PRESENTATION

TOPIC: HUMAN CAPITAL

GROUP MEMBERS:
1. Trương Thủy Anh
2. Trần Thị Cẩm Dương
3. Nguyễn Thùy Dung
4. Trần Thị Hồng Phương
5. Lương Thu Thủy
6. Trương Hoàng Yến
7. Hoàng Thị Thùy Dương
CLASS: A3 High quality class, Faculty of Finance and Banking, Hanoi
Foreign Trade University.
 OPENING
Good morning, ladies and gentlemen. Welcome all of you to our
presentation and we hope that you will enjoy it.
As you know, in the digital era nowadays, with the development of
rushing technologies as well as the rise of human knowledge, human capital is
becoming more and more important and necessary for any economy.
We can not deny the importance of human capital when competition is
becoming fierce. Nobel Prize-winning economist Gary S. Becker, who coined
the term “human capital,” says that “the basic resource in any company is the
people. The most successful companies and the most successful countries will
be those that manage human capital in the most effective and efficient manner.”
Vietnam is not out of this competition. Our country is a developing
country with young population structure, abundant human resources.
Vietnamese are smart, laborious and hard-studying which engage plentiful
young talent generation to State.
Notwithstanding, Vietnam are now extremely lack of talent. Although
illiteracy rates are very low, accounting for less than 3% but the rate of those
with qualifications, experience, skills are negligible or disqualified, not to
mention that Vietnam is also facing brain drain situation.
So wishing to give an overview and importance of human capital as well
as to recommend possible solutions to improve efficiency in the use of national
human capital, we decided to study deeply the theme: “Human capital in
Vietnam 2010”
Our presentation will be divided into 2 main parts: First we will give you
general knowledge about the term “human capital” and some of its must-be-
concerned issues. Then we will specify the term in Vietnam’s economy in the
developing period of 2010 to find out strengths and
weaknesses, as well as challenges and opportunities of Vietnam’s human capital.

I. In Theory
1. Definition
Human capital refers to the stock of competences, knowledge and
personality attributes embodied in the ability to perform labor so as to produce
economic value. It is the attributes gained by a worker through education and
experience. Many early economic theories refer to it simply as workforce, one of
three factors of production, and consider it to be a fungible resource -
homogeneous and easily interchangeable.
2. Classifying Human capital
 We can classify Human Capital components in three broad categories:
basic skills, professional competencies and complex functionalities.
- Basic skills: we have elementary instruction (reading, writing, etc…),
general principles of main subjects, introducing methodological
references.
- Professional competencies: concern with applied knowledge, job-
oriented development of technical skills or with assimilation of work-in-
groups techniques or practices
- Complex functionalities: elicit self-learning evolutionary processes,
effective knowledge management/ sharing and problem-solving/ goals-
achievement attitudes, include teamwork and relational abilities, conflicts
resolution and crises management tendencies as well as interpersonal,
intrapersonal and social skills.
Eg: being able to get self awareness, self esteem and self confidence in
changing working environment, being able to manage feelings and stress or to
feel empathy etc…
3. Necessity of human capital
So is human capital necessary for the development of every economy? Of
course, yes. Corporations are recognizing the importance of investing in their
employees now more than ever before. Employing individuals who have the
necessary expertise, judgment, and ability to function within their assigned roles
allows the business to operate at maximum efficiency. This in turn increases the
potential of earning a profit, and remaining successful for many years. A failure
to identify individuals with the necessary combination of skills, experience, and
education can undermine the efforts of even the well-organized company.
Such investments provide returns to the individuals and the company as
well as to the economy as a whole. Individuals benefit from higher earnings; the
companies have access to wider skill set without the need to hire additional
people, the whole economy gains higher productivity.
However, human capital investment doesn’t include only some direct
cost. There is also indirect cost as well as opportunity cost, which we should
consider. For example, investment in education requires annual tuition fee,
various administrative taxes, Expenditure for books, supplies, equipment,
Expenditure on accommodation (host), Transport costs (regular trips
home),Additional costs for food. Besides, the opportunity cost is wages students
could have earn if they hadn’t spent time at school.
4. Brain Drain phenomenon
 One visible phenomenon of human capital nowadays is “brain drain” - the
departure of educated or professional people from one country, economic sector,
or field for another, usually for better pay or living conditions.

There are 3 types of brain drain:

• Primary external brain drain occurs when trained and skilled human
resources leave their country to go and work in developed
countries.

• Secondary external brain drain occurs when trained and skilled

human resources leave the African Union - or any other less
developed region of the world - to work in other parts of the
developing world.

• Internal brain drain occurs when trained and skilled human

resources are not employed in the fields of their expertise in their
own country, or when such human resources move from the public
sector to the private sector or within a sector of a particular country.

There are many factors obtaining in countries which are affected by brain
drain that have contributed to the exodus of skilled talent. The following can be
considered as the main causes:

• Poor condition of service.

• Human rights abuses

• Misplacement of talent

• Disregard for local talent

• Scarcity of job

• Limited access to education

• Valued foreign relationships

Brain drain obviously has serious impacts on developing countries that

are extremely in need of skilled human resources. Therefore, in the situation of
facing brain drain, the economy will lack critical skills necessary for
development, use resources ineffectively and the innovation will be limited
obviously.
 To stem the exodus of the country’s skilled nationals, government
together with enterprises should create a conductive socio-economic
environment for citizens, respect and protect human rights, stamp out of
corruption and build-up a peaceful and stable environment for the best working
efficiency of labor. Low-interest loans should also be offered to both
professionals based in foreign countries to start and manage their own business
undertakings, and those in local to prevent them from migrating to foreign
countries for employment.

