Human Capital Potential
Vietnam’s youth possess high human capital potential. The World Bank’s Human Capital Index (HCI) measures actual and potential productivity levels for the next generation of workers. Despite being a lower-middle-income country, Vietnam is among the top(quartile) performers worldwide in terms of the HCI, not only outperforming other countries in the East Asia and Pacific (EAP) region, but also significantly surpassing other lower middle-income countries (LMICs). According to the 2020 series of HCI data, a child born in Vietnam today will be 69 percent as productive when she grows up as she could be if she enjoyed complete education and full health, compared to 59 percent for the average child in the EAP region, and 48 among LMIC children.
The challenges of reaching higher-productivity growth are reflected in the characteristics of the current youth workforce. Today’s youth in Vietnam are better educated than previous generations, but some indicators point to challenges in transitioning to higher-skilled jobs without continuing reforms in education, skill development, and a transformation of the labor market. Despite higher education completion, the youth cohort is concentrated in medium-skilled occupations, more so than youth cohorts in other countries in the region. Employers in Vietnam report difficulty finding skilled labor. However, challenges are not purely from the labor supply side; the domestic private sector faces challenges in innovation and competition.