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Cablegate: Vietnam Addresses Workforce Anxiety in Apec Conference

VZCZCXRO8337
RR RUEHCHI RUEHFK RUEHHM RUEHKSO RUEHPB
DE RUEHHI #2633/01 2861014
ZNR UUUUU ZZH
R 131014Z OCT 06
FM AMEMBASSY HANOI
TO RUEHC/SECSTATE WASHDC 3704
INFO RUEHHM/AMCONSUL HO CHI MINH 1990
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEHZU/ASIAN PACIFIC ECONOMIC COOPERATION

UNCLAS SECTION 01 OF 02 HANOI 002633

SIPDIS

STATE FOR EAP/MLS AND DRL/IL
STATE PASS USDOL ETA DAS SMALL, YOUNG, ILAB WATSON
STATE PASS USTR FOR KARESH
USDOC FOR 4431/MAC/AP/OPB/VLC/HPPHO

SENSITIVE
SIPDIS

E.O. 12958: N/A
TAGS: ELAB EAID ECON ETRD EINV WTRO VM
SUBJECT: Vietnam Addresses Workforce Anxiety in APEC Conference


HANOI 00002633 001.2 OF 002


This cable is sensitive and not for Internet distribution.

1. (SBU) SUMMARY: Dealing with the anxieties and needs of the
Vietnamese workforce as the country becomes more integrated into the
world economy is high on the minds of the Vietnamese. This explains
the huge turnout for a two-day APEC labor conference in Hanoi. Some
175 participants from Vietnam and 14 of APEC's 21 economies attended
"Strategies for Workforce Development: Keys to Success in the 21st
Century" on September 19 and 20. One of the most welcome
developments was the energized performance of MOLISA Vice Minister
Nguyen Luong Trao, who actively engaged multiple panelists and took
copious notes throughout the conference. Diverse experts also made
specific recommendations on the steps Vietnam should take to deal
with the challenges the country's labor force faces. End summary.

2. (SBU) Dealing with workforce anxiety as Vietnam becomes more
integrated into the world economy is high on the minds of the
Vietnamese. As this year's host of the Asia-Pacific Economic
Cooperation (APEC) forum, Vietnam used its influence to get APEC to
address this issue. Earlier this year it made a pitch to focus on
the workforce challenges of globalization and succeeded. The APEC
Human Resources Development Working Group approved the conference in
May at the Second APEC Senior Officials' Meeting (SOM-2). Vietnam
also helped shape the agenda for the conference and provided
speakers for most of the panels. It also designed one plenary
session, "Vietnam and the Forces of Globalization-Building a
Competitive Workforce," to focus in particular upon Vietnam's
workforce needs in the aftermath of its looming WTO entry.

3. (U) The U.S. Department of Labor provided most of the funding for
the conference. It co-sponsored the two-day event in Hanoi with
Vietnam's Ministry of Labor, Invalids and Social Affairs (MOLISA)
and the Department of State. The State Department also contributed
money and the Embassy provided substantial planning and logistical
support. "Strategies for Workforce Development: Keys to Success in
the 21st Century" took place on September 19 and 20. About 175
participants, the vast majority Vietnamese, attended the event. The
others came from 14 of APEC's 21 economies. About half of the
Vietnamese participants came from the private sector. U.S. firms,
including Intel, Microsoft and Ford Vietnam, provided human
resources specialists from their offices in Vietnam. Union
officials, educators, employment service center employees and
government policymakers in the labor, science and technology and
education fields also participated. Representatives of the World
Bank, the International Labor Organization and a range of local and
international media also attended.

