VietNamNet Bridge - Labor costs in Vietnam are expected to be higher after commitments in the CPTPP (the Comprehensive and Progressive Agreement for Trans-Pacific Partnership) trade agreement are implemented, experts say.

Vietnam feels pressure on labor quality

Nguyen Thi Thu Trang, director of the WTO Center under the Vietnam Chamber of Commerce and Industry (VCCI), said that all the provisions in the TPP related to labor are also found in CPTPP. 

With CPTPP, Vietnam will have to implement two groups of commitments on workers’ rights and working conditions, as well as observe the principles in the ILO (International Labor Organization) Declaration on Fundamental Principles and Rights at Work.

Vietnam will not face many challenges in implementing labor commitments stipulated in Chapter 19 of the agreement as the commitments are not as strict as requested by the US in the TPP.

However, the pressure will be hard for Vietnam to implement commitments in bilateral agreements between Vietnam and other CPTPP members.

One of Trang’s concerns is that VCCI still has not accessed the bilateral letter between Vietnam and Mexico to analyze Vietnam’s commitments in terms of labor.

During negotiations with Vietnam, Mexico set very high requirements, which are believed to be even higher than those set by the US in TPP (Trans-Pacific Partnership). 

Trang, while admitting that it is still impossible to quantify all the possible effects of CPTPP’s commitments on the Vietnamese labor market, said that labor costs will be higher in the future.

What will Vietnam need to do?

CPTPP is expected to bring big benefits to enterprises. However, business will not be effective if they have poor corporate governance.

Stephan Ulrich from ILO said Vietnam is on the same par with Kenya and Nigeria in enterprise management, lagging far behind other countries such as Japan and South Korea.

Advising Vietnam to make preparations for the new CPTPP period, Ulrich said Vietnam needs to expand training, universalize education, and encourage students to study science, technology, and math to obtain better jobs with higher pay in the future.

Education and startups both need ‘reform’. The connection between private and state-run education sectors plays an important role, serving as the impetus for the private sector to speed up reform in the state-run sector.

According to Le Kim Dung from MOLISA (the Ministry of Labor, War Invalids and Social Affairs), the number of workers with bachelor’s degree in the third quarter of 2017 increased by 4.51 percent compared with the second quarter to 237,000.

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