Quach Thi Khanh Ngoc^a

Nguyen Văn Minh^b

Nguyen Tien Thong^c,a

Nguyen Thi Ngan^d

Ari Kokko^c 

^a Faculty of Economics, Nha Trang University, Nha Trang, Vietnam

^b Faculty of Food Technology, Nha Trang Univeristy, Nha Trang, Vietnam

^c Department of International Economics, Government and Business, Copenhagen Business School

^d Department of International Relationship, Nha Trang Univesity, Nha Trang, Vietnam.

Corresponding author: ngocqtk@ntu.edu.vn

Abstract

This study examines the knowledge and skill gaps for different professional positions in Vietnam’s food processing industry as well as the expected demand for professional skills linked to Industry 4.0. Data were collected through an online survey with representatives from 50 enterprises. Our results indicate that there is a notable gap between the current supply and demand of skills and knowledge. The workforce in the food processing sector in Vietnam lacks knowledge and skills in fields like food legislation, the development of new value-added products, the effective application of quality management systems, and effective preventative measures for food safety violations. Therefore, in order to upgrade labour skills for Vietnam's food processing industry, both supply-side and demand-side solutions are required. From the supply side, universities should incorporate more technical skills and information about the sector's digitalisation in the food technology curriculum, so that the future workforce will have the necessary qualifications to help the industry increase production efficiency and keep up with technological progress and global competition. From the demand side, the private sector should be more actively involved in financing and providing training along with the economic growth.

Key words: labour skill development, food processing industry, Vietnam

Introduction

The  knowledge and skills of the labour force are critical factors behind economic development (Nelson and Winter 1982; Teixeira and Queirós 2016). They have an impact on productivity, innovation, and competitive advantages, and they help to shape long-term development at both the national and enterprise levels. These insights are reflected in national development agendas across the world, where labour skill development policies and initiatives currently hold prominent positions. Developing countries and emerging economies are longer able to compete based on cost advantages alone. Instead, knowledge-intensive development based on the capacity to produce novel ideas and new products is becoming increasingly important (Chen 2009; Javalgi et al. 2011; Thorn and Schleicher 2013). The demand for technological skills has also been amplified by the emergence of Industry 4.0, which is primarily based on smart networking of machines and technologies enabling process optimization and increased productivity ⁶. The integration of artificial intelligence (AI) and automation into everyday life will require a good match between the supply and demand of knowledge and skills (Acemoglu and Restrepo 2018; Remington and Yang 2020). Skill development therefore needs to be part of a comprehensive economic development strategy in all countries, irrespective of their position in global value chains. The systems for education and training must be adaptable to provide training programs that meet present and future knowledge and skill requirements.

Vietnam has managed to achieve high economic growth rates thanks to productivity gains from the shift of employment away from low-productive jobs in agriculture to more productive jobs in manufacturing and services ⁹. The manufacturing sector has contributed significantly to this process of structural change, accounting for more than 80% of total Vietnamese exports in recent years ¹⁰. To sustain its economic growth and development, in 2014 the Vietnamese government launched the Strategy on Viet Nam's Industrial Development Through 2025, With a Vision Towards 2035 (Decision 879/QD-TTg, 2014). This strategy emphasizes the importance of accelerating growth and development in three important sectors - manufacturing and processing, telecommunications and electronics, and new and renewable energy. The strategy also highlights the importance of providing Vietnam's workforce with the necessary skills to advance economic modernization and sustain economic growth over the course of the next ten years and beyond.

In the manufacturing and processing sector, food processing is one of the more competitive industries. The food processing industry accounts for around 1% of the total number of enterprises in Vietnam, but its production value corresponds to 19% of the aggregate output of the entire processing and manufacturing sector. The Government's goal for the development of this industry is to focus on high-value products with strong backward and forward value chain linkages ¹⁰. This industry is also one of Vietnam's most labour-intensive ones ¹¹, providing employment and incomes to about 1.5 million workers, both in cities and in rural areas, where it makes up an integral part of the country’s rural development policy ¹⁰. Despite having reached an average annual growth rate of 7% over the past decade, the food processing industry still faces numerous obstacles, including low value-added, low-skilled labour, and weak internal structures.

