in Terms of

Technical Skill by Nationality ……… 67

12 Mean Distribution of Respondents’ Perception in Terms of

Technical Skill by Industrial Working Sector ……… 68

13 Test for Reliability for Communication Skills Variable …… 69

14 Mean Distribution of Respondents’ Perception in Terms of

Communication Skills by Nationality ……… 70

15 Mean Distribution of Respondents’ Perception in Terms of

Communication Skills by Industrial Working Sector ……… 71

16 Test for Reliability for Performance Rating of Previous

Employers Variable ……… 72

17 Mean Distribution of Respondents’ Perception in Terms of

Performance Rating of Previous Employers by Nationality 73

18 Mean Distribution of Respondents’ Perception in Terms of

Performance Rating of Previous Employers by Industrial

Working Sector ……… 74

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19 Test for Reliability for Working Seniority Variable ………… 75

20 Mean Distribution of Respondents’ Perception in Terms of

Working Seniority by Nationality ……… 76

21 Mean Distribution of Respondents’ Perception in Terms of

Working Seniority by Industrial Working Sector ……… 77

22 Test for Reliability of Working Attitude Variable ……… 78

23 Mean Distribution of Respondents’ Perception in Terms of

Working Attitude by Nationality ……… 79

24 Mean Distribution of Respondents’ Perception in Terms of

Working Attitude by Industrial Working Sector ……… 80

25 Test for Reliability of Compliance with Labor Contract

26 Mean Distribution of Respondents’ Perception in Terms of

Compliance with Labor Contract by Nationality ……… 81

27 Mean Distribution of Respondents’ Perception in Terms of

Compliance with Labor Contract by Industrial Working

28 Mean Distribution of Respondents’ Perception in Terms of

Average Evaluation by Nationality ……… 84

29 Mean Distribution of Respondents’ Perception in Terms of

Average Evaluation by Industrial Working Sector ………… 85

30 Indicators of International Employers ……… 86

31 Mean Distribution of Japanese Employers’ Perception in

Terms of Average Evaluation by Nationality ……… 90

32 Mean Distribution of Korean Employers’ Perception in

Terms of Average Evaluation by Nationality ……… 91

33 Mean Distribution of Taiwanese Employers’ Perception in

Terms of Average Evaluation by Nationality ……… 92

34 Mean Distribution of International Employers’ Perception in

Terms of Average Evaluation by Nationality ……… 93

35 Ranking of Factor Priority in Terms of International

Employers’ Perception by Nationality ……… 94

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36 Descriptive Statistics ……… 95

37 Empirical Results of Model 1……… 97

38 Empirical Results of New Model ……… 98

39 Testing for Hypotheses ……… 99

40 Test of Homogeneity of Age Variances ……… 100

41 Comparison of Respondents’ Perception According to Age 101 42 Comparison of Respondents’ Perception According to Gender ……… 103

43 Test of Homogeneity of Variances by Marital Status ……… 104

44 Comparison of Respondents’ Perceptions According to Marital Status ……… 105

45 Test of Homogeneity of Variances by Highest Educational Attainment ……… 106

46 Comparison of Respondents’ Perceptions According to Highest Educational Attainment ……… 107

47 Test of Homogeneity of Height variances ……… 108

48 Comparison of Respondents’ Perceptions According to Height ……… 109

49 Test of Homogeneity of Variances by Weight ……… 111

50 Comparison of Respondents’ Perceptions According to Weight ……… 112

51 Comparison of Respondents’ Perceptions According to Related Personal Profile(P-values) ……… 113

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1 Conceptual Framework Showing the Factors Affecting the

