4.0 industrial revolution to bring major changes to labor market
Vietnam’s cheap labor force will no longer be an advantage in attracting investment as the cost for applying advanced technologies is getting lower. Thus, a large number of Vietnamese workers will be thrown off production lines.
The director of a South Korean precision molding company based in Thach That Industrial Zone in Hanoi said he can imagine how his production line will work in the future.
It will be an automatic system with robots and artificial intelligence. When materials run out, this will be recognized by robots which will issue commands to pour more materials into the production line.
This scene will be seen in the near future, when the world begins the 4.0 industrial revolution with the boom of information technology and internet. By that time, machines and robots will not only be able to work, but command and regulate as well.
Vu Tien Loc, chair of VCCI, noted that the 4.0 industrial revolution will come as quickly as a typhoon and the number of workers to be hit will be very high. However, Vietnamese businesses still do not have any plans to prepare for it.
Meanwhile, Canon, a foreign investor in Vietnam, has been upgrading its machines and technology. After eight years, the number of workers at its factory has fallen from 13,000 to 8,000.
Dao Thi Thu Huyen, chief secretariat of Canon Vietnam, said Canon’s managers were surprised as Vietnam can lose its advantage in cheap labor costs quickly.
At the 2016 World Economic Forum, Vietnam was cited as one of 10 new emerging markets with garment & footwear and electronics the sectors making the greatest contribution to economic development.
However, according to Loc, in both fields, Vietnam just does simple assembling which brings low added value. These will be the labor intensive labor industries that will suffer heavily from the 4.0 revolution.
Analysts said that in the past, foreign investors flocked to Vietnam because they were attracted by the cheap labor costs. However, as the minimum wage has been increasing, the labor costs have risen.
Therefore, investors will utilize high technology to use less labor. Besides, with protectionism, it is highly possible that enterprises like Nike and Adidas will set up production bases in their countries to get support from governments and apply high technology to reduce costs.
ILO estimates that 86 percent of workers in garment & footwear and 75 percent of workers in electronics will face the risks to be brought by the revolution.
David Lamotte from ILO Asia Pacific said the initiatives like robotic automation has been applied in many industries, including garment & footwear and electronics in ASEAN and China.