Vietnam's Skilled Labor Shortage Strains Its Manufacturing and FDI Ambitions

Investment Grows Faster Than Factories Can Recruit

In Bac Ninh province, which attracted $5.5 billion in foreign direct investment in 2025, a battery manufacturer has spent more than a month trying to recruit 150 technical workers. It has drawn only 60 applicants. Across Vietnam's industrial economy, the difficulty of turning investment into fully staffed production lines is becoming a constraint on growth.

Vietnam has attracted billions of dollars in foreign direct investment, or FDI, through its political stability, strategic location and historically low labor costs. FDI is money that businesses invest in operations in another country, such as building a factory. Yet from industrial parks in Bac Ninh to technology zones in Ho Chi Minh City, employers are struggling to find the people needed to operate and expand those businesses.

The pressure reaches beyond a temporary shortage after the pandemic or seasonal changes in recruitment. Changing worker expectations, demographic trends and the changing nature of foreign investment are widening the gap between the skills workers have and those factories require. Companies need more technical expertise as global supply chains relocate and Vietnam seeks work that creates greater economic value.

As of January 18, 2026, the problem stretches from garment production to semiconductor engineering. Employers are raising wages, paying recruitment bonuses and reconsidering how they retain staff. The government is investing in training, while the shortage is testing the sustainability of a development model built heavily on inexpensive labor.

A Battery Factory's Search for Technical Staff

Nguyen Phuong Thao, a human resources director at a battery manufacturing company, has been trying to fill the 150 technical positions. Her employer produces lithium-ion batteries for electric vehicles and consumer electronics and recently opened a new factory. Despite immediate bonuses and recruitment through TikTok livestreams, it has filled only about 40% of its staffing demand.

Thao described the rising expense of attracting recruits, including higher wages, referral payments and bonuses for joining the company:

"At this point, the only solution is to keep raising costs," Thao said.

Positions requiring technical skills, team leadership or foreign language proficiency have attracted almost no applicants. Those gaps matter because a factory needs people who can manage production and solve problems as well as workers who can carry out individual tasks.

Some factories report that as many as 40% of new recruits quit within three days. Employers consequently recruit two or three times the number of people they actually need, hoping enough will remain to staff their production lines. Repeated recruitment and training consume resources and interrupt production.

The Korean Chamber of Commerce in Vietnam, known as KOCHAM, has identified recruitment difficulties among South Korean manufacturers seeking skilled workers and managers at the middle level, particularly in Bac Ninh and Thai Nguyen. KOCHAM chairman Ko Tae Yeon warned that growing investment would increase pressure on employers:

"Competition for human resources will become more intense as foreign investment continues to grow," said Ko Tae Yeon, chairman of KOCHAM.

Why Advertised Jobs Remain Empty

Across Vietnam, thousands of job advertisements remain unanswered even as companies seek more staff. A report from recruitment platform TopCV indicates that nearly 70% of companies have increased hiring. The pool of applicants nevertheless remains shallow, leaving employers advertising repeatedly while many workers show little interest.

Factory salaries advertised at 8 million to 12 million dong a month in major cities can appear more attractive than the guaranteed pay workers actually receive. Those advertised amounts often include overtime, allowances and bonuses. A new worker's base salary can be as low as 5.2 million dong, only slightly above the regional minimum wage.

Rent, food and transportation in Ho Chi Minh City or Hanoi can leave workers with little money to save. A recruitment offer therefore involves more than its largest advertised number: workers must consider what they can reliably earn and how much remains after daily expenses.

Vietnam's traditional advantage of low labor costs is coming under pressure from that household calculation. Factories need affordable staffing to remain competitive, while employees need pay that makes the demands and costs of industrial work worthwhile. Bonuses can attract attention, but the relationship between regular wages and living expenses shapes whether workers stay.

Workers Reconsider Life in Industrial Cities

The COVID-19 pandemic accelerated a trend of reverse migration, with workers leaving industrial cities for their rural hometowns. Lockdowns and job losses changed how many viewed factory employment, especially when it meant living far from family while paying high urban living costs.

