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07 November
2018

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Reigniting upgrading in global value chains: findings from firms and workers in Vietnam

Hanoi, Vietnam


The Centre for Analysis and Forecasting (CAF), JJN’s partner in the ongoing research project on Inclusive Industrialization for ASEAN,hosted a technical workshop at the Vietnam Academy of Social Sciences to present initial findings of the project to local stakeholders involved in the apparel and electronics sectors. Participants from research institutes, trade unions, United Nations Development Programme, Oxfam and the business world came together to share feedback on the first draft of the sectors’ report.

The sectors’ report, to be published in 2019, is based on primary data collection from 160 firms and 400 workers, technical staff and managers. The survey links questions on firm-level investment and value chain participation with indicators for workforce development, including wages, training, working conditions and promotion.

The aim is to analyze firm’s strategies for upgrading products and processes and their potential impact on the workers. Findings from previous studies suggest that benefits from global value chain participation tend to be unevenly distributed, depending on the workers’ skill level and employment status in the company.

Findings of the preliminary analysis of the survey conducted by CAF’s research team confirm certain trends:

  • Only few firms in the sample engaged in more value-adding tasks, or introduced more sophisticated products, which helped them to move beyond simple assembly manufacturing.
  • Many firms improved their production processes but could not improve their bargaining position vis-à-vis buyers significantly.
  • Economic upgrading is more prevalent among electronics firms as compared to apparel firms.

No clear relationship between economic upgrading and the improvement of the workers’ situation could be identified in the preliminary data analysis. International buyers have cited the insufficient supply of components matching quality standards as a limiting factor to procure from local suppliers. One of the main reasons for this, highlighted by the workshop’s attendees, are inadequate worker skills. Preliminary analysis confirm that Vietnam needs to intensify relations between ministries and firms to train a capable workforce, an essential ingredient for the manufacturing sector to move up the quality ladder and provide better opportunities for workers.

The primary data will be analyzed in more detail, while other research institutions of the project will contribute comparable evidence from Myanmar and Thailand. This will provide a great opportunity to draw lessons from three country experiences in ASEAN to inform policies for inclusive sector development.


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