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Labour Market Aspects of State Enterprise Reform in Viet Nam

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  • David O’Connor

Abstract

State-owned enterprise (SOE) restructuring has proceeded more rapidly in Viet Nam than, for example, in China and India. The government tightened the budget constraints facing SOEs virtually simultaneously with price liberalisation. While a large number of mostly small SOEs were liquidated soon after reform began, others were able to adjust through various cost-cutting measures, including sizeable labour force reductions. The government put in place a safety net composed of severance pay and early retirement schemes that, combined with natural attrition, yielded a reduction in the SOE workforce of almost one million people in less than a decade. While the largely voluntary nature of the schemes may have caused some adverse selection and made them more costly than necessary, the benefit has been to avoid social discontent. High private-sector employment growth has been a major contributor to the programme’s success. Still, the process is not complete. Initial restructuring was ... La restructuration des entreprises publiques a été plus rapide au Viêt Nam que dans d’autres pays comme, par exemple, la Chine et l’Inde. Le gouvernement a resserré les contraintes budgétaires imposées aux entreprises publiques au moment où il procédait à une libéralisation des prix. Un nombre non négligeable de petites entreprises publiques ont été liquidées peu après le début des réformes, mais d’autres ont réussi à s’adapter en adoptant diverses mesures de réduction des coûts, dont des licenciements de grande ampleur. Le gouvernement a mis en place un filet de sécurité comprenant des indemnités de licenciement et des programmes de préretraite qui, en sus du jeu normal des départs, ont permis de réduire la main-d’œuvre employée dans les entreprises publiques de pratiquement 1 million de personnes en moins de dix ans. Les systèmes adoptés reposant largement sur le volontariat, ils ont sans doute provoqué des phénomènes d’antisélection et eu un coût plus élevé que nécessaire, mais ...

Suggested Citation

  • David O’Connor, 1996. "Labour Market Aspects of State Enterprise Reform in Viet Nam," OECD Development Centre Working Papers 117, OECD Publishing.
  • Handle: RePEc:oec:devaaa:117-en
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    File URL: http://dx.doi.org/10.1787/808875873345
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    5. Jeffrey D. Sachs, 1989. "Introduction to "Developing Country Debt and the World Economy"," NBER Chapters,in: Developing Country Debt and the World Economy, pages 1-34 National Bureau of Economic Research, Inc.
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    Cited by:

    1. Patricia Justino & Julie Litchfield, 2003. "Welfare in Vietnam During the 1990s: Poverty, Inequality and Poverty Dynamics," PRUS Working Papers 08, Poverty Research Unit at Sussex, University of Sussex.
    2. Ghosh, Madanmohan & Whalley, John, 2008. "State owned enterprises, shirking and trade liberalization," Economic Modelling, Elsevier, vol. 25(6), pages 1206-1215, November.
    3. Adam McCarty, 2001. "The Employment and Social Consequences of Vietnam's International Economic Integration," Labor and Demography 0110002, EconWPA.
    4. Adam McCarty, 2001. "Vietnam's Labour Market in Transition," Labor and Demography 0110001, EconWPA.
    5. Amy Y.C. Liu, 2005. "Changing wage structure and education in Vietnam 1993-1998: The roles of demand," International and Development Economics Working Papers idec05-4, International and Development Economics.
    6. Adam McCarty, 2001. "The Social Impact of the Reform Process," Development and Comp Systems 0110004, EconWPA.
    7. Patricia Justino & Julie Litchfield, 2003. "Poverty Dynamics in Rural Vietnam: Winners and Losers During Reform," PRUS Working Papers 10, Poverty Research Unit at Sussex, University of Sussex.

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