The aim of this study is to address the gaps in labour knowledge and skills in the Vietnamese food processing sector, identify some of its future skill requirements, and discuss the possibilities to strengthen education and training programs to close these skill gaps. A skill gap can be seen as a systematic shortage of skills needed to meet the continuously changing business objectives ¹². We investigate the difference between existing and expected (or required) labour knowledge and skill levels in food processing enterprises. In addition, we also identify some of the main challenges on both the supply and demand sides. To this end, we aim to identify the current and future skill set required by various professional profiles in the food processing industry and examine how existing educational programs match these needs.

There is a scarcity of research on labour skill gaps in the Vietnamese food processing industry. Previous research has primarily focused on labour productivity ¹³ and the spillover effects of exports on employment generation (Kien 2015). Our research makes two contributions to this body of literature. First, we examine the knowledge and skills required for the most important professional positions in the food processing sector and conduct a skill gap analysis that has, to the best of our knowledge, not previously been made for Vietnamese food processing. Second, we examine labour skills not only from the demand side, but also from the supply side. This comprehensive analysis of the current labour skill supply and demand mismatch in the food processing industry will provide a valuable foundation for practical and effective skill development policies.

The article is organized as follows: Section 2 describes the data and research methodology, Section 3 summarizes the results of the analysis, and Section 4 provides a discussion and conclusions.

Methodology

Measurement

            The skill gaps are defined as labour skill levels that are insufficient to meet all the requirements of their current job position ¹⁵. It may be critical to make the distinction between skill gaps that originate within firms and those that result from external skill shortages. However, Weaver and Osterman (2017) suggested that the reasons for skill gaps go beyond a simple lack of skills in the external labor market. As such, skill gaps may be rooted from consequences of human resource management practices, the presence of institutions at the firm level or technical progress (Haskel and Martin 2001; McGuinness and Ortiz 2016).

The aim of this study is to understand the knowledge and skill gaps for professional employees in the food processing industry. We define professional workers as those who have completed at least a two or three-year higher education program in a college or university. We focus on four high-skill positions; i) Food Production Operators; ii) Food Safety Specialists; iii) Food Production Engineers; and iv) Food Analysts. Our approach for skill gap analysis is based on the research of Antonucci and d’Ovidio (2012) and Rosaline (2013) which assess the difference between the level of existing knowledge and skills and the owners’ and top managers’ perceptions of what would be the required skills for these positions. Even with this approach, the assessment of employers may neglect the consequences of internal process and management on skill gaps, their inputs, more or less, may inform the workforce about a lack of certain labour skills and provide a perspective on their firm’s competitive position in terms of human resource.

Knowledge has a long life cycle and is centered on the theoretical foundations of the specific discipline, while skills change to meet the market demand and economic development ¹⁸. The specification of the types of knowledge and skills for each professional position are based on Akyazi et al. (2020), who defined the necessary competencies of food industry employees to meet Industry 4.0 and future requirements. These specifications of knowledge and skills were then adjusted and operationalized through a focus group discussion with five representatives from enterprises and four scientists, who identified the four professional positions that contribute most significantly to the development of the industry’s enterprises. Finally, the definitions of workforce knowledge and skills were adapted to the current (and expected future) setting of Vietnam's food industry.

Data and analysis

Data were collected through an online survey. A pilot survey was carried out with seven enterprises to ensure the clarity and feasibility of the questionnaire. The main survey was conducted by sending the questionnaire to the director, the head of the human resource department, or the head of the administration department of a total of 50 enterprises from various parts of the food processing industry, including seafood, fruits and vegetables, rice, and coffee. We received useful responses from all 50 enterprises. The respondents were asked to evaluate existing and required labour knowledge and skills/competences on a five-point Likert scale of 1: Poor, 2: Satisfactory, 3: Average, 4: Good and 5: Excellent. STATA 14 was used to analyse the data, with output in the form of descriptive as well as inferential statistics. We use the means and standard deviations of variables for descriptive analysis, while paired t-tests are used for inferential statistics.

