Dealing with Labor Shortages in Times of Workforce Scarcity

After the economic downturn, the labor market in Vietnam is showing signs of recovery in 2024. The technology sector, especially the semiconductor industry, is facing challenges in terms of workforce, causing many HR companies to assess that recruiting is becoming increasingly difficult. Simultaneously, due to the impact of the economic downturn, importing foreign labor has become more challenging, leading to the situation where some businesses are unable to expand or even sustain their current operations.

The technology sector is actively striving to attract talent, and the labor market seems to be forming a chain where "the semiconductor industry attracts the technology sector, the technology sector attracts the traditional manufacturing industry, and the traditional manufacturing industry attracts the service sector." This could imply that the market has entered a period of substantial recruitment, with each candidate having at least two job opportunities to choose from. Meanwhile, businesses are confronted with greater challenges in searching for and retaining talent.

However, focusing solely on recruitment cannot completely solve the labor shortage issue. This significant recruitment period places emphasis on the employee experience and perception, from the employer's brand image, managerial leadership abilities, to the workflow processes and training system. All these factors can effectively mitigate the impact of the labor shortage issue.

Many businesses in the technology sector have announced plans to open around 500-1000 new job positions. For many HR professionals, they have perceived an increasing difficulty in sourcing replacement workforce, particularly amidst the high demand for personnel in the technology sector and the trend of declining population. Due to the impact of the economic downturn, the process of importing foreign labor has become more complex, causing companies to struggle in finding suitable personnel. This not only affects the ability to expand business but also poses significant challenges in maintaining current business operations.

Furthermore, there is a growing trend of employee turnover, marked by a significant monthly increase in resignations, with many individuals shifting towards employment in the semiconductor industry. In summary, the labor dynamics in the Vietnamese market can be characterized as follows: "Foreign enterprises are attracting skilled professionals from the semiconductor sector, which, in turn, is sourcing talent from the technology industry. The technology sector is actively recruiting from traditional manufacturing, while traditional manufacturing is undergoing a shift towards the service industry."

The labor market in Vietnam is entering a phase of significant recruitmen, however, many businesses are not adequately prepared. Strengthening personnel through recruitment, collaborating with talent search partners, adjusting salary levels, along with marketing and promoting the employer brand strategy, have not yielded substantial results. This imbalance between the supply and demand for personnel continues to be a major issue, known as the "large labor shortage." Let's find out with Aniday!

The era of significant recruitment - Each job seeker has at least two choices.

For Vietnam, this particular phenomenon comes as a surprise. Previously, industrial development had reached a saturation point, and the labor industry had undergone shifts, making the voice of employers more significant than that of the workforce.

If employees are dissatisfied, they are no longer obligated to stay because there are plenty of others ready to replace them in the industry. Salary increases, benefits, and even overtime bonuses have become luxuries. Nowadays, discontented employees can submit their resignation the following week, with at least two job positions awaiting them. Many businesses in Vietnam are adapting to this situation, and owners must also change their management mindset.

In Indonesia, large-scale recruitment is common. Firstly, foreign investment in Indonesia increases every year, with new factories being constructed every month, providing employment opportunities for thousands.

Secondly, the scarcity of professional and technical labor is a challenge, leading to fierce competition for recruitment. For newcomers to Indonesia, frequent job switching unrelated to their field may be shocking. This is believed to stem from the scarcity of technical labor, where individuals have numerous job opportunities and use job transitions to negotiate for higher salaries. Foreign companies in Indonesia offer benefits that local companies struggle to match.

The ease of finding jobs and the perks when resigning have created a rapid turnover rate, posing significant challenges for management and the search for replacements. Both Vietnam and Indonesia are facing unexpected fluctuations in the labor market.

The employer brand, leadership skills of managers, and a well-established system play a crucial role in mitigating the issue of labor shortage.

Initially, when the total number of employees exceeded 300, I frequently faced pressure from management to supplement the workforce to overcome delays in production. However, after enhancing our recruitment capabilities, the labor shortage ceased to be a challenge when the number of employees reached 1000. Even after the economic downturn was under control, I could hire an additional 70 people every month, significantly boosting production efficiency in a short period. Compared to other units within the corporation, the turnover rate in my company could be maintained at the lowest level.

Some may think that focusing solely on recruitment can solve the problem. However, this approach is too traditional and simplistic, overlooking crucial factors in the era of significant recruitment: the experience and perception of employees. Without the integration and engagement of the entire company, addressing the labor shortage issue remains ineffective.

Summarizing my experience, there are four proposed directions for discussion:

1. Relevant Employer Branding

- Recruiting from the community and implementing ESG activities to build the company's image are crucial steps in attracting candidates.

- The employer brand should not only be limited to the recruitment page but also reflect consistency when employees enter the company.

2. Employee Perceptions and Experiences

- More important than anything is to create a fitting employer image for employees to perceive and experience when joining the company.

- Consistency between the communication message and the reality within the company plays a decisive role in the mindset and stability of employees, avoiding sudden resignations and high retraining costs.

Hope this Aniday article is helpful to you!