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by Ray Riches*
Last month, I walked out of a job I’d held for over six years. It wasn’t my choice. I was told my contract was ending and artificial intelligence (AI) was replacing me. Research shows that Việt Nam isn’t protected from the onslaught of AI, but could it disrupt the economy that’s been so strong for many years?
Việt Nam’s decade strong economy
Việt Nam’s economy has been one of the global success stories over the past decade. With regular annual growth figures of 6 per cent or higher, only the COVID-19 pandemic and 2023 saw even mild slowdowns.
In fact, representing a staggering 0.45 per cent of the global economy, recent years have seen growth figures reach nearly 12 per cent. There’s no doubt Việt Nam is among the truly strong global economies.
While manufacturing plays a significant role, labour hire is another vital component. It’s the labour resource that’s attracted many global businesses to the country.
HMC, for example, hosts numerous multinational operations with major offices based across the region. Particularly in the IT sector, there’s long been a shortage due to high demand for talent in this industry.
Global commentators now predict the IT sector could lose 300 million jobs over the next five years. That will heavily impact Việt Nam’s economy, which has spent over a decade working with international companies to open operations in the country thanks to the low cost and strong skills of local IT workers.
Beyond IT, AI is the first technology capable of competing with the lower wages of skilled and semi-skilled Vietnamese workers. It’s essentially so inexpensive that even low-paid employees could be outpriced by automated AI systems.
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Relocating companies
Historically, many global companies have relocated back-office functions to countries like Việt Nam to reduce salary costs. As early as 2004, my former employer terminated 80 per cent of their back-office staff and shifted operations to Asia to increase profits.
This model of redeployment for profit maximisation—using the lowest-paid but skilled labour—has existed for over three decades. However, AI development is now displacing those same low-wage employees, much like local workers in Western countries were displaced years ago.
This significant shift will have repercussions across the commercial real estate sector, as global companies downsize or exit Việt Nam’s market. Factories will follow suit, replacing low-cost workers with basic AI systems and thereby reducing their real estate requirements.
In the community, the once-great promise of opportunity for newly trained university graduates may soon prove illusory. Currently, work is plentiful for most graduates, but a time may come when jobs become scarce.
Like an out-of-control train, we can see this change approaching. It is only the timing that remains uncertain. With this impending disruption, how can we minimise the damage?
Planning to prevent economic disasters
One global response has been to direct young people back toward basic societal skills. Jobs like builders, nurses, aged care workers, and electricians are in higher demand than ever in Western societies. Maybe Việt Nam will follow this trend as its economy and demographics shift.
And this shift won’t spare foreigners living and working here. The flooding of the English as a second language (ESL) market with fairytale-level promises, like replacing teachers at 10 per cent of the cost, has led some less-informed businesses to take the bait and terminate skilled educators in favour of AI systems.
There’s no question AI systems will improve certain tasks in various industries. And some sectors will see moderate to large job losses as their roles become obsolete. But greed and ignorance will also drive decisions that may not serve the future of businesses or society well.
We can only hope that Việt Nam’s GDP is less impacted than other nations, because so much has gone into building a strong foundation through hard work and good planning.
In my view, we can’t resist the rise of AI, but we can manage it the right way. We must avoid rash decisions that could wipe out entire industries without logical and careful planning. The smart path forward ensures businesses, workers, and communities all benefit from the growth of technology, not suffer because of it. VNS
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