Vietnam's footwear industry is growing, the minimum wage of workers in the industry is increasing every year, but labor productivity has increased slightly. Over the 10 years from 2007 to 2017, the minimum wage increase was between 7-12% a year, while GDP grew by only 6% a year and labor productivity increased only 2% a year. This makes labor-intensive enterprises such as leather and footwear businesses more difficult and has to find solutions such as reducing soft wages and using machines to replace workers.

However, the roots of difficulties of the business is not a matter of salary increase, but because the footwear industry is mainly export processing, depending on the source of raw materials imported from abroad, the profit is too low. This paradox of the footwear industry is a problem for managers to improve the competitiveness of the shoe companies to gain market share in the country.

Difficulties

In the first six months of 2017, footwear exports were estimated at US $ 7 billion, up 12% against 2016. However, the share of FDI enterprises in the footwear sector is 81.3% - much larger than that of the market share of Vietnamese enterprises (18.7%). Domestic enterprises have reflected the difficulties that they are facing, the problem of productivity increase and the application of new technological advances to production are still slow due to lack of capital. FDI enterprises are increasing in quantity and at the same time have capital and technology conditions, which can push higher wages and productivity. But for Vietnamese enterprises, most of them are small and medium enterprises. For them, yearly salary is also a big worry.

In addition, wages can be divided into areas 1, 2, 3 and 4 but the selling price of the common ground can not be sold by selling a pair of shoes for 1 million dong while selling the same pair of shoes for 500,000 dong. The footwear industry in Vietnam is mainly manual labor so the productivity and efficiency is not high, the attractiveness is not large, so the labor supply is increasingly difficult.

Processing costs are not rising while low labor productivity is a burden on the part of the major processing enterprises. In addition to wages, the management of workers is more difficult than in the past because the work is easier to earn, so the spirit of labor discipline is no longer respected.

FDI enterprises have focused on changing production processes and applying science and technology to production, especially automation in labor-intensive areas such as fissuring. As a result, the productivity of FDI enterprises increased significantly, about 30,000 USD/person/year. Meanwhile, labor productivity of Vietnamese enterprises is still relatively low, this figure are only 18,000-20,000 USD/person/year for the largest enterprises.

Solutions to improve labor productivity

In the industrial revolution 4.0, businesses need to change their vision, management approach and investment process. This investment requires a lot of capital but it is necessary because it helps to replace some of the labor, improve the quality and control the uniformity of the product.

In order to create high added value, the enterprises only need to change the direction, management level and infrastructure. For example, a number of employees (100-200) that are small but make the high qualityshoes and  brings huge value.

Bringing jobs to rural areas, where there is abundant labor force, is also one of the most active, sustainable and long-term strategies that domestic firms should aim for. This not only helps solve the problem of labor, reduces the burden on the urban area, but also helps to create jobs for nearly 60% of rural labor who are unemployed. The existing footwear manufacturing facilities in urban areas will become product research centers to develop science and technology. These fundamental changes will fundamentally improve the difficulties.