Competitivenessof Labor in the Vietnamese Market ……… 48

2 Mean Distribution of Respondents’ Perception in Terms of

Academic Performance By Country ……… 65

3 Mean Distribution of Respondents’ Perception in Terms of

Technical Skill by Nationality ……… 68

4 Mean Distribution of Respondents’ Perception in Terms of

Communication Skills by Nationality ……… 71

5 Mean Distribution of Respondents’ Perception in Terms of

Performance Rating of Previous Employers by Nationality ……… 73

6 Mean Distribution of Respondents’ Perception in Terms of

Working Seniority by Nationality ……… 77

7 Mean Distribution of Respondents’ Perception in Terms of

Working Attitude by Nationality ……… 79

8 Mean Distribution of Respondents’ Perception in Terms of

Compliance with Labor Contract by Nationality ……… 82

9 Mean Distribution of Respondents’ Perception in Terms of

Average Evaluation by Nationality ……… 84

10 Mean Distribution of Japanese Employers’ Perception in Terms of

Average Evaluation by Nationality ……… 89

11 Mean Distribution of Korean Employers’ Perception in Terms of

Average Evaluation by Nationality ……… 91

12 Mean Distribution of Taiwanese Employers’ Perception in Terms

of Average Evaluation by Nationality ……… 92

13 Mean Distribution of International Employers’ Perception in Terms

of Average Evaluation by Nationality ……… 93

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A Questionnaire ……… 126

B Number of Vietnamese Laborers Going Overseas and

Foreign Currency Which Labor Sent to Home Country Last 5 Years ……… 134

C The Number of Labor Exportation Companies by Time … 134

D Number of Vietnamese, Thailand and Philippine Laborers

Going Abroad in Last 5 years……… 134

E Number of Indonesia, Thailand, Philippine and

Vietnamese Labor Entered in Taiwan in Last 5 Years … 135

F Number of Chinese, Indonesian, Philippine and

Vietnamese Labor Entered in Japan in Last 5 Years …… 135

G Vietnam’s Export Labors During 1992-2008 ……… 136

`

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Title of Research : COMPETITIVENESS OF VIETNAMESE LABOR

EXPORT INNORTH-EAST ASIA MARKET: A COMPARISON ACROSS ASEAN COUNTRIES

Researcher : HOANG VAN HUNG (TOM CRUISE)

Degree Conferred : DOCTOR OF BUSINESS ADMINISTRATION

Name and Address

of Institution

: Southern Luzon State University Lucban, Quezon, Philippines and Thai Nguyen University, Socialist Republic of Vietnam

Adviser : Dr Alice T Valerio

Year Written : 2013

Each year, Vietnam economy have more than 1 million new labors (GSO, 2011), and labor status is always excessive as we mention before Hence, exporting labor is essential way to solve this issue and earning foreign currency for economy Competition happens in everywhere and every sector, including labor export Hence, determining competitiveness of Vietnamese labor is a key point to develop However, articles which discuss about this issue are very rare

The study assessed the competitiveness of export labors among four countries (Vietnam, Philippines, Indonesia, and Thailand) in terms of the following major seven variables: Academic performance, technical skill, communication skill, performance rating of previous employers, working seniority, working attitude, compliance with labor contract This paper considered North-East Asia market only, under evaluation of three international employer groups, which include Japanese, Korean and

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literatures and studies

The findings of the study shows that Majority of these respondents were 16-30 age female with high school degrees, single with height 1.5-1.6 meter, weight 40-50kg According to regression results, the most important factor affecting to labor competitiveness is academic performance, followed

by communication skills, working attitude, working seniority and finally technical skill factor Indonesian has the highest capacity of competitiveness, especially in term of compliance with compliance with labor contract, communication skills and working attitude Meanwhile, Vietnamese is lowest, especially in term of technical skills, working seniority and communication skills Philippines have advantages in technical skills, working attitude and reputation Thai is similar Vietnamese, technical skills, communication skills and working seniority are not their strong points Vietnamese labors got trouble, such as: Low education attainment, lack of technical skills, weak solving skill during working time, communication capacity is weak, difficulties when communicate with colleagues, employers and foreigners, limited working seniority, trouble with team-work and adaptability in the workplace in foreign companies and experience about the future job In addition, working attitude need to concern more Testing the statistical difference of the respondents’ perceptions and their profile resulted to a value that age does not affect academic performance, technical skills, performance rating of previous employers, working seniority, working attitude, compliance of labor contract and labor competitiveness, except communication skills The proposed improvements offered by this study concentrated on the specific

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of Vietnamese labors These relate some issues need to be improved, such as: Education level, technical skills, soft techniques, communication skills, especially language capacity, working seniority, team-work skill, information about cultural, working style of expected destination, and working attitude

From the findings of the study, the following conclusions were obtained: The profile of the respondents’ subjected under study was considered sufficient and reliable enough to arrive at an accurate analysis and evaluation

of labor competitiveness Vietnamese government needs to improve their export labor competitiveness by improving labors’ education level, technical skill, communication skill, working seniority and working attitude They are very important factors, which influence to decision of international employers Comparing with other countries, Vietnamese labors are lowest competitiveness, especially in term of technical skills, working seniority and communication skills Though there were some limitations identified which were related more to education level, technical skills, solving skill during working time, communication capacity, working seniority, team-work skill, adaptability capacity in the workplace in foreign companies, experience about the future job and working attitude To improve the competitiveness of Vietnamese labor, the study suggested improvements on education level, technical skill, communication skill, working seniority and working attitude

It is recommended that the Vietnamese government must regularly conduct annual employers’ evaluation surveys to update international managers’ feedback about competitiveness of Vietnamese labors and to decide for necessary improvements The Vietnamese government should