II. Vietnam’s case

OK, now we will move to the second part, the practical situation of
Vietnam’s human capital in 2010.
1. State of socioeconomic development and human capital in
Vietnam:
In a national context, Vietnam’s socioeconomic development depends
most on the advantages and disadvantages of our membership in the World
Trade Organization, together with our market economy’s trend of integrating in
global and regional economies. These two conditions create a broader business
environment, a large number of products and services as well as more job
opportunities which can help make good use of our domestic human capital.
However, we can only take advantage of these by establishing a modern and
appropriate business operating mechanism at any levels from state to local.
Besides, we must also understand thoroughly about the specific human capital
condition of Vietnam to find out possible developing trends.
We all know that Vietnam has abundant human resources with the
population of 86 million people, whose 67% belong to working age group, and
this number is increasing rapidly every year, guaranteeing potential working
generations.
Yet, there are 2 issues we must consider carefully about the human capital
of Vietnam.
First, about the labor indexes:
- There is now only 50% of trained labors can do a job which is right for
what they have learnt.
- 73% of labors is farmers, who already get used to doing the farm works,
but are not encouraged to apply new technologies actively in the
production process though have been exposed to them through mass
media.
- The number of workers today is just 5 million people, accounting for 6%
of nation population, and just 3.3% of them have standard level of study.
 - About the intelligentsia: 63% of graduates don’t have a job; others are not
able to work in the right branch or must be retrained 1-2 years more. The
number of educational institutions and people at higher degrees is
increasing annually but the practical skills of people remain unchanged.
Second, about the educating methods: Contents is still unspecialized for
clear career directions, figures of achievements are focused, but the examination
of quality hasn’t been concerned.
As a result, the low quality of human capital leads to a reduce in the
competitiveness of the economy in the regional and global competitions;
Vietnam will find it difficult to get out of ASEAN’s middle-income trap; and
eventually, Vietnamese labors will lose the chance of taking part in the
international labor market.
The only way to fix this problem is to connect the economic strategies
with the educational strategies in every developing period.

The need of Human Resource Development in State-Owned Enterprises in

Vietnam
According to the state of human capital in Vietnam, it is apparent that
Vietnam state owned enterprises should have their own human resource
development departments. So what are these departments’ missions?
We suppose that they have 3 main missions:
The first is to combine economic strategies with training strategies.
The second is to improve and make the training programs up to date, that
are, strengthen enterprises’ international corporation to learn new methods in
terms of training and techniques, then optionally applying these methods to the
Vietnam contemporary situation.
And the final is to support employees in studying and researching, as well
as in their daily lives. As such, the employees will have opportunities to perform
to their fullest potential.
To sum up, Vietnam state owned enterprises can become outstanding if
they have well qualified staffs and the well –run human resource development
departments can contribute to make this come true. Why I said “can contribute
to make this come true” instead of “can make this come true”? Because at
present brain drain is the toughest challenge for Vietnam enterprises and they
cannot succeed in their business if they cannot handle this problem, especially
the “brain drain” phenomenon we are going to discuss now.
3. Brain drain is toughest challenge for Vietnam
We must admit that brain drain is one of the biggest obstacles for an
economy generally and for any firms specifically, and Viet Nam is not an
exception.. Up to 63.8 percent of business operating in Viet Nam agreed that
how to keep the talents to prevent brain drain is the toughest challenge in 2010 –
according to Navigos Group, a leading recruitment solution provider, said in a
recent survey covering 168 firms. The number of employees quitting jobs for
higher-income jobs in private and foreign-invested enterprises is rising.
This can be explained by following reasons:
Low salaries and inefficient working conditions is the first motive that
triggers the movement to the countries with better living standards and facilities.
Skilled workers aim to get pleasing salaries in return for their labor but the
working conditions in Viet Nam don't fulfill their wishes. Therefore, those
workers prefer to move to other countries in order to have better living
conditions with higher salaries.
Secondly, in developed countries, researchers are provided with funds and
necessary equipment to carry out study, which can be another motive that
attracts those deprived of these opportunities. But the scientists in Viet Nam do
not possess enough laboratory facilities and researchers can not get sufficient
funds. Therefore, when developed countries such as the US, the EU… offer
these facilities, researchers and scientists naturally prefer to migrate to these
countries.
Lastly is unreasonable commend, award regulation and unfairness.
Having knowing these reasons, we suggest some solution for this
phenomenon
Firstly we should develop human resources and create more job and
career opportunities.
Secondly we have to respect and consolidation of human rights and
democracy, namely freedom of speech.
Finally, we should establish necessary and positive political, social and
economic conditions that would serve as incentives to curb the brain drain.

CONCLUSION

The socio-economic conditions are causing changes in human to become

a significant economic leverage than ever. The outstanding development of
scientific, technical, structural changes in population and scarcity of natural
resources has been made intellectual skills - human capital - becomes top
priority subjects in economic development policy of the country. However, to
accomplish the development objectives of national abundant human capital, the
State, enterprises, organizations or individuals should be positive, further efforts
in improving the level and skills, and contribute to the development of national
human capital in a state of this extreme scarcity.
With the theme "Vietnam's human capital", we hope to provide an
overview of human capital in Vietnam's market as well as giving the best
solution for the development and improvement level, education, labor skills,
making human capital plentifully on the road of industrialization and
modernization of the country.

We are approaching the end of our presentation. If you have any

questions, please do not feel hesitate to ask.
Thank you for listening!