Labour productivity growth essential to boosting economic performance: experts

Workers at a wood factory in the northern Tuyên Quang Province. —VNA/VNS Photo Hoàng Hải

HÀ NỘI — After three years of failing to meet growth targets, Việt Nam’s economic productivity in 2024 overachieved its goal with a 7.09 per cent increase. Experts believe this is an important stepping stone to reach 8 per cent growth in 2025.

The national economy’s productivity in 2024 is estimated at VNĐ229 million (US$9,182) per person, increasing by $726 compared to the previous year due to improved capacity.

Assoc. Prof., Dr. Đinh Trọng Thịnh, senior lecturer at the Academy of Finance, underscored the importance of labour productivity in production quality, efficiency, wage increases and overcoming the middle-income trap to transform into a developed country.

The country's productivity growth mainly came from both local and foreign-invested private enterprises, as well as restructured State-owned enterprises.

The increase over the past year has helped boost productivity numbers over the 2021-2024 period. In Southeast Asia, Việt Nam currently ranks second among high-growth countries.

As for this year's 8 per cent growth target, Thịnh said that challenges are expected as 2025 could see uncertainty and multiple fluctuations due to undefined policies of major countries around the world, such as the US.

He expressed hope that the new US administration would adopt a harmonious approach to international conflicts and minimise escalating risks of war, which would help stabilise and propel the global economy.

Addressing the Russia-Ukraine and the Middle East conflicts could boost the economy and trade activities, thereby improving US incomes and facilitating imports from Việt Nam, he explained.

“Economic and political instability still exists, not to mention the possibility that the US might impose high tariffs on imported goods,” Thịnh told Voice of Việt Nam (VOV).

He added: “In general, there are many uncertainties, especially with ongoing global conflicts that could destabilise the global situation, causing fluctuating commodity prices. Our economy is currently in a transitional phase, and we are undergoing a restructuring of the administrative apparatus.

“If we manage this well, it will be a driving force to boost labour productivity and achieve better economic growth.”

Dr Nguyễn Trí Hiếu, an economic expert, said that the 7.09 per cent productivity growth in 2024 was an encouraging result but is still considered low compared to global statistics, adding that Việt Nam remains among the list of developing countries.

While achieving its target, Việt Nam should not be overly optimistic as there is still a lot to be done to improve the economy’s labour productivity, he said.

Việt Nam is now in the mid-tier of the middle-income group, but still has to overcome a considerable gap to reach the upper-middle-income group, with much more effort needed to achieve higher productivity and GDP per capita, said Hiếu.

He also emphasised that labour productivity is an important indicator because the country needs quantifiable data to understand where its productivity stands and how it compares to neighbouring countries and global performance.

Additionally, qualitative indicators are necessary to assess workers’ progress in all aspects, especially as we enter a new phase of development.

“We should not only focus on quantitative indicators but also qualitative ones. For example, when discussing the workforce, we need to consider the quality of life, housing conditions, living environment, transportation means, compensation and benefits, and workers' opinions.

“These are the factors that need attention, not just the growth numbers,” said Hiếu.

Experts believe given the current status and capacity of the economy, 8 per cent productivity growth in 2025 is a relatively high target. Việt Nam has the potential, but the key factor remains in policy changes and the drivers leveraged for growth.

Regarding this target, Hiếu said that the Government needs to prepare for different scenarios, and create support policies to achieve this goal or different measures if the growth rate is below expectations.

Meanwhile, Thịnh underscored that we must stabilise the administrative structure and immediately work on production and business management to ensure development. In addition, macroeconomic balances must be maintained.

Among these measures, stabilising the value of the Vietnamese đồng against the US dollar is considered a key strategy to ensure macroeconomic balance and economic stability, attract foreign investments and boost import-export activities.

Thịnh said: “It is necessary to improve frameworks and mechanisms, especially by digitising the economy and ensuring digital connectivity between ministries and sectors, building a database on socio-economic issues to improve administrative reforms and reducing the cost of information and market access, as well as productivity growth requirements.

“We should also continue the streamlining and restructuring of the apparatus to select capable, dedicated and talented individuals for state management, thereby helping to improve labour productivity.” — VNS