Vietnam and Globalization
-------------------------

4. (U) In their opening remarks, MOLISA Vice Minister Nguyen Luong
Trao, Ambassador Marine, and Department of Labor Deputy Assistant
Secretary Douglas Small all highlighted the challenges that

SIPDIS
workforces face as globalization increases competition worldwide.
"In a world where businesses can choose among dozens of countries
for their production sites, creative, skilled and hardworking
employees can make all the difference between growth and stagnation
for a nation's economy," Ambassador Marine said. At a media
roundtable for local and international journalists, DAS Small
emphasized the importance of cooperation between the government and
private sector. Workforce development was vital for general
economic development, he added. Small endorsed the remarks of
keynote speaker Martin Bean, the Global Director of Education for
Microsoft that "Business goes where the talent is." Asked at a
press briefing for his advice on what the Government of Vietnam
(GVN) should do, Small said the GVN needs to listen carefully to the
private sector to determine its educational emphases. Several
Vietnamese news outlets, including Vietnam News, Vietnam Economy,
and Voice of Vietnam, covered the event.

5. (U) World Bank Vietnam Chief Economist Martin Rama said Vietnam
needs to focus on implementing WTO-compatible labor market
regulations, improving social protections and boosting skills for
development. He observed that Vietnam's minimum wage laws are
currently not WTO-compatible because they apply different wage rates
to Vietnamese and foreign-owned firms. He advised Vietnam to create
a more flexible and market-responsive wage setting regulations for
those working above minimum wage. (Note: Under current rules, the
wage rates for all Vietnamese workers are set as a multiple of the
minimum wage. Thus, an increase in the minimum wage results in
automatic raises across the wage spectrum. End note.) In Rama's
view, the wave of labor unrest in Vietnam earlier in 2006
demonstrates the inadequacy of Vietnam's labor dispute resolution
mechanisms. He recommended that Vietnam improve the social safety
net for the tens of thousands of workers who stand to lose their

HANOI 00002633 002.2 OF 002


jobs as a result of state-owned enterprise restructuring. Because
employers usually provide training only in specific job-related
skills, Rama argued that Vietnam should focus its resources on solid
basic education, particularly at the tertiary level.

6. (U) David Knapp, the General Director of Motorola Vietnam, noted
that aside from boosting basic engineering skills, firms such as his
need more employees with drive, creativity and analytical skills.
He recommended that Vietnam should eliminate the current regulation
that limits the number of foreign employees to three percent.
Strategically, the country should encourage knowledge transfer from
abroad, and the best way to do so was by removing blocks to
foreigners working in Vietnam. Ta Doan Trinh, the Director of the
Vietnam Science and Technology Evaluation Center, decried low
education levels in Vietnam. With a population of 83 million, the
country has only 2 million citizens with university degrees. Only
16,000 Vietnamese have master's degrees, he added.

Vice Minister Actively Engages
------------------------------

7. (SBU) The most welcome development was the active engagement by
MOLISA Vice Minister Nguyen Luong Trao. He visited Washington in
August to participate in the 2006 Labor Dialogue at the Department
of Labor. The standard practice in Hanoi is that Vice Ministers, if
they show up at all, make canned speeches then disappear. This was
not the case at this conference. Trao stayed the entire first
morning. He returned for the entire second day and even asked at
the last minute to deliver closing remarks. He took lengthy notes,
asked several questions and grilled panels of American, Australian
and Mexican experts with questions about labor market information
and building effective public workforce systems. "The views and
experiences of the APEC economies are extremely useful to Vietnam.
It will help us prepare our own strategy to face the challenges and
opportunities of globalization, and I look forward to continuing to
exchange views after this," he said.

8. (U) Other sessions at the conference focused on strategies to
create innovative public-private partnerships, education and
training, youth and the role of entrepreneurship in economic growth.
The last session described Topic64, an innovative public-private
partnership involving Microsoft Corp., USAID, a local NGO, Qualcomm,
Electricity Vietnam, Vietnam's Ministry of Science and Technology,
among others. The project will bring an information technology
curriculum to computer laboratories in community colleges in each of
Vietnam's 64 provinces.

Comment
-------

9. (U) The conference was a success in terms of the Mission's broad
economic strategy for economic prosperity. Labor is an integral
element of the process. Vietnam will need to create more jobs to
absorb a growing workforce. The private sector has created most of
the new jobs in the country. It was good for the Vice Minister to
hear from the firms that are creating jobs what the challenges are.

10. (U) This cable has been cleared by the Department of Labor.

MARINE

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