Vietnam has undertaken a series of groundbreaking and strategic initiatives since the beginning of this year, laying a solid foundation for both immediate progress and long-term development as the country steps into what has been dubbed “The era of the nation’s rise”. In just the first six months of 2025, the economy has nearly reached its targeted growth rate of 7.52 per cent; a figure that partially reflects the ongoing recovery and evolution of the domestic labor market. However, in order to achieve the full-year GDP growth goal of 8 per cent or more, the labor market must overcome challenges such as improving workforce quality and reducing the share of informal employment.
Evolving workforce
The first half of the year painted a labor market landscape featuring both promising signs and underlying uncertainties. Employment indicators, including workforce size, the unemployment rate, and job creation numbers, have all moved in a positive direction. Data from the National Statistics Office at the Ministry of Finance revealed that the available workforce aged 15 and above has grown to 53 million people, an increase of more than 542,600 compared to the same period in 2024. The number of employed people has reached 51.9 million, the highest in the last three years, with 20.1 million in urban areas and 31.8 million in rural regions.
Job creation has varied by sector. While employment in agriculture, forestry, and fisheries has declined by more than 243,000 people, the industrial and construction sectors have added over 258,000 jobs. The services sector experienced the most significant surge, with more than 523,000 new jobs created. This shift suggests a structural transformation in Vietnam’s economy, favoring sectors that are increasingly tied to urbanization, consumer demand, and technological innovation.
Signs of progress are also evident in workforce quality. The proportion of workers with formal qualifications or certifications has reached 29 per cent, a modest yet meaningful increase of one percentage point compared to last year. Informal employment, while still accounting for a high 63.9 per cent, has declined slightly, with notable reductions in both urban and rural areas, as well as across gender groups. Unemployment has remained low at 2.22 per cent, with slightly higher rates in urban areas compared to the countryside.
One of the most encouraging developments has been the significant drop in underemployment, which now stands at 1.72 per cent, representing fewer than 800,000 people. This improvement reflects the rebound of supply chains, particularly in manufacturing, construction, and logistics, after a turbulent period of global disruptions.
The increasing number of people entering the workforce and finding employment highlights the continued momentum of Vietnam’s economic growth. Key sectors such as industrial production, logistics, information technology, and financial services have reported strong hiring trends, especially in the southern region, which now boasts the lowest unemployment rate in the country at 1.7 per cent. Meanwhile, the central highlands faces a higher unemployment rate, of 3.8 per cent, pointing to persistent regional disparities.
Of particular concern is the unemployment rate among youth aged 15 to 24, which stands at 8.06 per cent; significantly higher than the national average and especially high in urban centers, where it stands at 10.65 per cent. These figures reveal the challenges young workers, especially those from Gen Z, face in securing jobs that align with their skills, education, and expectations.
Overall, while the labor market is showing clear signs of improvement, it continues to require targeted policies aimed at upskilling the workforce, addressing underemployment in lagging regions, and most critically, creating meaningful opportunities for young people who are entering the job market with rising ambitions but also mounting pressures.
Towards a sustainable workforce
While recent labor market data contains many positive signs, several persistent challenges suggest that the labor market structure is still to achieve sustainable development. Four major challenges can be identified.
First, nearly two-thirds of the workforce remains in the informal sector. This means millions of workers lack access to social insurance, opportunities for retraining, and protection against job loss.
Second, regional disparities in job opportunities persist. Areas such as the central highlands and the Mekong Delta continue to post lower employment rates than the national average, highlighting uneven development across the country.
Third, the unemployment rate among youth aged 15 to 24 is nearly four-times higher than the general unemployment rate, revealing a growing mismatch between young people’s skills and demand in the labor market.
Fourth, there remains a shortage of highly-skilled workers, particularly in technology, engineering, and foreign languages. Though there has been progress in improving the rate of trained workers, the demand for specialized skills still far outpaces supply.
Beyond these challenges, the labor market is also being shaped by a number of influential forces. While some of these drivers contribute positively to market development, others pose risks and disruptions. Two of the most critical influences are rapid technological change and newly-enacted legislation.
In terms of technology, the accelerated integration of AI, automation, and digital platforms into enterprise management is reducing demand for low-skilled labor. At the same time, there is growing demand for roles related to data management, intelligent machinery operations, and systems analysis - areas that require a more highly-skilled and adaptable workforce.
As for policy, two key legal reforms are set to impact the labor market trajectory. The amended Law on Employment No. 74/2025/QH15, to be effective from 2026, and the revised Law on Social Insurance, which took effect on July 1, 2025, are expected to promote a more coordinated, flexible, and modern labor market. These frameworks aim to stimulate job creation across both public and private sectors, support career transitions, and enhance international labor integration. In doing so, they also help balance labor supply and demand, particularly in the face of global trade policy shifts such as new US tariffs that may affect Vietnam’s export-driven industries.
In the months to come, Vietnam is expected to ramp up efforts to address these challenges through expanded vocational training and digital skills development, especially for young and rural workers. Leveraging digital technologies to manage labor flows, including through a national job exchange platform and online recruitment systems, will be key to improving market transparency and efficiency. At the same time, reforms will aim to increase social insurance coverage and extend support to informal workers. Localized job creation initiatives in underdeveloped areas will also be promoted to curb labor migration and foster more inclusive economic participation.
Looking ahead, the upwards employment trend is expected to continue into the second half of 2025. Job demand will likely rise sharply in areas such as AI, automation, ESG (environmental, social, and governance), and logistics; sectors that will define the next chapter of Vietnam’s modern, sustainable, and globally-integrated labor market.
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