Promote innovation, increase national labor productivity

In particular, Decision No. 36/QD-TTg dated January 11, 2021 of the Prime Minister promulgating the Master Plan to improve productivity based on science, technology and innovation for the period 2021- 2030 has affirmed that increasing labor productivity is an urgent issue that cannot be delayed, because increasing labor productivity and innovation is the key to bringing direct and practical benefits to all stakeholders in economy.

Boost labor productivity

Deputy Minister of Science and Technology Le Xuan Dinh said that under the close direction of the Party and State, many policies, programs and activities to improve productivity have been implemented in ministries, branches and localities and businesses. Accordingly, the results of productivity improvement have been recorded, labor productivity in the period 2016-2020 achieved an average growth rate of 5.88%/year, total factor productivity (TFP) was constantly growing, exceeding 45% compared to the period 2011-2015). Although Vietnam has achieved some results in improving productivity, it is still a country with low labor productivity compared to other countries in the region. With the goal of becoming a high-income developed country by 2045, the prerequisite must be the maintenance and growth of productivity based on innovation.

In the previous development stages, the main contribution to Vietnam’s increase in labor productivity was structural shift of labor from low-productivity agriculture to industry and services and labor productivity is higher, but this cannot be the driving force for sustainable development of labor productivity because the fact that the structural shift in labor productivity growth has gradually decreased in recent years. In the past period, due to the impact of the COVID-19 epidemic, businesses, production and business establishments have focused on economic recovery and development. Most production and business sectors face difficulties due to supply chain disruptions, production interruptions, and rising input costs. By the end of the first half of 2022, commercial activities will gradually return to stability, and workers will return to work under new normal conditions.

Deputy Minister Le Xuan Dinh said that the impact of the Fourth Industrial Revolution has shown an important role in promoting socio-economic development, especially during and after the pandemic. Businesses, organizations and people have taken advantage of advanced technologies and approached new productivity improvement methods, which have accelerated the rate of labor productivity growth. It can be affirmed that innovation and creativity are soft power and an important development resource of each country. This is also a great quality that even the most perfect artificial intelligence (AI) can never achieve. Innovation and creativity are demonstrated through the four industrial revolutions along with the invention of market mechanisms that have brought about a prosperous life and society in each country.

In fact, in Vietnam today, the policy to encourage and promote innovation and creativity is one of the most important decisions of the Government in the digital age. The World Intellectual Property Organization – WIPO‘s Global Innovation Index – GII 2022 report has recognized Vietnam as 48th out of 132 groups of countries that have made the greatest progress over the past decade and is a model among the 50 most advanced economies in the world.

The recent meeting on the project “Promoting innovation and increasing national labor productivity” has shown that the Fourth Industrial Revolution, along with the development of Vietnam’s market economy, is bringing many new opportunities. Therefore, in addition to well implementing the Resolution of the 13th Party Congress, the creation of systems and processes, especially a civilized and fair social environment, is one of the important steps in the process. innovation, towards an open, autonomous environment for active innovation and creativity. In addition, it is necessary to build a culture that supports and promotes innovation and creativity as well as changing the perception that innovation and creativity always involve expensive investments, complex techniques or new technologies. Typically, in Japan, Kaizen is an innovative and continuous improvement program to improve labor productivity, has a history of more than 50 years and is widely applied in all businesses in many other fields together. To implement Kaizen, simply apply the usual techniques of 7 quality control tools: Pareto diagrams, cause and effect, organization, control, dispersion, graphs and checklists.

In the new context, in order for businesses to innovate, it is necessary to have high-quality human resources who are not only good at job skills but also have soft skills and understanding of productivity tools, contributing to creating new business opportunities, ideas, technologies, and commercialization of technology.

Implement the solution synchronously

Facing difficulties and challenges in the new situation, Vietnam needs a strong strategic transformation to increase productivity, based on innovation and increase TFP. This can only be achieved when Vietnam synchronously develops an innovation ecosystem centered on science and technology. It can be affirmed that the further development of high-quality human resources is the most important factor to increase productivity and innovation. Currently, in Vietnam, manual labor accounts for a high proportion in the employment structure across the country, so it is necessary to focus on investing and developing qualified and high-quality human resources.

According to reports and surveys in enterprises, it is difficult to find workers with leadership and management skills; mobilize laborers with technical skills and foreign languages. In addition, the limited awareness of workers about productivity and innovation is also the cause of the slow growth in labor productivity. Therefore, training with employment, improving the quality of human resources needs to be linked and encouraged. The effective linkage between training institutions, vocational schools and enterprises is necessary to raise a high-quality labor force in the right majors; innovate teaching and learning methods, and at the same time invest in educational infrastructure, especially vocational and university education as well as information and communication technology.

Currently, Vietnamese enterprises, especially small and medium-sized enterprises, are still mostly using outdated technology, the proportion of investment in science and technology will only account for about 0.44% of GDP in 2021. Therefore, it is necessary to increase the capacity of enterprises to absorb technology and innovation, especially the private sector.

In fact, during the past 20 years, Vietnam has attracted a large amount of foreign direct investment (FDI), but most of them are enterprises investing in low-value-added fields, taking advantage of cheap labor, not focusing on industries or products with added value and high technology content. Besides, the lack of linkage between FDI enterprises and domestic enterprises limits the ability of domestic enterprises to spread technology and absorb technology. Therefore, it is necessary to come up with policies to encourage and support enterprises to innovate and enhance the application of science and technology, strengthen linkages between domestic enterprises and FDI enterprises to enhance technology transfer and increase the absorption capacity as well as the technology spillover effect.

Vietnam has only focused on enhancing innovation for manufacturing enterprises, but has not paid attention to service enterprises, while the service sector has grown stronger and stronger, contributing a large part in the development of the economy, socio-economic development. Therefore, the enhancement of innovation activities of the service business sector needs more attention.

In Vietnam, the science and technology market is gradually developing, but businesses still face many difficulties in accessing the supply of high-quality solutions, leading to the situation that businesses cannot access with advanced technology, innovation activities and technology application are still limited. The science and technology market, especially digital technology, still has many obstacles, not closely linking training, research and application with production and business needs. This is a key role in promoting innovation activities, improving science and technology capacity, competitiveness of enterprises, as well as the economy. Therefore, it is necessary to improve mechanisms and policies to create conditions for this market to develop further in Vietnam. In addition, increasing labor productivity and innovation is not a problem of a single industry or a field, but a systemic issue, requiring policy synchronization and consistency across sectors, at all levels, between central and local governments to ensure capacity building for policy implementation on productivity and innovation.

Vietnam has established the National Council on Sustainable Development and Competitiveness Enhancement with one of the main tasks of developing and implementing strategies, policies, plans, programs, tasks, solutions to improve the business investment environment, labor productivity and national competitiveness; strengthen innovation and enhance scientific and technological potential to approach the Fourth Industrial Revolution. Innovation is not only a prerequisite for economic development, but also a key to productivity growth, economic development, and solving national and global problems.