ANALYSIS ON THE EFFECTS OF VOCATIONAL TRAININGS ON EMPLOYMENT OF RURAL YOUTH IN VIETNAM
Increasing job employment opportunity for the youth in general and rural youth in particular might generate incomes for households, reduce poverty and reduce risks of youth and their family leaving their hometown. According to the human capital theory (Mincer, 1962; Becker, 1962), vocational training benefits workers with higher productivity and higher income opportunities. Boheim et al. (2009) believes that, professional skill and soft skill trainings (teamwork skills, interview skills, etc.) have positive effects on employment possibility and improve workers’ work efficiency.
In Vietnam, the rural population accounts for 70.4% of the country’s population, of which rural youth accounts for 20% and urban youth accounts for 10%. The youth group of 15-24 years old has high unemployment rate, which increased from 6.26% in 2014 to 7.03% in 2015. Faced with unemployment and underemployment, rural youth are forced to do simple and low-paying jobs, affecting their opportunity to develop and change.
Authors such as Jones (2001) stated that, trained workers have more employment opportunities and higher layout productivity than those who are untrained in Ghana. Hempell (2003) also gives comments showing that the rate of workers with vocational training has significant positive effects on workers’ development opportunity and benefits businesses in the economy.
The aim of this paper is to evaluate the effects of the vocational training program on employment opportunities and incomes of Vietnamese rural youth.
In this paper, rural youth is defined as people in the age group of 15-24 being a member of households in the rural area.
Data source and method of analysis
The data used in this article is from LFS 2015 and Vietnam Household Living Standard Survey 2014 (VHLSS) of General Statistic Office; and the Survey on Vocational Training Reform for rural youth in order to approach and interview youth as a rural household member after attending vocational training course at the time of the investigation. The survey was conducted in the area of Ha Giang, Nam Dinh and Quang Nam.
According to the survey data, the economic activity status of rural youth participating in the interview is divided into 3 groups: (i) The currently working group (68.9%), (ii) the full-time student group (13.3%); and the looking-for-work group (17.8&). Most of the rural youth with or without vocational training is currently working. The minority of rural youth with or without vocational training is looking for jobs.
Methods of analysis: this study uses VHLSS data and Probit model estimation to analyze the effect of vocational training on employment opportunities and sustainable employment; and Blinder-Oaxaca decomposition model estimation to determine the wage difference between worker with vocational training group and worker without vocational training group.
2. Rural youth employment overview
According to the LFS 2015 statistics, the number of employed worker in rural area is 34.67 million people. Among them, the number of employed rural youth is 5.6 million people, accounting for 15.23% of employed workers in rural area.
In 2011-2015, the number of employed workers in rural slightly increased; the average employment growth rate is 0.43% per year – much lower than the national average rate (1.3% per year). The employed rural youth group had an increase compared to 2014 yet the growth rate decreased by 2.93% per year comparing to the same period last year. This shows that there is a trend in the rural youth moving from rural area to urban area to find jobs.
According to the employment status 2015, the number of wage workers in rural area is 11.43 million; among them, rural youth makes up for 21.54%. This shows that a more stable level of employment for rural youth is expressed through the increasing quantity and ratio of rural youth being wage worker, as the quantity and ratio of rural youth working in rural area in a same period decline.
Table 1: Rural youth employment 2011-2015
|2011||2012||2013||2014||2015||Growth rate (%)|
|1.1 Number of employed people in rural area (thousand persons)||35.851||36.010||36.243||36.736||36.465||0,43|
|1.2 Rate of employment (%)||98,56||98,76||98,63||98,69||98,36|
|1.3 Rate of wage workers (%)||27,22||27,08||27,51||27,85||31,35|
|2.1 Number of employed rural youth (thousand persons)||6.258||5.663||5.655||5.400||5.554||-2,93|
|2.2 Rate of employed rural youth (%)||96,02||95,75||95,3||95,37||94,77|
|3.1 Number of rural youth being wage worker(thousand persons)||2.342||2.210||2.143||2.113||2.462||1,26|
|3.2 Rate of rural youth being wage worker (%)||37,43||39,11||37,89||39,14||44,34|
Source: LFS 2011-2015 by GSO
In 2015, the rate of working rural youth without technical expertise (TE) is 83.95%; rate of rural youth with short-term vocational training is 4.23%; the rate of rural youth with vocational school degree is 4.34%; and the rate of rural youth with vocational college, college/university or post-graduate degree is 7.49%. By industry and technical expertise, the Information and Communication has higher rate of rural youth with vocational college, college/university and postgraduate degree than others (53.49%); the Electricity and gas supply industry has the highest rate of vocational school degree (25.30%); the Transportation and storage sector has highest rate of short-term vocational training (41.37%); and Agriculture has the highest rate of working rural youth without technical expertise (94.48%).