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courses for supplementing essential knowledge; (2) Support tuition fee for poor people; (3) Supplementing tools for studying, such as: Internet, personal computer, etc The Vietnamese government should build plans to improve technical skills of Vietnamese labors: (1) Opening free courses for supplementing soft techniques; (2) Opening vocational centers freely; (3) Training necessary technical skills for people who plan working overseas Supporting and improving communication skills for Vietnamese labors: (1) Opening free language courses with popular languages: English, Korean, Japanese, Chinese, etc.; (2) Opening free communication class to make applicants more confident when communicating with foreigners Enhancing working seniority for Vietnamese labors: (1) Opening vocational class for practicing; (2) Cooperate with some production enterprises in Vietnam to help applicants have chance to practice; (3) Increasing team-work skill by providing and giving them free lectures about culture and working style of country, which they want to apply

ChapterI INTRODUCTION

Background of the Study

In the last fewyears, the world has witnessed the economic recovery of a number ofcountries affected by the financial crisis of 2008-2009 The international economy has gone on a strong growth path However, unemployment all over the world has put pressure on the labor and jobs market Given the growth of the international labor market, Vietnam has subsequently offered specific policies and programs to expand and develop some new labor markets In particular, the Communist Party of Vietnam and its Government defined that labor and specialist export is an important external economic sectorthat should form a part of the overall employment policy This policy is put

in place in the annual target by the Congress

Expanding the labor export market is a suitable economic development direction with an open integration path This expansion takes part in handling jobs for the laborers throughout the nation Labor exportation contributes to eliminate famine and reduce poverty The remittances from about a half million employees, including technicians and unskilled employees scattered in over 40 countries and regionshave contributed a lot to the national budget (approximately US$1.6 billion per year) Recently, the labor exportation policy as part of the overall employment policy hasshown positive effect on the economy

in terms of increasing income, contributing to the stabilization and development

of the country However, the requirements for labor exportation have become stricter regarding labor qualification, skills and workmanship, work

regulations,and facility in foreign language, especially for jobs in workshops and factories Currently, Vietnamese overseas laborershave matchedforeign demand but their skills and qualifications are so limited that it makesit harder for them to penetrate the labor markets of the developed economies Hence, what must be done is to make Vietnamese labor stronger and more competitive to affirm itstrademark in the international market It requires urgent action of the government, the enterprises, the managers, and the employees interested in labor exportation

Many factorsinfluence the labor export Firstly, the economic crisis dramatically influenced the context in which a growing number of international migrants had begun to spread from poorer to more industrialized countries.Secondly, the globalizationhas affectedlabor export in a positive way.Thirdly, competitiveness is one main influence on labor export.Hence, the global labor marketis itself a very important factor

The labor market is a generalized concept denoting the interaction between the supply (number of persons available for work) and the demand (number of jobs available) and the wage rate The high-income countries are always the potential destinations for migrant workers

Labor export in recent years has been one effective solution to generating employment, helping to increase workers' income and earning foreign currency for the country According to the Department of Overseas Labor(DOLAB) (2011) which is under the direct management of the Ministry of Labor, Invalids and Social Affairs (MOLISA), since 2001 more than 295,000 Vietnamese have gone to work abroad, bringing the totalnumber of Vietnamese workers in foreign countries to 400,000 In 2005, the country sent nearly 70,600

workers abroad, a 5 percent year on year increase The overseas workers have remitted about US$1.6 billion to the country The labor export sector is one

of Vietnam's one billion dollar export value earners

Labor export has also helped generate jobs in related services, such as job and foreign language trainings, thus reducing the pressure on the matter of qualification requirements for overseas workers in the country Labor export businesses have contributed to the State budget billions of VND from their profits and management fees annually

The number of Vietnamese workers in traditional markets has remarkably increased, including more than 30,000 workers in the Republic of Korea, 10,000 workers in Malaysia, 90,000 workers

in Taiwan, and 20,000 workers in Japan Vietnamese workers have also been sent to Canada, US, Australia, Italy, and some Middle Eastern countries These new markets are attractive for their high wages and proper worker protection laws (DOLAB, 2011)

Vietnam has licensed more than a hundred businesses for labor exports, including 40 businesses specializing in labor supply Many businesses of ministries and localities have sent large numbers of workers abroad and have taken a high level of responsibility for their workers, particularly in reducing risks (DOLAB, 2011)

According to the Ministry of Labor, Invalids and Social Affairs (MOLISA),in the coming years Vietnam has a chance to expand markets for labor exports as the world labor market is in great need of foreign workers, for a variety of work in construction, manufacturing, electronics assembly, garment and textile, services, hospitality, health care, domestic labor, sea transport,

fishing, seafood processing,and forestry and agriculture, which are suitable to Vietnamese workers

