Revisiting employer perceptions of skill mismatch: the case of the machine manufacturing industry in Vietnam

Abstract

ABSTRACT There are growing claims that increasing skill mismatch, or skill deficit, is impeding further economic growth and industrialisation in Vietnam. Previous studies often attributed it to the failure of supply-side initiatives to meet increasing skill demand. However, it is still uncertain whether skill demand is increasing in Vietnam, as the supply-side approach presumes. Through questionnaires and in-depth qualitative interviews, this research investigated employer perceptions of skill mismatch at the intermediate occupation level in the machine manufacturing industry. This sector is expected to lead higher value-added industrialisation. It found that employers are not uniformly concerned about large skill shortages because many of them do not require large numbers of skilled workers due to intensified supply chain competition, small domestic markets, and incremental technological progress. In order to achieve upskilling and further industrialisation, Vietnam needs an integrated skill formation strategy which not only improves skill supply but also stimulates the dynamism of skill demand, as the demand-side approach proposes. The research findings suggest that one possible way to evolve the demand-side approach in Vietnam is to develop supporting industries. These industries typically contain some dynamic suppliers which have high aspirations for ascending value chains and higher demand for intermediate workers than assemblers.