Paradigm of Skill Mismatch and a Supply-Side Approach in Vietnam: The Need of Integrated Skill Formation Strategies

21/11/2020

Junichi Mori

Abstract: There are growing claims that an increasing skill mismatch, including skill shortages, is impeding further economic growth and industrialisation in Vietnam. Previous studies attributed it to the failure of supply-side initiatives to meet increasing skill demand. However, this supply-side approach, which emanates from human capital theory, provides only a partial view of Vietnam’s skill formation challenges. This research investigated the perceptions of skill mismatch obtained through questionnaires and in-depth qualitative interviews with policymakers, educators, and employers. 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 contrast to policymakers and educators who often perceive large skill shortages. They confront a fundamental challenge in trying to deliver improvements to their skill formation system through a supply-side approach, namely slow growth in skill demand. In this condition, imposing the supply-side approach amplifies mutual distrust between the supply and demand sides. In order to break through this deadlock of stagnant skill demand and mutual distrust among key actors, Vietnam needs an integrated skill formation strategy that stimulates the dynamism of skill demand.

Keywords: policy borrowing and learning; skills development policy; technical and vocational education and training; Vietnam.