Growth of new middle class accompanied by concerns.
Vietnam’s lower middle class is increasing and the proportion of poor and near-poor in the population is falling, according to the Vietnam Human Development Report 2015 on inclusive growth, released on February 5 in Hanoi by the United Nations Development Program (UNDP) and the Vietnam Academy of Social Sciences (VASS).
Those in the middle are far from secure, however, and those still in poverty are harder to reach, particularly within remote ethnic minority communities. “Mostly still employed in the informal sector, the poor and the ‘new middle’ face constraints on productivity that curtail further advances in human development and render them vulnerable to sudden shocks and reverses,” the report noted.
Dr. Pratibha Mehta, UN Resident Coordinator and UNDP Resident Representative, estimated that the lower middle class account for about 50 per cent of Vietnam’s population who are not poor but don’t have the means to guard against any shock from the economy. “Population development will grow with economic development but we have to make sure that no one will be left behind,” she emphasized.
Moreover, although growth in Vietnam has been inclusive, with widely distributed benefits and shared opportunities for the whole period from 2004 to 2012, it was more inclusive in the first four years of this period. After 2008 the pattern was more equal but growth was slower. “The full period shows that all groups saw their incomes rise but middle income groups benefited the most, and this underpins the emergence of a Vietnamese middle class,” the report stated.
To make the most of its current middle-income stage of development and to avoid being perpetually trapped there, Vietnam will need to make the most productive use of its rich human resources. “At the middle-income stage the importance of skills grows rapidly, because it is no longer enough just to rely on low-skilled jobs that anyone can do,” according to the report.
Without widely shared improvements in human capacities, allowing all people to acquire new and more advanced skills, there is a risk of serious inequality developing, as those without skills are likely to be left behind as the economy advances. “In tandem, the remaining pockets of absolute poverty (largely in remote areas and ethnic minority communities) need to be tackled urgently so that these do not become entrenched,” the report noted.
“Vietnam’s renewed development success rests on it building an inclusive and equitable economy, and the route to this lies in full employment based on decent jobs and opportunity and security for all.”
Dr. Pratibha Mehta, UN Resident Coordinator and UNDP Resident Representative
“These are important recommendations and put forward at the right time, when Vietnam is developing its Socio-economic Development Plan for the 2016- 2020 Period and preparing for the implementation of the Agenda 2030 for Sustainable Development, of which inclusive growth and poverty eradication are at the center.”
Dr. Nguyen Xuan Thang, President of the Vietnam Academy of Social and Sciences