Currently, Vietnam has more than 44 million people of working age, with about 1.2 million more people per year reaching working age, a major resource

of work force supply for the domestic and foreign labor markets According to foreign employers, Vietnamese workers are industrious, clever and creative The rate of exported workers given job training has increased from 35 percent in

2003 to nearly 50 percent in 2005 (DOLAB, 2011)

The MOLISA plans to promote the education and job training for export,and toprevent breaches of the law onlabor exports It has instructed local authorities to promote cooperation with businesses in the recruitment of labor for export Exporting labor to wealthier parts of the world is something in which Vietnam has lagged behind its Asian neighbors, but the government hopes to change that soon As the government sees it, labor exports could help to ease the country's growing unemployment rate, as well as to alleviate poverty It is now pushing to have the number of Vietnamese overseas workers soar over the next few years At the same time, the country is already grappling with the social costs of the campaign poor people are getting into debt to pay for overseas trips and workers abroad are becoming vulnerable to abuses (MOLISA, 2011)

Vietnam exported nearly 15,000 workers who sent home some US$220 million Many countries like Malaysia, Middle East countries, Laos, Japan, Taiwan, South Korea and Libya, employed Vietnamese laborers in construction, manufacturing industry, sea transport, seafood processing, hospitality, health care, home service, fishing industry, and forestry and agriculture (MOLISA, 2011)

Falling GDP growth and dwindling foreign investment inflows are partly to blame for the rising number of jobless workers Compounding the problem is an administrative reform drive that plans to slash the government payroll by 15 percent, and growing redundancies from loss-making state-owned enterprises (DOLAB, 2011)

However, it is among the farming households, which account for more than 70 percent of the population, that unemployment could have the most severe long-term consequences As the rural community swells and lesser new lands become available for cultivation, unemployment is becoming a widespread problem, resulting in large-scale unplanned migration to cities (DOLAB, 2011)

It is young, largely unskilled laborers that the government is targeting for export But while overseas employers may consider it a plus factor, they cannot command higher wages, as these workers' relative lack of skills in comparison with those from other countries is a major drawback, as is their inability to converse or understand a foreign language (DOLAB, 2011)

These shortcomings are already proving problematic for labor exporters

in the country Although meager benefits were among things cited as the main recruitment hurdles, the foreign employers also set high qualification requirements Applicants have to meet specific health and age requirements, have a sound knowledge of English, hotel industry skills, and work experience but successful applicants get low payand have to work on a seven-day per week basis

Statement of the Problem

Each year, Vietnam turns out more than a million new laborers (GSO, 2011), and labor supply is always in excess as mentioned before Hence, exporting labor is an essential way to solve this issue in addition to earning foreign currency for the economy Competition occurs everywhere and in many sectors, including labor export Hence, determining the competitiveness of Vietnamese labor is a key point to consider However, researches about this issue are very rare

Therefore, this study focused on three main concerns First, this paper compared the competitiveness of Vietnamese labor export with three other countries: Philippines, Indonesia, and Thailand Hence, it would be possible to find the gaps between Vietnamese against other countries within ASEAN in terms of academic performance, technical skill, communication skill, working seniority, working attitude, and compliance with labor contract

Second, this study aimed to evaluate international employments from Taiwan, Japan and South Korea of Vietnamese labor export In addition, the study tried to compare the competitiveness of Vietnamese against Filipino, Indonesian, and Thai laborers,and todetermine the factors that affect their competitiveness More importantly, qualifications of international managers about imported labor are evaluated more clearly in order to understand the strengths and weaknesses of Vietnamese labor, theproblems in the exportation process, and to determine the gaps in quality that must be resolved

Third, the level of impact and priority in selecting applicants were investigated fully and clearly Hence, this paper provided some suggestions for

both governmental and local administrations to improve competitiveness of labor export that could lead toexpansionin labor export

Specifically, this study sought to answer the following questions:

1 What is the profile of the respondents in terms of age; sex, health status, civil status, preceding jobs, weight, height, and work area?

2 What is the level of competitiveness of labor export across countries in terms of academic performance, technical skill, communication skill, performance rating of previous employers, working seniority (in previous companies), working attitude, and compliance with labor contract as perceived by the workers and the employers?

3 Is there any significant difference between the level of competitiveness

of labor export as perceived by the international employers and the international workers?