Results

Overview of Vietnam food processing industry

Food processing employs about 10% of Vietnam’s manufacturing workforce, with an average annual growth rate of 7% in the sector’s production index between 2016 and 2020 ¹⁹. The industry is expanding rapidly and gradually supplying a wider range of products. It dominates the domestic market and generates increasing export revenue ¹⁰. Food currently accounts for the dominant share of Vietnamese consumers' monthly spending ¹⁹.   

            The food processing industry was incorporated into the global economy at an early stage of Vietnam’s market oriented economic reforms that commenced in the late 1980s, and the pace of internationalization accelerated after Vietnam joined the WTO in 2007. One of the top exporters of agricultural and forestry goods globally, Vietnam's food processing industry has also been ranked near the top in terms of output growth ¹⁰. However, there are several bottlenecks that the industry must overcome to sustain its development and growth. Certain agricultural products still have relatively high processing costs compared to other countries in the region and a significant share of exports have low value-added because of weak investments in deep processing and product development. Furthermore, in the context of integration and trade liberalization, the food processing industry is facing increasing demands for the certification of standards that govern the quality, branding, and  phytosanitary requirements of products, as well as various new requirements related to compliance and reporting in areas related environment, social conditions, and corporate governance (ESG) (Trifkovic 2016; Rezai et al. 2019; Xuan, Sandorf, and Ngoc 2021). Continuous improvements of the capabilities and skills of the workforce will therefore be necessary for a long time.

Sample summary

A summary of the characteristics of the surveyed enterprises is presented in Table 1. The average firm had been in operation for 23 years at the time of the survey, and the average number of employees per enterprise was 1,044. Forty-three of the fifty enterprises in the sample were domestic, while the remaining seven were foreign-invested enterprises. The majority of enterprises were joint-stock companies (46 %) or limited liability companies (46 %). More than half of the enterprises (52 %) used eco-labels in their marketing. Eco-labels identify environmentally friendly products, and signal that the enterprise invests in the implementation of environmentally responsible practices in production and consumption (Rihn, Wei, and Khachatryan 2019; Bhaskaran et al. 2006).

 Table 1 here

 Knowledge and skill gaps

In this study, we assessed the knowledge and skills gap for each of the four professional positions selected for analysis. Skills and knowledge were defined in accordance with the requirements and goals of the food processing sector, which include increasing value-added and promoting sector integration into the global supply chain. The knowledge and skill gaps were measured by the mean difference between “existing” and “expected” knowledge and skills, as reported by enterprise owners and top managers. Paired t-tests were applied to test whether this difference was significant. Table 2 – 5 show the gap between existing knowledge and skills and what was expected by owners and top managers for Food Production Operators, Food Safety Specialists, Food Production Engineers and Food Analysts.

A production operator in a food factory has overall responsibility for the entire processing chain by setting up work stations and handling equipment to prepare ingredients, finished products, and packaging. This job position is also responsible for ensuring that operations adhere to relevant food production requirements, food safety parameters, and other standard operating procedures. A fundamental background in food production processes is the most important knowledge requirement for food production operators. The basic knowledge of food production processes is usually provided in three to four-year bachelor level programs, while advanced knowledge requires two-year master programs. The survey revealed significant gaps between existing and expected knowledge in areas such as food safety principles, food production processes and maintenance and management of manufactory equipment (Fig .1).

Ability to apply quality management systems such as HACCO, GMP and ISO was identified by owners and top managers as the most important skill for food production operators. Overall, the existing level of skills among production operators was considered to be significantly lower than the expected level in all four skill categories included in the survey. However, the gaps were larger for skills related to quality management than for the other three skill categories assessed in the survey (Fig 2). 

