A new report by the International Labor Organization (ILO) shows that more than one-third of domestic jobs are directly or indirectly linked to global supply chains, while significantly dependent on the pulse of major commodity markets. This raises an urgent need for the adaptability of the labor market, the quality of workforce skills, as well as the resilience of the domestic business sector in the face of increasingly unpredictable external shocks. The Saigon Times had an email interview with Felix Weidenkaff, employment policy and labor market specialist at the ILO Office in Vietnam, to clarify the trends shaping Vietnam’s labor market and to suggest policy priorities for the next 3–5 years.
The Saigon Times: According to the ILO, Vietnam currently accounts for more than one-quarter (around 27.1%) of the 75 million supply-chain-related jobs in Southeast Asia, and over 35% of total domestic employment. What do these figures reflect, in your view, and what are their key implications for the labor market today? Felix Weidenkaff: Global supply chain (GSC)-related employment in Vietnam accounted for more than 25% of the more than 75 million GSC-related jobs in South-East Asia in 2023. The growth of GSC-related employment reflects Vietnam’s strong integration into GSCs, also supported by the expansion of trade agreements. These agreements have been instrumental in bolstering Vietnam’s rapid economic growth, stimulating job creation and reducing poverty over the past decades. While integration into GSCs provides a strong foundation for Vietnam’s socio-economic aspirations towards 2045, this also means that Vietnam’s labor market is closely tied to external demand dynamics. Therefore, further efforts are needed to strengthen the resilience of GSCs and improve skills development to take advantage of new growth areas. How does the ILO assess the extent to which supply chain jobs in Vietnam depend on major partner markets, and how does this affect their ability to withstand external shocks? GSC-related employment in Vietnam has more than tripled since 2000 and as of 2023, over 20 million workers were engaged in GSC-related jobs, constituting more than 35% of total employment. In terms of shares of total employment, Vietnam is moderately reliant on GSC-related employment in comparison to other countries in the region – at over 35%, this figure is below Singapore, Thailand and Lao PDR with shares above 40%. Yet, more than three out of four GSC-related jobs (76.8%) in Vietnam directly or indirectly rely on the demand from ASEAN, China, EU, Japan, the Republic of Korea, and the United States. Compared to other economies in ASEAN, this is similar to the Philippines (77%) and slightly lower than Lao PDR that exhibits a moderately heavier reliance on these trade partners (84.7%). Such reliance indicates that external shocks, whether from tariffs, economic slowdowns or geopolitical shifts, can transmit rapidly into the labor market. This reinforces the importance of diversification and stronger domestic private sector development in Vietnam in the years ahead. In manufacturing, only about 5.9% of jobs are high-skilled, lower than the national average of 10.9%. How does the ILO view the challenge of a potential “low-skills trap” in Vietnam, especially in the context of automation and digital transformation? To sustain high economic growth at a time of economic transformation and global trade uncertainties, Vietnam can foster resilience of supply chains and pursue quality FDI to generate knowledge spillover and create higher value-added activities in manufacturing and stimulate higher-skilled jobs within the manufacturing sector and beyond. This transformation will require enhanced capabilities of workers, especially given the relatively low share of high-skilled roles within key GSC-linked sectors.
Investments in quality skills development that are aligned with the evolving demands of GSCs will be needed. This will need to be accompanied by a deeper understanding of strategic skills requirements in other areas, particularly in higher-skilled and technology-intensive occupations. Strengthening technical and vocational education and training (TVET), re-skilling and up-skilling, alongside lifelong learning systems, will be essential to equip workers with the competencies needed for quality jobs and enhancements in productivity.
To ensure sustainability in the field of labor and employment, what should be Vietnam’s top priority over the next 3-5 years?
To ensure decent work outcomes in GSCs, coordinated efforts are needed across several policy areas to mitigate short-term disruptions and shape Vietnam’s medium- and long-term positioning. These include (1) Trade diversification and stronger domestic industrial linkages, (2) Inclusive, demand-driven skills development, (3) Gender-responsive labor market policies and shock-responsive social protection systems for just transitions, (4) Improved job quality and raising labor standards, and (5) Inclusive social dialogue and institutional coordination.
As Vietnam transitions to upper-middle income country status, the impact of these policy areas is mutually reinforcing and complementary over the next five years, with trade diversification, domestic industrial linkages and skills development and labor market policies emerging as particularly pivotal enablers for navigating current trade uncertainties. Several have been recognized in recent Resolution No. 68‑NQ/TW on private sector development, Resolution No. 59-NQ/TW on deepening international integration to leverage international commitments for economic growth and Resolution No. 71-NQ/TW (August 2025) on breakthroughs in the development of education and training.
Vietnam is also undertaking a range of labor-market reform initiatives. From the ILO’s perspective, what “toolbox” does Vietnam have to better manage labor market shocks linked to supply chains?
Vietnam is undertaking substantial reforms to modernize regulatory and institutional frameworks governing its labor market with a view to making it more competitive and efficient. On June 16, 2025, Vietnam’s National Assembly adopted the amended Employment Law, marking a key step forward in strengthening the country’s employment and labor market policies.
The adoption reflects Vietnam’s commitment to inclusive, sustainable, and future-ready socio-economic development, within the framework of international labor standards, particularly the ILO Employment Policy Convention, 1964 (No. 122). This amended law covers key areas such as job creation, labor market information (LMI) systems, vocational skills development, public and private employment services and unemployment insurance.
These reforms provide a more agile and responsive policy framework and with an effective implementation of the amended Employment Law, it has the potential to enable enterprises and workers in Vietnam to better navigate trade uncertainties and labor market shocks through job creation initiatives, demand-driven skills development, employment services, active labor market programs and unemployment insurance.
Reported by Minh Tam