4 Is there a significant difference in the perceived competitiveness of labor export across countries?

5 What are the factors that affect labor competitiveness?

Objectives of the Study

The study aimed to evaluate the statusand competitiveness of Vietnamese labor in comparison with labor from other Asian countries

Specifically, this study aimed:

1 To describe the profile of the respondents in terms of:

a) Age b) Gender c) Civil status

d) Weight e) Height

2 To analyze the level of competitiveness of labor export across countries in terms of:

a) Academic performance b) Technical skill

c) Communication skill d) Performance rating of previous employers e) Working seniority (in previous companies) f) Working attitude

g) Compliance with labor contract

3 To compare the perceived competitiveness of the labor export by the international employers and the international employees

4 To compare the perceived competitiveness of labor export across countries

5 To determine the factors affecting labor competitiveness

Hypotheses of the Study

The following hypotheses were tested in the study:

1 There isa significant difference in the competitiveness of labor export across countries

2 There is a significant difference in the competitiveness of labor export as perceived by the international employees and international employers

3 There is significant difference between respondents’ perception in term of academic performance, technical skill, communication skill, performance

rating of previous employers, working seniority, working attitude, and compliance with labor contract when they were grouped by personal profiles.

4 Competitiveness of labor export is significantly affected by academic performance, technical skill, communication skill, performance rating of previous employers, working seniority, working attitude, and compliance with labor contract

Significance of the Study

The result of this study is envisioned to contribute knowledge to effective and efficient management of labor export;hence, it will benefit the following sectors:

International employers Based on analysis of this paper, Vietnam’s

government will build special action plans to improve competitiveness of Vietnamese labors Hence, international employers can have better and more competitive labor in the future

Vietnamese laborers This study will help them understand their

strengths and weaknesses In addition, laborers will be made aware of the requirements of international employers in term of academic performance, technical skill, communication skill, performance rating of previous employers, working seniority (in previous companies) and personal characteristics Hence, Vietnamese labors can prepare and study to improve their abilities and increase their potential for success in the future This will provide them with assessments and directionsin applying for work abroad in the future

Managers of labor exportation This research will help them in

understanding requirements of international employers The research will provide them withvery important suggestions to build action plans for improving labor competitiveness of Vietnamese labor The paper couldhelp build up the image, competitive advantage through superior innovation, and improve and meet expectations of international employers

Vietnamese government This paper will study the current status of

Vietnamese labors in term of strength and weakness points; it will also provide lots of useful information about requirements of foreign labor importers It will be

a good basis for Vietnamese government in planning labor development, especially export activities

Other researchers This study will help other researchers to collect

necessary information in relation to their research fields Other researches will also consider the limitations of this research as they conduct future research related to this field of study

Scope and Limitations of the Study

The study assessed the competitiveness of export laborsamong four countries (Vietnam, Philippines, Indonesia, Thailand)interms of the following seven major variables: academic performance, technical skill, communication skill, performance rating of previous employers, working seniority, working attitude, compliance with labor contract This paper considered North-East Asia market only, under evaluation of three international employer groups, which include Japanese, Korean and Taiwanese employers.These main variables were selected based on the review of related literatures and studies

Definition of Terms

For clarity and better understanding of this study, the following terms hereby defined conceptually and operationally:

Academic performancerefers to the level of education (primary school, high

school, undergraduate, post-undergraduate) of the respondents

Communication skills refer to capacities of using foreign language of

orientation country to communicate Knowing English will earn extra point

Competitiveness is the ability of a firm or a nation to offer products and

services that meet the quality standards of the local and world markets

at prices that are competitive and provide adequate returns on the resources employed or consumed in producing them (Business Dictionary, 2012)

Demand for laboris a concept that describes the demand for labor that an

economy or firm is willing to employ at a given level of wage rate This demand may not necessarily be in long-run equilibrium, and is determined by the real wage firms are willing to pay for labor, and the number of labor workers willing to supply at that wage rate

Job is a group of homogeneous tasks related by similarity of functions When

performed by an employee in an exchange for pay, a job consists

of duties, responsibilities, and tasks (performance elements) that are defined and specific; can be accomplished, quantified, measured, and rated

Labor is the aggregate of all human physical and mental effort used in creation

of goods and services Labor is a primary factor of production The size

of a nation's labor force is determined by the size of its adult population, and the extent to which the adults are either working or are prepared

to offer their labor for wages (Business Dictionary, 2012)

Labor force of a country (or other geographic entity) consists of everyone of

working age (typically above a certain age (around 14 to 16) and below retirement (around 65) who are participating workers, that is people actively employed or seeking employment People not counted include students, retired people, stay-at-home parents, people in prisons or similar institutions, people employed in jobs or professions with unreported income, as well as discouraged workers who cannot find work