Table 2 here 

Figure 1 here 

Figure 2 here 

Food safety specialist have a wide range of responsibilities, from developing policies and procedures for food handling, sanitation, and employee health measures to compliance with state and federal regulations. Food safety specialists also have tasks related to the training of food handlers, interactions with other departments to promote food safety awareness, and education of staff about processing procedures to meet quality standards and potential risks in the production process. The position requires knowledge in food legislation, food preservation and processing technology, as well as skills ranging from implementing food safety programs to training employees. Understanding food regulations and law is the most important knowledge area for food safety specialist according to enterprise owners and top managers. However, this knowledge was also evaluated as the weakest among the three knowledge areas required by food safety specialist (Table 3, Fig. 3). 

Table 3 here 

Developing and controlling food safety programs and regulations and maintaining personal hygiene standards were evaluated as the strongest existing skills among the food safety specialists. Acting on food safety violations was perceived as the most critical skill by enterprise owners and managers, and it is of concern that the gap between existing and expected skills was larger in this category than in the other four skills considered important for food safety specialist (Table 3; Fig. 4). 

Figure 3 here 

Figure 4 here

Production engineers are responsible for supervising and improving production at plants and factories. Food production engineers are expected to have multidisciplinary knowledge in engineering, with equal weights for electrical, mechanical, and refrigeration technology (Table 4). However, the perceived gap between the existing and expected levels of knowledge were large in all three fields of engineering, suggesting that both the bachelor and higher education programs in the field need strengthening (Fig. 5). The daily work of food production engineers requires a variety of skills in operating, maintaining, repairing, and managing the machines and equipment used in the production process (Table 4). The most critical skills expected from engineers were related to operating equipment and managing all processing activities. Yet, the gaps between existing and expected skills were significant for all four types of skills covered by the questionnaires (Fig. 6). An interesting observation was that both the levels of existing and expected knowledge and skills were lower for food production engineers than for the other job positions examined in the survey.

Table 4 here 

Figure 5 here 

Figure 6 here 

The position as food analyst requires a diverse and interdisciplinary knowledge base in areas related to food safety and laboratory science (Table 5). The daily tasks of a food analyst require skills ranging from collecting samples to operating and calibrating laboratory equipment and analyzing and evaluating the quality characteristics of food ingredients and products. The knowledge and skills for food analysts were also relatively large, suggesting a need to strengthen higher education programs in fields such as food chemistry and production (Fig. 7 & 8).

Figure 7 here 

Figure 8 here 

Required future labour skills and Industry 4.0

The future development of the food processing sector will benefit greatly from Industry 4.0 (Luque et al. 2017; Akyazi et al. 2020). Our survey included questions about the expectations of enterprise owners and top managers regarding some of the cross-disciplinary and technological skills that are likely to become more important as a result of Industry 4.0. The objective was to identify the specific skills and capabilities that will be needed for the adoption of new technologies and more complex tasks. Table 6 presents the food enterprises’ evaluation of nine skill categories identified by Akyazi et al. (2020) and Adepoju and Aigbavboa (2021) as necessary requirements to benefit fully from the possibilities created by Industry 4.0 in the food processing sector. The assessment of the importance of the skills was based on a five-point Likert scale with measurement values of 1 = Very Low, 2 = Low, 3 = Moderate, 4 = High and 5 = Very High. The future labour skills were then ranked according to their mean scores. (It should be noted that all nine skill categories were rated as highly important.)

Competence in using digital communication tools was ranked by the enterprise respondents as the most important future skill. Digital technologies promote productivity and innovation by lowering transaction costs, increasing efficiency by improving the value of other production factors, and encouraging greater economic inclusion ²⁶. The food processing industry is not likely to differ significantly from other Vietnamese industries regarding the importance of digitalization. 

Food traceability was ranked as the second most important future skill. The needs of the consumer will become increasingly important, and handling food-related incidents will call for quicker responses. Effective traceability prevents the production and distribution of unsafe or underperforming goods. Food traceability systems are therefore becoming an essential component of logistics management, to the benefit of individual enterprises as well as society at large ²⁷. New product research and development and knowledge on new legislation on food safety were also considered as important future skills for the labour force. 

