Tài liệu Competitiveness of vietnamese labor export in north-east asia market a comparison across asean countries

Southern Luzon State University Republic of Philippines Thai Nguyen University Socialist Republic of Vietnam COMPETITIVENESS OF VIETNAMESE LABOR EXPORT IN NORTH-EAST ASIA MARKET: A COMPARISON ACROSS ASEAN COUNTRIES A Dissertation Presented to the Faculty of the Graduate School Southern Luzon State University, Lucban Quezon, Philippines In Collaboration with Thai Nguyen University, Socialist Republic of Vietnam In Partial Fulfillment of the Requirements for the Degree of Doctor in Business Administration HOANG VAN HUNG (TOM CRUISE) August, 2013 APPROVAL SHEET iii DEDICATION This piece of work is dedicated To My Family iv ACKNOWLEDGMENT The researcher wishes to extend her most sincere gratitude to the following people who made this piece of work a reality. Dr. Cecilia N. Gascon, President of Southern Luzon State University, Republic of the Philippines, who made possible the linkage with Thai Nguyen University and the offering of Doctor of Business Administration, through the ITC-TUAF; Dr. Dang Kim Vui, the President of Thai Nguyen University, who made the linkage with Southern Luzon State University, Republic of the Philippines and the offering of Doctor of Business Administration, through the ITC-TUAF; Dr. Alice T. Valerio, for her support and supervision throughout my graduate study program. Her kindness and daily instructions in the last three years are greatly appreciated and this dissertation is as much her work as mine; Prof. Nordelina Ilano, Director, Office for International Affairs of URS for her support to the DBA1 students; Dr. Tran Thanh Van, the Dean of the Graduate School of Thai Nguyen University, for his assistance and encouragement to pursue this study; Dr. Dang Xuan Binh, the Director of International Training Center, for his assistance and encouragement to pursue this study; Dr. Nguyen Thanh Hai, the Vice Director of International Training Center, for his assistance and encouragement to pursue this study as DBA Class Manager; To all the SLSU and TNU Professors, for their support and guidance extended throughout the graduate studies in Thai Nguyen University, Vietnam; To his ever dearest friends for their kindness and remarkable support; To his family, for their support, encouragement for being the sources of greatest inspiration, which made his career a success. v ABSTRACT In recent years, the world has witnessed the economic recovery of a number of countries affected by financial crisis in the period 2008 to 2009. International economy is in ongoing strong growth, but unemployment all over the world puts pressure on labor and jobs. Each year, Vietnam economy have more than 1 million new labors and labor status is always excessive as we mention before. Exporting labor is essential way to solve this issue and earning foreign currency for economy. Competition happen in everywhere and every sectors, including labor export. Hence, determining competitiveness of Vietnamese labor is a key point to develop. With this point of view, the dissertation proposes a system of a set of criteria to evaluate the competitiveness of labor export. Base on these indicators, the dissertation evaluated competitiveness of labor export under two points of view: Direct assessment of international employers and indirect evaluation by comparing capacity of labor export and qualifications of international employers. In addition, the dissertation compared the perceived competitiveness of labor export across countries and markets. Further, the dissertation uses multivariate regression equation to evaluate fully factors affecting to competitiveness of export labors in North-East Asia market. Base on these analyses, the dissertation proposes value recommendations to improve competitiveness of Vietnamese labor export. They are highly value information for government in building plans and strategies of labor export. Keywords: Competitiveness, Labor export, ASEAN, North-East Asia vi TABLE OF CONTENTS TITLE PAGE Page APPROVAL SHEET ................................................................................................... ii DEDICATION ............................................................................................................. iii ACKNOWLEDGMENT.............................................................................................. iv ABSTRACT...................................................................................................................v TABLE OF CONTENTS ............................................................................................. vi LIST OF TABLES ..................................................................................................... viii LIST OF FIGURES .......................................................................................................x CHAPTER 1 INTRODUCTION………………………………………………………………1 Background of the Study.......................................................................................1 Statement of the Problem ......................................................................................5 Objective of the Study ..........................................................................................7 Hypothesis of the Study ........................................................................................8 Significance of the Study ......................................................................................8 Scope and Limitation of the Study........................................................................9 Definition of Terms.............................................................................................10 2 REVIEW OF RELATED LITERATURE AND STUDIES . . . . . . . . . . . . . . 