Labor marketrefers to the nominal market in which workers find paying work,

employers find willing workers, and wage rates are determined.Labor markets may be local or national (even international) in their scope and are made up of smaller, interacting labor markets for different qualifications, skills, and geographical locations They depend on exchange of information between employers and job seekers about wage rates, conditions of employment, level of competition, and job location (Business Dictionary, 2012)

Labor Supply is the total hours (adjusted for intensity of effort) that workers

wish to work at a given real wage rate.From a Marxist view, a labor supply is a core requirement in a capitalist society In order to avoid Labor shortage and ensure a labor supply, a large portion of the population must not possess sources of self-provisioning, which would allow them to be independent, and they must instead be compelled, in

order to survive, to sell their labor for a subsistence wage (Dobb, 1947; Harvey, 1989)

Northeast Asia and Northeastern Asia refer to the northeastern sub-region of

Asia In geopolitics, the Council on Foreign Relations defines Northeast Asia as China, Japan, North Korea, and South Korea

Productivityis defined in terms of utilization of resources, like material and

labor In simple terms, productivity is the ratio of output to input For example, productivity of labor can be measured as units produced per labor hour worked Productivity is closely linked with quality, technology and profitability

Technical Skill is knowledge and abilities needed to accomplish mathematical,

engineering, scientific or computer-related duties, as well as other specific tasks Those with technical skills are often referred to as

"technicians" in their chosen field, i.e audio technicians, electronics technicians, engineering technicians, etc

The Association of Southeast Asian Nations (ASEAN) was established on 8

August 1967 in Bangkok, Thailand, with the signing of the ASEAN Declaration (Bangkok Declaration) by the Founding Fathers of ASEAN, namely Indonesia, Malaysia, Philippines, Singapore and Thailand Brunei Darussalam joined on 7 January 1984, Vietnam on 28 July 1995, Lao PDR and Myanmar on 23 July 1997, and Cambodia on 30 April 1999, making up what is today the ten Member States of ASEAN

Unemploymentas defined by the International Labor Organization occurs when

people are without jobs and they have actively sought work within the past fourweeks (International Labor Organization, 2007)

Unemployment rate is the percentage of the total labor force that is

unemployed but actively seeking employment and willing to work

Working attitudes express motivation and profession in workplace This

variable is usually evaluated by some indicators, such as amount of reward respondent receive within a year, number of late attendance within a month, number of absent within a month and number of punishment within a year

Working seniority is the length of time that an individual has served in a job or

worked for an organization or other company Working seniority refers to experience in a particular mission or job

Chapter II REVIEW OF LITERATURE

Process of Labor Exportation

Vietnam’s international cooperation process in labor sector started in

1980, by performing Decree 46/NDCP, February 11th 1980, of Cabinet Council

on sending a part of laborers to work overseas and to improve skills in socialist countries Since that time, adapting to development process of the country, this exportation has greatly developed and is divided into some distinct periods

From 1980 to 1990, Vietnamese workers were mainly sent to socialist

countries in Eastern Europe, including Soviet Union, German Democratic Republic, Czechoslovakia, Bulgaria, Iraq, and Libya Specialists in medical, educational and agricultural sectors were sent to work in some African countries The cooperation on using labor between Vietnam and these countries must respect the government agreement and is executed by a centrally planned mechanism Vietnamese government directly selects employees and specialists who are engaged to work in factories, medical and

educational offices in receiving countries

Labor exportation policy in this period was “to create jobs for a part of Vietnamese youths”, “by labor cooperation with other countries, Vietnamese labor’s skills could be improved and Vietnamese labor could satisfy the requirements for economic development” (Resolution 362/CP, November 29th

1980, Cabinet Council) and “to recommend specialists to aid the developing countries in Africa and Middle East” (Resolution 263/CT, July 24th 1984,

President of Minister Council) These documents do not refer yet to economic benefit

The total number of employees and specialists moving abroad in this period was about 300,000, including 244,186 workers to Socialist countries in Eastern Europe; 20,000 employees to Iraq; 7,200 specialists to the Countries in Africa; and 23,713 apprentices and college students in Eastern European countries From 1991 to 2000, the sixth Party Congress (1986) initiated a comprehensive renovation policy for the country and defined that “expand labor exportation in many suitable methods, consider that is a part of general labor program” Simultaneously, at the end of 1980s and the beginning of 1990s, Socialist countries in Eastern Europe received Vietnamese labor resource in the face of huge political changes changes in political institutions and economic structures, economic and political crises in some African countries, and the war

in Iraq Most of these countries did not need Vietnamese workers and specialists If there was demand, they did not receive labor as per government agreement To resolve this problem and to adopt the new renovation policy, labor and specialist exportation mechanism were ameliorated and changed from focused planning mechanism to distinguish mechanism between the government management and companies’ business operation The Government offered policy mechanisms to manage the operation of companies; companies could now license, sign contracts, select employees, send and manage labor overseas (Resolution 263/CT, July 24th 1984, President of Minister Council)

