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First, too few students advance to secondary and tertiary education or complete formal technical or vocational training. Too few enter university and too many do not finish.

Many Problems Remain with Vietnam’s Human Capital Development
According to WorldBank, there are many aspects to human capital development in Vietnam. Two concerns seem most pressing. First, too few students advance to secondary and tertiary education or complete formal technical or vocational training. Too few enter university and too many do not finish. 
Cost is one reason. Government support for universities is only 0.5 percent of GDP, about half of that in China, Malaysia or South Korea. Students pay about 40 percent of the cost—more than in most countries.
Quality of teaching and facilities may be an even bigger reason for low uptake. The share of students in technical or vocational training is also low at 6 percent compared to 27 percent in South Korea and 50 percent in some other OECD countries. On-the-job skill acquisition does not fill the gap as few firms provide formal training.
The second concern is that Vietnam has not been able to mobilize a significant share of its potential labor force. Many workers face barriers to entry as the job search is made difficult by inadequate training, limited information on the needs of firms, and insufficient mobility. 
These obstacles are most visible for ethnic minorities, many living in remote areas, and representing almost three quarter of Vietnam poor. But they apply just as much to other marginalized and poor segments of Vietnam’s population. Their access to basic health and education services has improved. 
Yet, welfare indicators are still low for these groups—especially for girls and women—and few have been able to attain secondary or tertiary education or move to advanced jobs. There is an ethical case for renewing efforts to close this welfare gap. But there is also an economic case as a shrinking future population must mobilize more available workers. There are a number of priority reforms that promote a more productive and more inclusive workforce.
Embrace markets: Increasing participation and the responsiveness of the post-secondary education sector requires increasing the types of post-secondary education including nonuniversity programs. This will require more resources but also strong engagement with private education providers. 
More private or public-private institutions could provide more of the advanced education opportunities Vietnam needs. Private universities must compete for students and tend to focus on subjects demanded by employers. They cannot replace comprehensive public universities but complement them. 
Firms should also be encouraged to provide more formal technical and vocational training. Private sector led initiatives such as the European Sector Employer Councils or Singapore’s Institute for Technical Education could be models for Vietnam to better match skills demand and supply.
Modernize institutions: National Targeted Programs (NTPs) have been the main mechanism for addressing ethnic minority issues in Vietnam. These programs could better aid job market entry by easing migration to more dynamic parts of the country. Priorities for ethnic minorities include improving early child-development outcomes especially stunting, increasing access to secondary and post-secondary education, and removing barriers from labor market participation. 
Specific options include information systems that help job search and matching, transport vouchers to offset the cost of exploring opportunities, or encouraging seasonal work as an entry point to formal work. Women’s participation in the labor market will be eased by expanding child and elderly care options and encouraging more flexible work arrangements.
NTPs could also consider conditional cash transfer (CCT) programs that require school enrollment in return for payouts. They will get more kids into school and will raise demand for higher quality and ongoing education. Any such initiatives need to be designed in close consultation with ethnic communities and will require streamlining fragmented programs and policies (currently there are 23 for education and training and seven for healthcare).
Rethink incentives: Increasing resources and greater private sector involvement in education requires coordination, monitoring and oversight. Especially for post-secondary education it will also require changes in how education is financed and budgeted. 
Currently, financing is input-based building on historical budgets. In the medium term, more output-based funding could link financing with performance on well-defined criteria. Further in the future, voucher-based systems can be considered with preferences given to priority occupations and to need-based support.

DIEP NGUYEN