Labor Productivity – The Foundation of Growth and Competitiveness

In an era of intensifying global competition and the inevitable demand for sustainable development, labor productivity is regarded as the “key” that determines the internal strength of every economy. For Vietnam, as the room for growth based on cheap labor and capital narrows, raising productivity has become an urgent requirement to sustain growth momentum, improve growth quality, and elevate the country’s position on the global stage.

By nature, labor productivity reflects the efficiency of resource utilization in production and business. Higher productivity means that with the same inputs—labor, capital, and resources—the economy can generate greater value. This not only helps businesses reduce costs and increase profits but also creates conditions to raise incomes and improve workers’ quality of life.

At the macro level, labor productivity is a core factor shaping national competitiveness. Economies with high productivity often demonstrate strong innovation capacity, rapid adaptability to changes, and deeper integration into global value chains. Conversely, low productivity leads to high production costs, limited product quality, and weaker competitiveness in international markets.

For Vietnam, although productivity has improved significantly in recent years, it still lags behind many countries in the region. This highlights both the vast potential for improvement and the urgent need for comprehensive, coordinated, and long-term solutions.

Five Strategic Solutions to Enhance Productivity

The Vietnam Productivity Report 2025 proposes five key solution groups for the 2026–2030 period, aiming to sustainably raise productivity while aligning with growth model transformation:

1. Promoting science, technology, innovation, and digital transformation
   • Increase investment in research, development, and technological innovation linked to productivity gains.
   • Accelerate adoption of digital technologies, automation, artificial intelligence, and big data in production, management, and service delivery.
   • Strengthen technology absorption and diffusion, especially from foreign-invested enterprises to domestic firms.
2. Developing human resources and skills
   • Reform the education and training system to emphasize practical skills, innovation, and creativity.
   • Expand reskilling and upskilling programs to help the workforce adapt to technological shifts.
   • Align human resource development with sectoral and regional productivity demands.
3. Restructuring the economy toward higher productivity
   • Accelerate labor shifts from low-productivity sectors to high-value-added industries.
   • Promote manufacturing, modern services, and the digital economy.
   • Link sectoral restructuring with spatial economic reorganization, regional development, and sustainable urbanization.
4. Enhancing productivity at the enterprise level
   • Encourage adoption of advanced management systems, productivity improvement tools, and quality standards.
   • Support small and medium-sized enterprises in process standardization, digitalization, and integration into value chains.
   • Foster a culture of productivity and innovation within businesses.
5. Improving institutions and the productivity ecosystem
   • Continue institutional reforms to reduce compliance costs and foster innovation.
   • Refine policies that incentivize investment in technology, innovation, and productivity.
   • Strengthen public governance, advance digital government, and promote evidence-based policymaking.

Experts emphasize that synchronizing solutions across technology, human resources, economic restructuring, enterprise development, and institutional reform will provide a solid foundation for Vietnam to achieve sustainable productivity growth, improve workers’ livelihoods, and enhance its global standing.