Challenges of Vietnamese labour force in the revolution 4.0

138 HNUE JOURNAL OF SCIENCE Social Sciences, 2020, Volume 64, Issue 4D, pp. 138-147 This paper is available online at CHALLENGES OF VIETNAMESE LABOUR FORCE IN THE REVOLUTION 4.0 Phan Thanh Thanh Faculty of Political Theory and Civic Education, Hanoi National University of Education Abstract: The industrial revolution 4.0, by artificial intelligence and alternative human technologies in Vietnam, poses many challenges for Vietnamese labour force. Since then, it has affected the economic development in Vietnam. Therefore, Vietnamese government should make appropriate policies. In addition, educational institutions, enterprises and employees should actively learn and update knowledge and information to meet requirements of the current industrial revolution 4.0. Keywords: industrial, the Revolution 4.0, training, economics. 1. Introduction New technologies of this age are widely referred as the Industry 4.0. The rapid increase in digitalization, robotics, and intelligent automation has greatly impacted on markets, including the labour market. On the one hand, technological changes destroy some types of job but in other hand they generate new other types of job and occupations. Replacement of jobs by robots, smart vehicles, digitalized and connected processes will have great influence on labour market resulting in mass unemployment. This paper aims to highlight prospective changes in occupations and job lossing due to new technologies in Vietnam. There have been many studies in the world as well as Vietnam showing the impact of the industrial revolution 4.0 on labor and employment. The Fourth Industrial Revolution by Klaus Schwab (2016) [1], Industry 4.0: How it will affect employment and what skills will be required to match the requirements of the market by Martin Heinrich (2018) [2] highlighted that the new technologies will significantly change all industries. Jobs will increase in the direction of high-income intellectual and creative jobs and low-income manual jobs, but will decrease significantly for regular, repetitive middle-income jobs. The National Agency for Science and Technology Information (2016) with an article No. 8 The Fourth Industrial Revolution [3]; Vietnam Academy of Social Sciences (2016) with General Report: the fourth industrial revolution: some characteristics, implications and opinions [4] mention the challenges, opportunities, implications for government, businesses, citizens that this revolution created as well as strategies and policies for Vietnam in the context of this revolution. Truong Minh Vu and Nguyen Vu Nhat Anh (2017) with The Fourth Industrial Revolution A Vietnamese Discourse [5] introduced Vietnam’s understanding of Industry 4.0: policy makers, business circles, and academics. Impact of Industry 4.0 on Occupations and Employment in Turkey written by Beyza Sumer (2018) [6]; Industrial Revolution (IR) 4.0 in Vietnam: What does it mean for the labour Received April 11, 2020. Revised April 24, 2020. Accepted May 15, 2020. Contact Phan Thanh Thanh, e-mail address: phanthanhthanh89@gmail.com Challenges Vietnamese labour force in the revolution 4.0 139 market? published by Labour Organization (2018) [7], indicated opportunities and challenges for global jobs in some countries such as Turkey and Vietnam. However, the labor challenges for economic growth during the 4th Industrial Revolution in Vietnam have not been studied in above researches yet. The 4.0 Revolution is posing many challenges that can greatly affect jobs, income of Vietnamese workers in future. Therefore, the research is necessary to show that such challenges in order to find ways to response them. 2. Content 2.1. Labour force and the industrial revolution 4.0 2.1.1. Labour force and the economic growth A production function can be expressed in a functional form as the right side of (F): Y = F(Xi). (=1,2,3n). Y is the quantity of output and {\displaystyle X_{1},X_{2},X_{3},\dotsc ,X_{n}} Xi are the quantities of factor inputs (such as capital, labour, land or raw materials). Today, a production function can be expressed in a functional form as Y= F(K,L,TFP) [8, p. 84]. Output (Y) is a function of total-factor productivity (TFP), capital input (K), labour input (L). As usual for equations of this form, an increase in either TFP, K or L will lead to an increase in output. In economics, total-factor productivity (TFP), also called multi-factor productivity, is usually measured as the ratio of aggregate output (e.g GDP) to aggregate inputs. Under some simplifications about the production technology, the growth in TFP becomes the portion of growth in output which is not explained by growth in traditionally measured inputs of labour and capital used in production. In the 1990s, when the scientific and technological revolution reached a new stage, the application of information technology and software products made the production process more creative. That situation requires the exploitation and use of potentially creative resources. Investing in human resourses is considered the main direction of development strategy in almost every country in the world. 