From 1991 to 2000, the government definedthree decrees on labor exportation: (a) Decree 370/HDBT, September 20th 1991, offered the regulations on sending Vietnamese labor to work oversea temporarily In this

decree, labor exportation was executed by contracts that Vietnamese organizations signed with foreign organizations Decree 370/HDBT did not clearly stipulate conditions for economic organizations permitted to license; (b) Decree 07-CP, January 1st 1995, detailed some articles of labor law on sending Vietnamese labor to work overseas for a definite period This decree stipulated that only state–owned companies were licensed and detailed the budget conditions for licensed companies; and (c) Decree 152/ND-CP, September 20th

1999, stipulated about Vietnamese laborers and specialists working overseas for a definite period This decree had some huge mechanism changes in comparison with Decree 07/CP: Clearly stipulated conditions on budget, operation, staff for company; employees who had direct contracts with foreign employer could go to work overseas after registering contracts at the local labor offices Moreover, in this period, Vietnamese laborers were sent to new markets such as Korea, Japan, and Taiwan The number of mobilized labor was not huge but increased year by year In 10 years, 121,752 persons were mobilized

to work overseas (Resolution 263/CT, July 24th 1984, President of Minister Council)

On September 22, 1998, the Ministry of Politics offered Instruction No CT/TW on labor exportation This instruction claimed that “exportation of laborers and specialists is a socioeconomic action that helps to develop the human resources, create jobs and income, improve employees’ skills and increase foreign currency for the country Besides most of jobs were created in interior, labor exportation was an important policy in the long term to help to reinforce labor force for development country in industrialization and

41-modernization period” (Resolution 263/CT, July 24th 1984, President of Minister Council)

Since 2000, the government’s Decree No 152/ND-CP, September 20th

1999, prescribed on sending Vietnamese laborers and specialist to work overseas for a definite period continued to come into effect Although new decrees allowed only state-owned enterprises to license labor exportation, the government allowed having trial license for some private companies

In 2002, the Congress agreed with the modified labor law with 6 more articles on labor exportation July 17th 2003, the government offered Decree No 81/ND-CP replacing Decree 152/ND-CP This decree permitted Ministry of Labor, Invalids and Social Affairs to license for state-owned companies and joint-stock companies in which the state owned most of the stocks, simultaneously suggested Prime Minister to approve license for other companies (Joint circular No.16/2000/TTLT-BTC-BLDTBXH of February 28, 2003)

On September 8th 2004, Prime Minister had decision No Ttg on establishment, management and using aid fund for labor exportation to develop labor exportation market overseas, improve competitive quality and ability of Vietnamese labor and reduce risks for employees working overseas

163/2004/QD-On November 11th 2005, the government offered Decree No 141/2005/ND-CP

on the management of Vietnamese labor working overseas (Joint circular No.16/2000/TTLT-BTC-BLDTBXH of February 28, 2003)

To improve government management on labor exportation, the Congress accepted the law on Vietnamese labor working overseas under contracts, which have come into effect since the July 1st 2007 This law had full and clear

regulations on sending labor working overseas: through companies with license

of labor exportation, through companies that awarded in bidding, received bid or invested in foreign country, through companies that sent trainees overseas and through state offices Licensed companies were opened, not distinguishing state-owned company or private company Conditions to be licensed were strictly stipulated (Joint circular No.16/2000/TTLT-BTC-BLDTBXH of February

28, 2003)

Status of Vietnamese Labor Exportation

The legal system waseventually completed and unified to define the overall conduct of labor exportation (law on Vietnamese labor working overseas under contract and legal instructions to execute law such as decree, decision, and circular).There had been mechanisms and policies to encourage labor exportation (Credit policy and supporting educational fee for labor, etc.).The Government’s management on labor working overseas has improved (administrative process is renovated in quick, simple, direct and transparent method to decrease negatives and defrauds of labor exportation; activities to protect the interests of labor are well cared for The market to export Vietnamese labor hasgreatly expanded and reinforced (nowadays, Vietnamese laborers live and work in over 40 countries and regions); and currently the focus

is on well-paid labor market (Labor and Society Magazine, 2007)

The role of foreign affairs in exploiting and searching markets is initially focused; co-ordination between state offices in management and protection of the interests of labor is stricter and quicker The system of labor exportation companies is set up in good order and becomes professional Some dynamic

companies invest to expand their markets in deep direction; encourage and mobilize all of economic elements to take part in labor exportation (there are about 150 companies in all economic elements)(Labor and Society Magazine, 2007)