Table 2: Rural youth employment by industry and technical expertise in 2015
|Total||Without TE||Short-term vocational training||Vocational school degree||College/University, postgraduate degree|
|1. Amount (thousand persons)||5.554||4.663||235||241||416|
|2. Proportion (%)||100,00||83,95||4,23||4,34||7,49|
|2.1 Agriculture, forestry and fishery (AFF)||100,00||94,68||1,13||1,77||2,43|
|2.2 Mining and quarrying||100,00||78,16||12,45||4,16||5,22|
|2.4 Electricity and gas supply||100,00||39,03||2,17||25,30||33,50|
|2.5 Sewerage, waste management and remediation activities||100,00||59,48||0,00||2,83||37,69|
|2.7 Wholesale and retail trade||100,00||73,05||5,60||7,69||13,66|
|2.8 Transportation and storage||100,00||41,67||41,37||6,35||10,61|
|2.9 Accommodation and food service activities||100,00||81,96||3,17||4,27||10,60|
|2.10 Information and communication||100,00||35,63||5,73||5,15||53,49|
|2.11 Other service activities||100,00||38,91||5,91||22,13||33,06|
Source: LSF 2015 by GSO
3.1 Effect of vocational training on employment opportunity
This paper uses Probity model estimation to determine the possibility of getting wage employment among group of labour with vocational training and group of labour without vocational training.
According to the estimated results of VHLSS, labour with vocational training has higher possibility of wage employment than those without vocational training by 28.8%. Among the wage workers, labours with vocational training has higher possibility of signing a labour contract and getting paid social insurance than the group without vocational training by around 28.0%.
For rural youth with vocational training, the possibility of getting wage employment and signing labour contract is higher than the without vocational training group by 12.8% and 0.4% respectively but the possibility of social insurance is lower than the group aged 25 and over with vocational training by approximately 7.5%.
Table 3: Probity model estimation result summary
|Variables||Wage-earner||Signed labour contract||Paid social insurance|
|Probit||Marginal impact||Probit||Marginal impact||Probit||Marginal impact|
|Rural youth with vocational training||0,332***||0,128***||0,010***||0,004***||-0,202***||-0,075***|
|Standard errors in parentheses|
|*** p<0.01, ** p<0.05, * p<0.1|
Source: calculation from the VHLSS 2014; control variables including worker characteristics and household characteristics
The results above show that vocational trained workers have advantage in approaching sustainable works than workers without vocational training (wage, labour contract and social insurance)
According to survey data in 3 provinces of Ha Giang, Nam Dinh and Quang Nam, rural youth with vocational training employment was recorded as below.
By industrial sector, the rate of employed rural youth working in Industry and Construction is highest (51.61%), followed by Agriculture, forestry and fishery (38.7%). The survey notes that the majority of rural youth with vocational training works in Industry and Construction sector and Agriculture, forestry and fishery sector; whereas rural youth without vocational training or college/university degree working in Services has the highest rate. A few groups of rural youth go back to Agriculture and farming.
By employment status, the majority of working rural youth belongs to wage worker group and own-account worker group (54.0% and 25.0% respectively), the rate of rural youth in unpaid family worker group is 18.55%. The survey notes that the majority of rural youth without vocational training is in wage earner and unpaid family worker group.
By economic industry, the proportion of rural youth working in sectors of “Agriculture, forestry and fishery” and private enterprise is highest (about 35%), followed by household enterprise (18.6%). This shows that there is a remarkable percentage of rural youth completing short-term vocational training in agriculture working in households and a group of rural youth without vocational training working as wage worker in state and private enterprise sector.