2.1.2. The Fourth Industrial Revolution The new technology and its various facets have been referred to “the Industry 4.0” after Germany launched a project to digitalize manufacturing at the Hannover Messe in 2011. Since then the term “Industry 4.0” started to be used widely. Some one call it as “the Economy 4.0” and other refer to it as “the 4th Wave Industrial Revolution” within the context that the Industry 1.0 means the technology brought about by the Industrial Revolution; the Industry 2.0 implies the Fordist Mass Production in the first decades of the 1900’s; the Industry 3.0 is the period where computerisation plus robotic automation were used in the 1990s. And now the Industry 4.0 is the fourth wave of technological advancement. The Industry 4.0 implies cyber- physical systems monitoring the physical processes and making decisions with the aim of increasing output and productivity, and of reducing costs and risks arising during production in the industrial sector. Besides manufacturing, it is being used in various fields of services sector such as transportation, health, creative industries. Various applications of the Industry 4.0 as of sophisticated, smart, and mobile robots, interrelation of robots and machines (machine learning), cyber- physical and inter-connectedness of systems (internet of things), machines and systems empowered by computer softwares and their autonomous functioning (artificial intelligence), connecting and adding the real to the virtual (augmented reality) have started to increase rapidly[6]. 2.2. Challenges of Vietnamese labour force in the Revolution 4.0 Because of the effects of the IR 4.0, a large number of jobs will be replaced by machines and new jobs will be created. There is a concern of mass unemployment in the transitional Phan Thanh Thanh 140 period of technological changes. The gap between the rich and the poor is an element of social unrest. They causes many challenges in Vietnamese labour force in the Revolution 4.0. Firstly, Vietnam is being left behind by the Fourth Industrial Revolution. Most developing countries are being left behind by the Fourth Industrial Revolution. They face barriers in adopting the necessary technologies. Helping them counter these barriers will require an international effort. Just 10 countries account for 90% of all global patents and 70% of all exports directly associated with the advanced digital production (ADP) technologies that are driving the Fourth Industrial Revolution. Another 40 countries are actively engaging in these technologies, while the rest of the world remains largely excluded from technological breakthroughs such as artificial intelligence, big data analytics, cloud computing, the Internet of Things (IoT), advanced robotics and additive manufacturing. The 10 economies showing above-average market shares in the global patenting of ADP technologies are, in order of their shares: the United States, Japan, Germany, China, Taiwan Province of China, France, Switzerland, the United Kingdom, the Republic of Korea and the Netherlands. Other countries producing or using these new technologies, although to a much more modest extent, include Israel, Italy, Sweden, Austria, Canada, Mexico, Thailand and Turkey. Most developing countries are not involved, however - and this is a problem, according to a new report by the United Nations Industrial Development Organization (UNIDO). UNIDO’s Industrial Development Report 2020, argues that these new technologies are at the core of successful inclusive and sustainable industrial development. Image 1. Expected dividends from ADP technologies Source:https://www.weforum.org/agenda/2020/02/whos-leading-the-4ir-and- how-to-help-the-countries-being-left-behind/ [9] Challenges Vietnamese labour force in the revolution 4.0 141 They enable the creation of new goods and product innovations, which lead to the emergence of new industries – and the jobs and incomes that come with them. When these innovations are geared to reducing environmental impacts - by introducing green manufacturing - they also promote the environmental sustainability of industrial processes. New technologies can also increase production efficiency, leading in turn to sustained industrial competitiveness and expanding manufacturing production. Greater efficiency is also associated with reductions in pollutant emissions and material and energy consumption per unit of production, which can improve the environmental sustainability of the process. According to the UNIDO’s report, in large parts of the world, especially