The number of labor working overseas regularly has increased yearly Currently, there are about 500,000 employees working in over 40 countries and regions in over 30 categories of professions An average of about 83,000 are working overseasper year, occupying about 5% of the labor force having jobs The remittance from laborers working overseas has increased annually contributing a lot to the national fund (about US$1.7 billion in 2007)

Quality of selection, professional education for labor before working overseas are improved continually; content, education program, foreign language, support necessary knowledge for labor are renovated to be suitable for skills and the requirements of each market The rate of qualified labor working overseas has increased

Many laborers gain good experiences about techniques and modern production technology so when they come back to Vietnam, they can effectively use these in production, business, increasing productivity and income Quality of labor working overseas has improved gradually By the end of 2003, the number of qualified laborers before working overseas increased by about 35 percent; this number is over 50 percent now Companies have paid more attention to educating laborers before their departure to work overseas; the system of colleges and educational centers for training labor working overseas has also been established (see Appendix Table B)

Vietnam signed many conventions, agreements on labor cooperation with many countries and regions to establish the legal frameworks for labor exportation, management and protection of the laborers’ interests.There are 156 companies licensed to export labor overseas now Among these companies, there are about 30% operating effectively, bringing thousands of employees abroad per year while about 50 percentare operating quite well The last group are companiesthat have just been set up, or in completion period, wherein which efficiency is limited (see Appendix Table B)

Management and protection in the interests of Vietnamese labor working overseas have improved and became more focused The system of management of Vietnamese labor working overseas includes: representative offices for foreign affairs, board of labor management or professional staff to manage labor at representative office and representatives of companies Representative offices are present in all of receiving countries Board of labor management is established in seven countries and regions where there are many Vietnamese labors Moreover, in markets where there are many Vietnamese labor most of labor exportation companies have representative offices to manage and protect the interests of labor, and to timely resolve problems of labor (Dang, 2007)

Propaganda operation about labor exportation is enforced Due to this operation, awareness of state offices and labor about labor exportation has improved; transparency and openness in labor exportation have increased; and degradation in labor exportation has been limited System of labor exportation companies is established by contracts

With a completed legal system on labor exportation matching the national and international requirements, Vietnamese labor exportation companies are set

up and have become a system in which the number is bigger and mechanism is more diverse step by step.Initially, there were only state-owned companies, after which there were also sociopolitical companies After trial period and offering law of labor exportation, the number of private companies licensed hasgreatly increased Most of state-owned companies had been convertedinto private companies (Dang, 2007)

In 1990s, most of labor went to work overseas through labor exportation companies Since 2005, due to the center of overseas labor cooperation and labor working overseas by private contracts, the number of companies decreasedannually, but occupied about from 84% to 90% (see Appendix Table C)

There is a significant development in operation size and quality:With operation experiences and effects on investment, many companies have shown remarkable development in operational size and quality: First, staff, professional and foreign language teachershad significantly increased to adapt to the expanding demand and management demand Second, the qualification and professionalism of staff in many companies havegrown Thus, most of companies having at least 10 years’ experience search markets, negotiate contracts themselves, and develop many new markets, bringing a huge number

of labor working overseas, in response to market changes, while at the same timehandling problems and risks related to labor Third,many companies started investing in educational cooperating to prepare high qualified human resources; some companies cooperated with foreign partners to educate laborers

according to market demand Fourth, some companies have developed and improved working facilities to educate labor; renovate staff, structure, and enhancement of the qualifications of staff (Dang, 2007)

In the period of economic globalization and expanded market economics, mobilizing labor across borders are complex and more globalized in context In evaluating the documents of the International Organization of Migration (IOM), there were about 185 million people; or approximately three percent of median populations live outside territory of their own country In this number, there are

85 million labor migrants (Labor and Society Magazine, 2007)

The first form is exportation labor This form is moving labor from one country to others, as a result of official arrangement between two countries to take part in labor market in this country Basis for deciding the number of labor, career, gender and age and so on is the demand from original country’s labor market Vietnamese labors who work in Malaysia, Taiwan, and Korea belong to this category These employees work for specific periods and basically will come back to home country after the end of the contract In the next few years, Vietnam basically will continue to be an exporting labor country and not an importing labor country (DOLAB, 2011)

The second form is moving free labor in unified labor market of a country’s union Having unified markets requires the unification of economic environment between countries Unification process takes place in five stages:

First stage: countries in Union have trade references with each other; second stage: create a free trade area; third stage: build a customs union, fourth stage: establish a joint market; and fifth stage: establish economic union Nowadays, European Union is the unique union which has already finished the