Table 4: Distribution of rural youth by labour force characteristics
|Rural youth with VT||Rural youth without VT||Total|
|By industrial sector|
|Industry and Construction||46.48||–||72.09||51.61|
|By employment status|
|Unpaid family worker||14.08||40.00||20.93||18.55|
|By economic sector|
|AFF household /Self-employed||49.30||40.00||20.93||38.71|
|Foreign invested enterprise||–||–||2.33||0.81|
Source: Calculation from survey data
It was stipulated that the maximum weekly working hour in our country is 48h/week. The average weekly working hours is divided into 3 levels: low (under 35 hours per week), average (35-48 hours pre week) and high (over 48 hours per week). According to the survey data, the average working time of rural youth participated is 49.7 hours per week and 25-26 days per month; among them, rural youth with vocational training is 51.2 hours per week, rural youth without vocational training with college/university degree is 41.5 hours/week and untrained is 49.2 hours/week. It shows that rural youth’s working time is enough and working hours guaranteed.
The survey notes that rural youth with vocational training having enough weekly working time rate is higher than rural youth not participated in vocational training (62.0% to 20.0% and 48.8% respectively), whereas unemployed vocational training rural youth rate is lower than rural youth not participated in vocational training.
Table 5: The effect of vocational training on average monthly income
|Rural youth with vocational training||Rural youth without vocational training||Total|
|Over 48 h/week||61.97||20.00||48.84||54.03|
Source: Calculation from survey data
3.2 The effect of vocational training on average monthly income
This article uses Mincer wage model and applies Blinder/Oaxaca decomposition to determine the differences in wage between the labour with vocational training group and labour without vocational training group.
According to estimation result from VHLSS, the average monthly income of labour with vocational training is 27.5% higher than the vocational untrained group. Among them, 7 % point is from the differences in visible factors of vocational trained and vocational untrained groups (factors: rate of labours in younger age, gender, residence, workplace, working sector); 3.5 % point is from the unexplained differences of vocational trained and vocational untrained groups (as both being in younger age, living in urban area, working in the same economic sector and same industrial sector yet labour with vocational training get higher pay than labour without vocational training, and 17 % point in the total 27.5% is due to both reasons above or differences due to factor distribution between vocational trained group and labour without vocational training.
Table 6: Blinder-Oaxaca decomposition result summary
|lnwage||Coef.||Std. Err.||z||P>z||[95% Conf.||Interval]|
|Vocational trained group||7,961||0,011||709,73||–||7,939||7,983|
|Differences due to:|
Source: calculation from VHLSS 2014
The result shows that labour with vocational training has higher average monthly income than labour without vocational training. According to survey data in 3 provinces of Ha Giang, Nam Dinh and Quang Nam, the average monthly income of rural youth with vocational training is stated as below:
The average monthly income of rural youth with vocational training is higher than rural youth who did not take vocational training (including college/university graduate group and untrained group of rural youth) with 5333 thousand dong/month/person to 4520 thousand dong/month/person and 4226 thousand dong/month/person respectively. The survey noted some cases of rural youth who did not take vocational training (college/university) but open farms and earn relatively high average monthly income. Besides, some cases of rural youth not taking vocational training but working as worker in FDI enterprises earn high income, typically rural youth in Ha Giang working in Samsung Thai Nguyen.
Table 7: Rural youth income by labour force characteristics
|Rural youth with vocational training
|Rural youth without vocational training||average
|College /university graduate||untrained|
|By industrial sector|
|Industry and construction||5,603||4,526||5,073|
|By employment status|
|Unpaid family worker||2,820||4,750||2,267||2,939|
|By economic sector|
|AFF household /self-employed||5,153||4,750||2,267||4,566|
|Foreign invested enterprise||8,000||8,000|
Source: Calculation from survey data
After analysing the employment situation of rural youth with vocational training in Vietnam 2015, there are some points concluded: According to the national-scale data analysis results, rural youth with vocational training have the advantage in approaching sustainable employment and get higher income than labour without vocational training (wage, labour contract and paid social and income insurance). Survey data in 3 provinces asp shows that (i) rural youth with vocational training with high level of technical expertise would have the advantage in approaching sustainable employment and get higher income than rural youth without vocational training; (ii) rural youth tend to choose non-agricultural jobs and work at cities or urban areas for the opportunities of improving employment and income as well as changing life. However, rural youth with short-term vocational training have not made differences in employment and income to rural youth without vocational training.
Pham Ngoc Toan, M.A. and Le Thi Luong, M.A.
Centre for Information, Strategic Analysis and Forecast
Institute of Labor, Science and Labor Affairs