Wednesday, 6 May 2009

Vietnam still struggles to find right staff

By Tim Johnston
Published: May 7 2009 01:54 | Last updated: May 7 2009 01:54

South-east Asia is reeling, as the global economic crisis chokes the exports that have driven the region’s extraordinary growth over the past decade. Hundreds of thousands of jobs have disappeared, yet there are some unexpected bright spots.

“There seems to be robust demand at the executive level,” says Lance Richards, a senior director at Kelly Outsourcing and Consulting, part of Kelly Services of the US. “What you are seeing is that unemployment is discriminatory to the unskilled and uneducated.”

He says that, across the region, areas such as finance, engineering, healthcare and human resources are still providing opportunities for people with the right qualifications.

He also notes that although employer demand has inevitably been hit by the slowdown, supplies of the right sort of employees remain tight.

“We don’t have a shortage of people, we have a shortage of talent,” says Mr Richards.

That is a particular problem in countries such as Vietnam.

At the beginning of last year, companies were struggling to find high-quality middle and upper management: engineers, human resources professionals, and finance directors were all in revolving-door jobs, their salaries sucked ever higher by the insatiable demands of both booming domestic companies and the hundreds of international investors moving to Vietnam to take advantage of its low-cost production base.

Even if the economy has since come back to earth with a bump, the veterans of these battles for talent are reluctant to let go of good employees.

And their reluctance has been fuelled by the Vietnamese government, which has responded to the crisis by trying to insulate industry with subsidised loans, tax holidays and trade finance: all in the hope that they will hold on to as much labour as they can until global demand starts to pick up.

But for companies working in developing and middle income countries in south-east Asia, the problem of talent shortage is likely to linger long after the current crisis is little more than a bitter memory.

“We don’t convert people into talent,” as Mr Richards bluntly sums it up. He says the core of the problem is that many universities in the region are providing the wrong sort of education.

“There are some world-class schools in the region, but many turn out graduates qualified in rote learning,” he says. “Their employability is abysmal.”

A survey conducted last year by the World Bank found that Vietnam should be turning out 10,000 skilled information technology graduates a year, but employers said that at least 60 per cent of new employees had to be retrained to bring them up to standard.

Intel, the computer chip manufacturer, needs to recruit some 3,000 employees for its new plant in Vietnam, but when it first went out into the market last year, of 1,965 students tested, only 320 passed the exam and only 90 – or 4.6 per cent – got more than 60 per cent.

Kieran Brennan, director of work and careers at the RMIT International University – part of the Royal Melbourne Institute of Technology – in Ho Chi Minh City, says that the survey is an extreme example, but Intel is not alone.

“Companies can find as many technical people as they want, but problem-solving and customer-facing staff can be hard to find,” he says.

Despite the slowdown, RMIT alumni are finding jobs.

“Our students are still relatively confident that there is a market for them,” says Mr Brennan.

One of RMIT’s clients, the accountancy firm KPMG, says that the situation is improving.

“The quality of graduates has improved considerably: not only in what they are learning at university, but in their mindset and their understanding of the outside world,” says Warrick Cleine, the managing partner of KPMG Vietnam.

He says that his firm recruited 300 graduates from 2,000 applicants last year, most of whom would have qualified. He says the company recently returned to the market to recruit 200 graduates for this year.

Staff turnover may have fallen, says Mr Cleine, but there is still a structural shortage of accountants in Vietnam.

When it comes to education, the country is by no means alone in its predicament.

The McKinsey Quarterly published a survey last year – before the global crisis began in earnest – which indicated that 44 per cent of companies headquartered in China thought that the lack of managerial talent was the biggest barrier to expansion outside the country.

This was significantly more than the 25 per cent that cited a lack of access to capital as their biggest problem.

The Vietnamese government sees education as the key to future prosperity and is pouring huge resources into schools and universities.

However, Mr Richards says that this and a promotion of critical thinking skills are unlikely to provide the solution: corporate culture also needs to change.

“If your business culture doesn’t demand leaders because the decision-making process is concentrated around one or two people, supply drops to match demand,” he says.

Copyright The Financial Times Limited 2009

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