14 Related Literature................................................................................................14 Related Studies....................................................................................................32 Conceptual Framework .......................................................................................43 3 METHODOLOGY….........................................................................................45 Research Design..................................................................................................45 vii Time and Place of Study .....................................................................................46 Sampling .............................................................................................................46 Respondents of the Study....................................................................................47 Data collection ....................................................................................................48 Research Instruments ..........................................................................................48 Methods of Analysis ...........................................................................................50 4 RESULTS AND DISCUSSION…........................................................................53 5 SUMMARY OF FINDINGS, CONCLUSIONS AND RECOMMENDATIONS.100 Summary of Findings .......................................................................................100 Conclusions .......................................................................................................103 Recommendations .............................................................................................104 BIBLIOGRAPHY ......................................................................................................107 QUESTIONNAIRE ...................................................................................................112 APPENDIX ...............................................................................................................121 CURRICULUM VITAE............................................................................................123 viii LIST OF TABLES Table Page 1 Distribution of the Respondents by Working Area 47 2 Mean distribution of respondents’ perception in terms of academic 57 performance following citizen 3 Mean distribution of respondents’ perception in terms of academic 58 performance following working sector 4 Mean distribution of respondents’ perception in terms of technical skill following citizen 5 60 Mean distribution of respondents’ perception in terms of technical skill following working sector 6 Mean distribution of respondents’ 61 perception in terms of Communication skills following citizen 7 Mean distribution of respondents’ 63 perception in terms of communication skills following working sector 8 Mean distribution of respondents’ perception in terms of Performance rating of pervious employers following citizen 9 69 Mean distribution of respondents’ perception in terms of working attitude following citizen 13 68 Mean distribution of respondents’ perception in terms of working seniority following working sector 12 67 Mean distribution of respondents’ perception in terms of working seniority following citizen 11 66 Mean distribution of respondents’ perception in terms of Performance rating of pervious employers following working sector 10 64 71 Mean distribution of respondents’ perception in terms of working attitude following working sector 72 ix 14 Mean distribution of respondents’ perception in terms of compliance with compliance with labor contract following citizen 15 Mean distribution of respondents’ perception in terms of compliance with compliance with labor contract following working sector 16 81 Mean distribution of INTERNATIONAL employers’ perception in terms of average evaluation following citizen 22 80 Mean distribution of TAIWANESE employers’ perception in terms of average evaluation following citizen 21 79 Mean distribution of KOREAN employers’ perception in terms of average evaluation following citizen 20 76 Mean distribution of JAPANESE employers’ perception in terms of average evaluation following citizen 19 75 Mean distribution of respondents’ perception in terms of average evaluation following working sector 18 74 Mean distribution of respondents’ perception in terms of average evaluation following citizen 17 73 82 Ranking of factor priority in term of International employers’ perception following citizen 83 x LIST OF FIGURE Figure 1 Page Conceptual framework showing the factors affecting the competitiveness of labor in the Vietnamese market....................... 44 Chapter 1 INTRODUCTION Background of the Study In the last some years, the world has witnessed the economic recovery of a number of countries affected by financial crisis in the period 2008 to 2009. International economy is in ongoing strong growth. However, the unemployment all over the world puts pressure on labor and jobs. Obtaining the moving regular of international labor market, Vietnam already offered specific policies and resolutions to expand some new labor markets. In particular, the Communist Party of Vietnam and its Government defined that labor and specialist export is an important external economic sector and is also a part of handling employment policy. This policy is put in the annual target by the Congress. Expanding the labor export market is a suitable economic development direction with an open integration path. This expansion takes part in handling jobs for the laborers throughout the nation. Labor exportation contributes to eliminate famine and reduce poverty. The remittance from about a half million employees, including technicians and unskilled employees who live in 40 countries and regions, contributes a lot to the national budget (approximately 1.6 billion dollars per year). Recently, labor exportation strongly develops and positively participates in handling employment policy, increasing income, creating stabilization and developing the country. However, the requirements for labor exportation is stricter and stricter regarding labor qualification, workmanship, work regulations and foreign language, especially for works in workshop, factory. Nowadays, Vietnamese laborers who work overseas basically match foreign demands but their skills and qualifications are still so 2 limited that this makes it hard to attack any developed economy’s labor market. Hence, what we must do is to make Vietnamese labor strong and to affirm our trademark in international market. It requires the real action of the government, the enterprises, the managers, and the employees interested in labor exportation. There are many factors, which influence the labor export. Firstly, the economic crisis dramatically influenced the context in which a growing number of international migrants had begun to spread from poorer to more industrialized countries. Secondly, the universalization also affects labor export in a positive way. Thirdly, competitiveness is one main influence on labor export. In addition, global labor market is also very important factor. The labor market is a generalized concept denoting the interaction between the supply (number of persons available for work) and the demand (number of jobs available) and the wage rate. The high-income countries are always the potential destinations for migrant workers. Labor export in recent