A November decree on foreign labor in Vietnam has businesses seriously concerned about their ability to fill vacancies for skilled workers. Numerous changes, including the diminished length of work permits, increased minimum experience thresholds and required approval by local governments, will make it significantly more difficult for both employers and workers to contribute to the Vietnamese economy.
Let’s start with the work permits.
Following the lead of neighboring countries such as Malaysia and Singapore, Vietnam has reduced the validity of work permits for foreign workers from 3 to 2 years which, according to company executives and analysts, “could aggravate the shortage of skilled workers already felt acutely by both foreign and local companies.”
A potentially larger issue is the change in requirements for obtaining a work permit. Foreign workers must have both a four-year university degree and 5 years’ experience in exactly the same field as the job they’re applying for.
So if you’re an English teacher with a CELTA but only 3 years of experience, no work permit for you:
“English teachers, for example, may graduate from a four-year university program but not necessarily have five years of experience teaching English,” said Fred Burke, Ho Chi Minh City-based managing director of the law firm Baker & McKenzie (Vietnam) Ltd.
This will have serious ramifications on many schools and businesses that cannot satisfy their human resource requirements from the domestic labor pool, one which has a “shortage of workers with the right skills,” according to a recent World Bank report.
Case and point:
“A survey conducted this year by the Vietnam Business Forum that included over 83 companies from foreign business associations and chambers of commerce confirmed that technical expertise and the dearth of qualified Vietnamese candidates are the two main reasons companies employ foreign nationals in Vietnam.
The skills gap is particularly acute among applicants for jobs in technical, professional and managerial positions, while a shortage in applicants is common among more elementary occupations,” the report said.
In the face of criticism, Vietnamese authorities have pointed to similar regulations in Singapore and Malaysia, which also grant two-year work permits: “Vietnam’s current two-year validity period is therefore acceptable,” Doan Mau Diep, deputy labor minister, said at a meeting in June with the Vietnam Business Forum.
But unlike Singapore and Malaysia, which distinguish between “workers”, “technicians”, “managers” and “professionals,” Vietnam’s new labor rules are extremely broad with no distinctions.
It also takes 2 – 3 months to apply for a work permit in Vietnam and must be done manually while the process is less that 2 months in Singapore and Malaysia which also accept online applications.
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And that was even before the new regulations came into effect. Now, in addition to the above obstacles, work permits must now be approved on the provincial level in addition to the labor ministry and other agencies.
The new regulations stem from a backlash against growing numbers of illegal foreign workers:
“Lawmakers, local authorities, and experts lament that unlicensed and unskilled foreign workers, particularly Chinese, have stolen jobs, stayed on illegally, and harassed locals. Media stories of medical clinics in Ho Chi Minh City and Hanoi being fined for various violations - including the employment of unlicensed Chinese doctors or selling expired drugs - have also continued to surface.
There are thousands of illegal foreign workers at construction sites across Vietnam, according to a recent government report to the National Assembly, Vietnam’s legislature. The report did not dwell on the nationalities of the “foreign workers” but pointed out that many of the construction projects are being implemented by Chinese contractors.”
In 2012 there were 77,359 foreign workers in Vietnam, 31,330 of which were lacking work permits, according to the labor ministry.
All of these stipulations have companies scrambling:
“It has been a complete nightmare for most companies since the new decree came out,” Nicola Connolly, vice chairwoman of the European Chamber of Commerce (EuroCham) in Vietnam, told Vietweek.
Many provinces have stopped issuing working permits since local governments are either unclear on the new provisions or simply don’t want to be bothered with the paperwork.
Connolly added that she fears that the revised labor codes will result in another unwanted consequence: “[It] also can invite bribery to speed [up] the process.”
While Vietnam should focus on protecting their domestic work force, it seems like it’s gone way overboard with this new decree. Hopefully it is amended in the near future, before serious economic damage has been done.
[Thanh Nien // Photo via Jonathan Kos-Read]