Rural hometowns offer lower expenses and closer support networks. For workers weighing those benefits against city wages, returning home can be an economic choice as well as a family decision. Employers recruiting for industrial zones must contend with those changed priorities.

Ride-hailing and delivery services provide another alternative. Such gig work can offer greater flexibility and independence, even when earnings are comparable to factory pay. Workers who value control over their schedules may find those arrangements more attractive than production work.

Changing expectations add to the shortage of technical skills. Companies are competing for people who increasingly consider working conditions, the balance between work and personal life, and opportunities to progress in their careers alongside wages. The recruitment problem therefore includes both finding suitable workers and persuading them that factory employment is worth choosing.

Garment Factories Face Their Own Training Pressure

Crystal Martin Vietnam, which employs more than 10,000 people, illustrates the pressure on garment and textile manufacturers. Rising orders mean the company needs thousands of additional workers, yet applicant numbers remain low.

Nguyen Van Chi, chairman of the company's labor union, explained that garment production requires precision and manual skill. Training a new worker takes two to three months. Losing staff or failing to recruit enough people therefore affects more than the immediate headcount: companies also need time before new employees can perform the work.

Most garment factories avoid hiring new workers over 40, further narrowing the pool of potential recruits. That hiring practice adds to the challenge of meeting orders when younger applicants are insufficient.

Crystal Martin Vietnam has turned to Facebook and TikTok livestreams to reach potential employees and answer questions about wages and benefits in real time. The approach gives applicants a chance to ask about the terms of employment while showing how far companies are extending their recruitment efforts beyond conventional job advertisements.

Semiconductor Ambitions Need Specialist Engineers

Vietnam's ambitions in semiconductors create another layer of demand. Investments from Intel, Amkor and Hana Micron are helping position the country within the global chip supply chain, but the industry needs specialized engineering skills that remain in short supply.

Vietnam currently has about 15,000 semiconductor specialists, compared with the government's target of 50,000 by 2030. Expanding that workforce requires more than filling assembly positions. Semiconductor businesses need engineers with the technical knowledge to carry out demanding stages of chip development and production.

A World Bank report stresses the need to strengthen human capital, meaning people's skills, knowledge and capabilities, so Vietnam can move into semiconductor activities that generate greater value. The shortage concerns both the number of specialists and the kinds of expertise they possess.

Vietnam has a limited number of "full-stack" engineers able to handle chip design from its early stages through commercialization, when a design becomes a product that can be sold. Most Vietnamese engineers specialize in a single stage, mainly back-end work. That concentration limits the supply of people able to connect the entire process.

The World Bank's Viet Nam 2045 report warns that reliance on workers with limited skills is becoming a constraint on development. Only about 5% of the manufacturing workforce is considered highly skilled. Vietnam's goal of becoming a country with high incomes by 2045 depends in part on expanding that capacity as global production places greater weight on digital technology and sustainability.

Demand for advanced skills in science, technology, engineering and mathematics, known as STEM, is growing faster than the current supply. The challenge is therefore to prepare workers for more complex jobs while factories are already struggling to fill existing vacancies.

Recruitment Costs Test Investment Plans

The U.S. State Department's 2024 Investment Climate Statement lists "a shortage of skilled labor" among Vietnam's investment challenges. Political stability and trade agreements continue to attract foreign businesses, but difficulty finding qualified employees can discourage expansion or investment in more complex projects with greater economic value.

Existing businesses face immediate costs. At Thao's battery company, new recruits who remain for four months receive a bonus of VND9 million, equivalent to US$342. Employees who refer recruits receive VND4 million. Those incentives are more than double the amounts offered a year earlier.

Recruitment payments can help a company fill vacancies quickly, but they also put pressure on profit margins. Generous incentives for newcomers can create resentment among existing employees, particularly when experienced staff see new recruits receiving substantial payments for joining.