years has been one effective solution to generating employment, helping to increase workers' income and earning foreign currency for the country. According to the Department of Overseas Labor (DOLAB) (2011) which is under the direct management of the Ministry of Labor, Invalids and Social Affairs (MOLISA), since 2001 more than 295,000 Vietnamese have gone to work abroad, bringing the total number of Vietnamese workers in foreign countries to 400,000. In 2005, the country sent nearly 70,600 workers abroad, a 5 percent year on year increase. The overseas workers have remitted about 1.6 billion USD to the country. The labor export sector is one of Vietnam's 1 billion USD export value earners. Labor export has also helped generate jobs in related services, such as job and foreign language training, thus reducing the pressure of the matter of employment for 3 workers in the country. Labor export businesses have annually contributed to the State budget tens of billions of VND from their profits and management fees. The number of Vietnamese workers in traditional markets has remarkably increased, including more than 30,000 workers in the Republic of Korea, 10,000 workers in Malaysia, 90,000 workers in Taiwan, and 20,000 workers in Japan. Vietnamese workers have been also sent to Canada, United States of America, Australia, Italy and some Middle Eastern countries. These new markets are attractive for their high wages and proper worker protection laws (DOLAB, 2011). Vietnam has licensed more than 100 businesses for labor exports, including 40 businesses specializing in labor supply. Many businesses of ministries and localities have sent large numbers of workers abroad and have taken a high level of responsibility for their workers, particularly in reducing risks (DOLAB, 2011). According to MOLISA (2011), in the coming years, Vietnam has a chance to expand markets for labor exports as the world labor market is in great need of foreign workers, for a variety of work in construction, manufacturing, electronics assembly, garment and textile, services, hospitality, health care, domestic labor, sea transport, fishing, seafood processing, forestry and agriculture, which are suitable to Vietnamese workers. Vietnam now has more than 44 million people of working age, with about 1.2 million more people per year reaching working age, a major resource of work force supply for the domestic and foreign labor markets. According to foreign employers, Vietnamese workers are industrious, clever and creative. The rate of exported workers given job training has increased from 35 percent in 2003 to nearly 50 percent in 2005 (DOLAB, 2011). 4 The Ministry of Labor, Invalids and Social Affairs plans to promote the education and job training for export, and prevent breaches in of the law on labor exports and instruct local authorities to promote cooperation with businesses in the recruitment of labor for export. Exporting labor to wealthier parts of the world has long been something in which Vietnam has lagged behind its Asian neighbors, but the government hopes to change that soon. As the government sees it, labor exports could help to ease the country's growing burden of unemployment, as well as alleviate poverty. It is now pushing to have the number of Vietnamese overseas workers soar over the next few years. At the same time, the country is already grappling with the social costs of the campaign: poor people are getting into debt to pay for overseas trips and workers abroad are becoming vulnerable to abuses (MOLISA, 2011). Last year, Vietnam exported nearly 15,000 workers, who sent home some US$220 million. Many countries like Malaysia, Middle East countries, Laos, Japan, Taiwan, South Korea and Libya, employed in construction, manufacturing industry, sea transport, seafood processing, hospitality, health care, home service, fishing industry, forestry and agriculture (MOLISA, 2011). Falling GDP growth and dwindling foreign investment inflows are largely to blame for the rising number of jobless workers. Compounding the problem is an administrative reform drive that plans to slash the government payroll by 15 percent, and growing redundancies from loss-making state-owned enterprises (DOLAB, 2011). But it is among farming households, which account for more than 70 percent of the population, that unemployment could have the most severe long-term consequences. As the rural community swells and less new land becomes available 5 for cultivation, unemployment is becoming a widespread problem, resulting in largescale unplanned migration to cities (DOLAB, 2011). It is young, largely unskilled laborers that the government is targeting for export. But while overseas employers may consider it a plus that they cannot command high wages, these workers' relative lack of skills in comparison with those from other countries is a major drawback, as is their inability to converse or understand a foreign language (DOLAB, 2011). These shortcomings are already proving problematic for labor exporters here. Although meager benefits were among things cited as the main recruitment hurdles, the foreign employers also set high qualification requirements. Applicants had to meet specific health and age requirements, have a sound knowledge of English, hotel industry skills and work experience but successful applicants get low, and they have had to endure a seven-day per week. Statement of the Problem Each year, Vietnam economy have more than 1 million new labors (GSO, 2011), and labor status is always excessive as we mention before. Hence, exporting labor is essential way to solve this issue and earning foreign currency for economy. Competition happen in everywhere and every sectors, including labor export. Hence, determining competitiveness of Vietnamese labor is a key point to develop. However, articles which discuss about this issue are very rare. Therefore, this study focused on three main concerns. First, this paper will compare competitiveness of Vietnamese labor export with other three countries: Philippines, Indonesia, and Thailand. Hence, we can see the gaps between Vietnamese and other candidates within ASEAN in term of academic performance, 6 technical skill, communication skill, working seniority, working attitude, and compliance with labor contract. Second, this study aimed to determine evaluation of international employers from Taiwan, Japan and South Korea to Vietnamese labor export. In addition, we also can see comparison between Vietnamese, Filipinos, Indonesian, and Thai about competitiveness and their factors. More importantly, qualifications of international managers about imported labor are expressed clearly. Hence, we can understand strength and weakness of Vietnamese labor, troubles in exportation process and the gaps of quality we must try achieving. Third, the level of impact and priority in selecting applicants were interpreted fully and clearly. Hence, this paper will give some suggestions for both governmental and local administration to improve competitiveness of labor export that will lead to an increase in labor export. Specifically, this study sought to answer the following questions: 1. What is the profile of the respondents in terms of age; sex, health status, civil status, preceding jobs, weight, height, and work area? 2. What is the level of competitiveness of labor export across countries in terms of academic performance, technical skill, communication skill, performance rating of previous employers, working seniority (in previous companies), working attitude, and compliance with labor contract as perceived by the workers and the employers? 