in Africa, countries are not producing or importing in any significant amount the most representative goods within the realm of ADP technologies. Even among countries with some activity in ADP technologies, a large number of countries are importing capital goods produced abroad with very little or no domestic innovation and exporting activity. This means that their prospects for moving up the technological ladder are limited. UNIDO is calling for immediate action from the international community to support developing countries - especially the least developed countries - in adopting ADP technological breakthroughs. Without international support, low-income countries run the risk of lagging further behind and failing to achieve the Sustainable Development Goals. Developing countries face a range of challenges in engaging with the new technologies: * Many countries lack the basic production capabilities for absorbing, deploying and diffusing ADP technologies along supply chains. * Companies in developing countries that could make technology investments in this area have already committed resources to older technologies, and they need to learn how to retrofit and integrate the new ADP technologies into their production plants. * ADP technologies demand substantial infrastructure for their use in production. Some developing countries face significant challenges in providing affordable and high-quality electricity as well as reliable connectivity. * In developing countries where companies are engaging with some ADP technologies, many of these technologies remain contained within the company and occasionally a few close suppliers who have the production capabilities to use them. The vast majority of firms still use technologies typical of the Third or even the Second Industrial Revolution. In this context, it is extremely difficult for a leading company to link backwards and nurture its supply chain. Taken together, these challenges point in one direction: the need to build basic industrial production capabilities as a prerequisite for joining the Fourth Industrial Revolution. The latecomers and laggards can only catch up with support oriented towards building basic, intermediate and advanced industrial and technological capabilities, together with digital infrastructure. Secondly, the unemployment. The Fourth Industrial Revolution promises achivements in scientific knowledge, human health, economic growth and more. But for most people around the world, the prospect of a future in which robots and computers can perform many human jobs is a source of profound personal concern. As the well-known expert Klaus Schwab said it is possible that humanity will face the biggest challenge ever as the Cyber Physical Systems start to substitute workers that are doing more than just repetitive tasks. With the appearance of Cyber Physical Systems, more challenging tasks are in danger to be taken. In fact the research of Frey and Osborne from the Phan Thanh Thanh 142 Oxford University shows that 47% of all jobs in the US could be replaced perhaps in one or two decades. With the usability of Machine Learning (ML) and Artificial Intelligence (AI), it is possible to imagine that there is a wide range of the jobs which will be replaced. There is a high probability of automation even for the jobs where human interaction was inevitable until now, such as Loan Officers (see Figure 1). Global businesses are fast moving towards Industry 4.0, and if Vietnamese government does not take steps to enhance human capital, it will have a negative impact on the economy. According to the International Labor Organization (ILO), 86 percent of textile and footwear industries workers in Vietnam are at risk of losing their jobs due to technology. Majority of the unemployment will be seen amongst the workforce just entering the market. Image 2. Probability of a job becoming automatable Source: https://www.weforum.org/agenda/2018/01/the-fourth- industrial-revolution-a-survival-guide [10] Hence, the government has to introduce reforms in education and industrial training to bring it more in line with current industry demands. According to the World Economic Forum (WEF)’s Readiness for the Future of Production Report 2018, Vietnam was ranked among those that are not currently ready for the Industry 4.0. Vietnam is ranked at the 90th in technology and innovation and the 70th in human capital, among 100 countries. Thirdly, lack of skillful labors Not only lacking in professional knowledge, Vietnamese workers are weak in problem solving, leadership and communication skills. The advantage of low labour costs in Vietnam is gradually losing in the eyes of foreign investors. Enterprises surveyed by domestic and foreign organizations for a number of research projects said that they were dissatisfied with the quality of education and skills of