Higher labor costs could weaken the competitiveness of Vietnamese firms against regional rivals such as Cambodia or Bangladesh, where labor costs may remain lower for longer. Vietnam's response therefore involves a difficult balance: improving pay enough to attract workers while increasing the value and efficiency of production.

Automation is one option for reducing staffing needs in repetitive tasks. Companies are also exploring digital tools for managing their workforces. Automation, however, requires substantial capital investment and brings its own implementation challenges, making it another business decision that must be weighed against recruitment and training costs.

Training Plans Face a 2030 Target

The Vietnamese government has launched a semiconductor human resource development program to train 50,000 engineers by 2030. Plans include national laboratories and laboratories within institutions to support practical learning. Those facilities are intended to help students and trainees develop skills through direct experience.

Pham Ngoc Toan, a director at the Institute on State Organizational Sciences, has warned that the gap between workers' capabilities and market demand will keep widening without skills development. Findings from the International Monetary Fund also point to reducing mismatches between jobs and workers' skills, including shortages in vocational skills, as a way to improve labor productivity.

Labor productivity means how much workers produce for the time and resources used. Improving it gives Vietnam a route toward growth based more on capability and output rather than relying mainly on low wages. Training is central to that shift, especially when modern production requires technical knowledge that workers have not previously needed.

Several dates show how the current recruitment challenge connects with Vietnam's longer economic transition:

• Late 1980s: The Doi Moi reforms marked an earlier period of economic transformation.
• 2024: The U.S. State Department's Investment Climate Statement identified a shortage of skilled labor as an investment challenge.
• 2025: Bac Ninh attracted $5.5 billion in foreign direct investment.
• January 18, 2026: Employers face recruitment and retention pressures across manufacturing and technology industries.
• 2030: The government aims to reach 50,000 semiconductor specialists through its training effort.
• 2045: Vietnam aims to become an economy with high incomes.

The training effort requires coordination between government and businesses. Vocational education must connect with industry needs, while companies need ways to help workers gain skills that lead to stable employment and opportunities to advance.

Keeping Experienced Workers Becomes a Priority

Thao's company is shifting attention from aggressive external recruitment toward retaining experienced staff. It now focuses on maintaining monthly incomes of VND13 million to VND15 million and providing additional monthly bonuses to employees who complete a full year and meet performance targets.

Thao explained the operational purpose of keeping trained employees in place:

"That way, our production lines don't have to be constantly rebuilt," Thao said.

Other companies are investing in training and partnerships with vocational schools to develop a continuing supply of qualified workers. Retention and training address connected problems: a factory benefits from teaching people new skills only if enough of them remain to use those skills in production.

Vietnam's labor shortage signals the limits of relying on inexpensive workers alone to sustain industrial growth. The country has navigated major economic changes before, including Doi Moi, but its current ambitions require a workforce prepared for more demanding production.

Companies offering fair pay, better working conditions, technical training and clear career progression are likely to be better placed to attract and retain employees. Government efforts to improve vocational education, match curricula to industry requirements and strengthen social safety nets form another part of that response.

Vietnam's challenge is to connect continued foreign investment with better skills and more productive work. Factories need dependable staffing today, while semiconductor businesses need specialized engineers for the next stage of expansion. Addressing both needs will shape whether investment translates into lasting industrial growth and a more resilient, innovative and skilled workforce.

Key Points

• Bac Ninh attracted $5.5 billion in FDI in 2025, while a battery manufacturer seeking 150 technical workers drew only 60 applicants.
• Some factories report that up to 40% of new recruits leave within three days, increasing recruitment and training costs.
• Advertised monthly factory pay of 8 million to 12 million dong can include overtime and bonuses, while starting base pay can be as low as 5.2 million dong.
• Living costs, movement back to rural hometowns and flexible gig work are changing workers' employment choices.
• Vietnam has about 15,000 semiconductor specialists and aims to reach 50,000 by 2030.
• Only about 5% of manufacturing workers are considered highly skilled, creating pressure on Vietnam's ambition to become an economy with high incomes by 2045.
• Government training programs, vocational partnerships and company retention incentives are central responses to the shortage.