3. Is there any significant difference between the level of competitiveness of labor export as perceived by the international employers and the international workers? 7 4. Is there a significant difference in the perceived competitiveness of labor export across countries? 5. What are the factors that affect labor competitiveness? Objectives of the Study The study aimed to evaluate the status and competitiveness of Vietnamese labor in comparison with labor from other Asian countries. Specifically, this study aimed: 1. To describe the profile of the respondents in terms of: a) Age b) Gender c) Civil status d) Health status e) Preceding jobs or previous jobs? f) Weight g) Height 2. To analyze the level of competitiveness of labor export across countries in terms of: a) Academic performance b) Technical skill c) Communication skill d) Performance rating of previous employers e) Working seniority (in previous companies) f) Working attitude g) Compliance with labor contract 8 3. To compare the perceived competitiveness of the labor export by the international employers and the international employees. 4. To compare the perceived competitiveness of labor export across countries. 5. To determine the factors affecting labor competitiveness. Hypotheses of the Study The following hypotheses were tested in the study: 1. There is a significant difference in the competitiveness of labor export across countries. 2. There is a significant difference in the competitiveness of labor export as perceived by the international employees and international employers. 3. Competitiveness of labor export is significantly affected by academic performance, technical skill, communication skill, performance rating of previous employers, working seniority, working attitude, and compliance with labor contract. Significance of the Study The result of this study is envisioned to contribute knowledge to effective and efficient management of labor export; hence, it will benefit the following: For the international employers. Based on analysis of this paper, Vietnam’s government will build special action plans to improve competitiveness of Vietnamese labors. Hence, international employers can have better and more competitive labors in the future. For the Vietnamese laborers. This study will help them understand their strong and weakness. In addition, laborers also know the requirements from 9 international employers in term of academic performance, technical skill, communication skill, performance rating of previous employers, working seniority (in previous companies) and personal characteristics. Hence, Vietnamese labors can prepare and study to improve their abilities and easier to get success in the future. This will provide them with assessments and directions for a better future to apply to working abroad. For the managers of exportation. This research will help them in understanding requirements of international employers. These analyses will be very important suggestion to build action plains for improving labor competitiveness of Vietnamese labor. The paper will build up the image, competitive advantage through superior innovation, improve and meet expectations of international employers. For the Vietnamese government. This paper will express current status of Vietnamese labors in term of strength and weakness points; it also shows lots of useful information about requirement of foreign labor importers. It will be good bases for Vietnamese government to plan labor development, especially export activities. For other researchers. This study will help other researches to collect necessary information in relation to their research fields. Other researches will also consider the limitations of this research to avoid in case they conduct the research in same fields. Scope and Limitations of the Study The study assessed the competitiveness of export labors among four countries (Vietnam, Philippines, Indonesia, Thailand) in terms of the following major seven variables: Academic performance, technical skill, communication skill, performance rating of previous employers, working seniority, working attitude, compliance with 10 labor contract. This paper considered North-East Asia market only, under evaluation of three international employer groups, which include Japanese, Korean and Taiwanese. These main variables were due to the results of reviewing related literatures and studies. Definition of Terms Academic performance refers to the level of education (Primary school, high school, undergraduate, post-undergraduate) of the respondents. Competitiveness is the ability of a firm or a nation to offer products and services that meet the quality standards of the local and world markets at prices that are competitive and provide adequate returns on the resources employed or consumed in producing them (Business Dictionary, 2012). Technical skill refers to the knowledge and abilities needed to accomplish mathematical, engineering, scientific or computer-related duties, as well as other specific tasks. Communication skills refer to capacities of using foreign language of orientation country to communicate. Knowing English will earn extra point. Seniority means that an employer considers date of hire a factor in deciding workplace benefits like promotions, leave schedules, days off, shifts, overtime, and selection for training. Demand for labor is a concept that describes the demand for labor that an economy or firm is willing to employ at a given point in time. This demand may not necessarily be in long-run equilibrium, and is determined by the real wage, firms are willing to pay for this labor, and the number of labor workers is willing to supply at that wage.