staff, especially engineers and technicians [11]. Challenges Vietnamese labour force in the revolution 4.0 143 Since 2008, labor productivity in Vietnam has increased by 22.5 percent. In accordance with 2017 prices, productivity is estimated to be 93.2 million VND per worker (US$ 4,159), an increase of 10 million VND compared to that in 2016. Productivity has not grown relatively to the economic growth in Vietnam. In accordance with 2010 prices, the average annual productivity growth rate between 2011 and 2017 was 4.7 percent, while the growth in investment capital was higher at 9 percent. In the same period, the economy grew from US$ 105 billion to US$ 220 billion. This discrepancy shows that the economy depends on other non-labor factors as well, in addition to productivity. [11] FDI firms continue to struggle in hiring skilled labor in Vietnam. According to the 2018 Global Talent Competitiveness Index (GTCI), which assesses countries in terms of their ability to attract, develop, and retain talent, Vietnam ranks 87th amongst 119 countries. Major challenges include the lack of technology infrastructure, R&D spending, vocational, and technical skills. Lack of skillful labor will slow down the economic transition from labor-intensive industries to high-tech goods, which will reduce Vietnam’s competitiveness. Currently, around 40 percent of FDI firms in Vietnam find it difficult to recruit skilled employees. The government has taken steps to increase vocational and technical training in order to meet the requirements of the labor market. In March 2018, the government introduced the Decree No. 49/2018/ND-CP that provides for the accreditation of vocational education. As of February 2018, there are more than 1,900 vocational training centers across Vietnam, including 395 colleges and 545 vocational schools, which offer programs in tourism, beauty services, IT, construction, fashion, garment and textiles, pharmaceuticals, precision mechanics and hotel management. The government aimed to provide vocational training to 2.2 million people in 2018. 2.3. Missions to prepare for the IR 4.0 Four main stakeholders (government, educational institutions, companies and employees) should participate responsibly in the education and transformation process in context 4.0. 2.3.1. Governmental policies Governments must develop policies to maximize the benefits from digitalization. Low and middle-income countries (LMICs) urgently need to unlock the new possibilities of digital technologies to drive inclusive and sustainable growth to achieve the Sustainable Development Goals (SDGs) and ensure that no one is left behind. Expanding access for the bottom billion. Lack of access to digital infrastructure is a key challenge in LMICs: both hard infrastructure, such as telecoms networks, sensors and ICT equipment; and software, human capabilities and appropriate regulation, including taxation and fiscal policy. Strengthening basic digital infrastructure will mean lowering the cost of capital and internet in developing countries, developing public-access solutions and sharing digital infrastructure. In terms of data infrastructure, there is a need for governments to build capabilities and frameworks around the classification of data and lay down data standards. Companies need to lead on the collection and processing of data. Connectivity must improve. Innovating for sustainability and job creation: Generating these new jobs will require investment in digital and soft skills through education and training, and policies for fostering competitive and innovative economies. Financing and scaling tech for good Unclear direction, short-term goals and lack of government support for investment are key challenges in leveraging the full potential of technologies for the Sustainable Development Goals (SDGs). There is a lack of a common purpose and language – including an agreed Phan Thanh Thanh 144 definition of “tech for good”. These challenges are compounded by lack of capital and insufficient early-stage investment. Financing models are not set up to incentivise investment for long-term gains. Effectively scaling up these technologies will require efforts across multiple stakeholders. The Coalition for Digital Intelligence, for example, is a multi-stakeholder community that will coordinate the implementation of a digital intelligence framework across both the technology and education sectors, making sure that both work together. Image 3. Digital transformation of the economy. Source:https://www.weforum.org/agenda/2020/01/governments-leverage-4ir-achieve-sdgs [12] Updating regulatory frameworks for the platform age With accelerated changes under the IR.4.0, workers who are more frequently moving from one job to another will need to be supported. Effective “active labour market policies” that help to connect people with jobs are important t