Walking on a Knife-Edge: The Development of Vietnam's Economy and Labour Market

Abstract Vietnam is still resisting the economic crisis that is affecting other nations of the South-East Asian region, but the risks accompanying its development are high. In the paper the transformation process of Vietnam's economy is outlined and an overview of some basic features of the labour market is given.
The labour market reveals many institutional differences compared with either the Western or the European transformation economies. A relatively large informal sector of the economy, which has grown very fast, works as a buffer against a high increase in unemployment figures. Therefore, the main labour market problem in Vietnam is not unemployment but underemployment: working with very low productivity and low pay. Thus, besides the many winners from the reforms there are losers. The success story of the reforms in Vietnam is accompanied by problems and pain.