Table 6 here 

Challenges related to the supply and demand for labour skills

Achieving a better match between skill supply and skill demand has been regarded as a leading policy issue around the world (Albrecht and Vroman 2002;  Liu, Salvanes, and Sørensen 2016). Within the framework of the current project, we conducted a workshop with six representatives from food processing enterprises and four participants from the universities offering food technology programs to better understand the match between training programs and enterprise needs. Some of the questions raised during the workshop were: 1) Has the supply of workers with adequate skill levels kept up with the companies’ demand over the past few years? 2) Where are the largest mismatches between supply and demand found? 3) What unique labour supply challenges do universities face?

Table 7 summarizes the supply and demand challenges related to education and training activities. The enterprise representatives suggested that university graduates often did not meet the job requirements immediately. The area where graduates reportedly had their main weakness was the ability to implement and solve practical problems, because universities primarily equipped students with theoretical knowledge rather than practical skills. Enterprises were therefore obliged to train their newly hired employees. Furthermore, the labour turnover rate in the industry was high, which reduces the incentives to invest in costly training activities. Small enterprises with limited supervisory capacity and other resource constraints were rarely able to implement systematic in-house training programs. Because a significant share of the industry's output is exported, understanding consumer tastes and preferences in order to create suitable products was seen as an area where the demand for skills and knowledge was likely to grow. Similarly, it was expected that Industry 4.0 and the associated digital transformation would require new capabilities.

On the supply side, the main challenge for universities in training human resources was reported to be that connections with the business sector were generally weak, so there were few opportunities for students to participate in internship programs. Facilities for practically oriented training activities were lacking and outdated, making it difficult for students to perfect up-to-date skills in line with labour market standards. Some universities were slow in keeping up with developments and technological changes in the food industry, resulting in training programs not being linked to the industry's production and business practices. Furthermore, tuition fees for non-autonomous universities were capped by the government's regulatory framework, at the same time as government spending on universities was diminishing. This was considered to be a challenge for the education system at large, where many institutions were forced to reduce investment costs at the expense of training quality. 

Discussion and Conclusions

Industry 4.0 ushers in a future in which networked operations, smart factories, and intelligent machines work together to promote industrial growth and innovation business models with significant adjustments in production, logistics, and customer service (Nayyar and Kumar 2020). The food processing industry in Vietnam has been growing significantly in recent years. However, in comparison to the world, the adoption of new technology and level of mechanization in this industry are rather slow and just reaching the average world level (UNIDO 2019). The majority of products are only being preliminary processed, using outdated technologies (Thoi 2019). On top of that, approximately 75% of the workforce in small and medium-sized enterprises (SMEs) lack technical or professional training, which makes it difficult  to apply advanced technologies linked to Industry 4.0 ¹⁰. This creates an urgent need for skill development and upskilling in this sector.

To ensure that labour skills in the Vietnamese food processing industry are continuously updated, it is necessary to monitor the current skill needs and the supply of skills, at the same time as it is important to anticipate future skill requirements and identify possible skill gaps. Given that skill gaps are a major driving force behind training investment decisions made by both employers and employees, the paucity of relevant research in the Vietnamese food processing sector is both surprising and worrying. This article reports findings regarding skill gaps and future skill requirements in the Vietnamese food processing sector in the context of Industry 4.0. We also address the imbalance between skill supply and demand by examining training programs and enterprise skill requirements.

According to our discussions with food processing enterprises, many of them have undergone product process transformations and digitalization applications, as well as internal and external workforce training programs. Their labour force, on the other hand, have struggled to keep up with these transformations. Our findings indicate that the workforce in Vietnam’s food processing sector has insufficient knowledge and skills in fields like food legislation, the development of new value-added products, the effective application of quality management systems, and effective preventative measures for food safety violations. Furthermore, with the advent of Industry 4.0, enterprises recognize the need to develop a variety of new skills to adapt to new technologies and new forms of competition. They consider skills in using digital communication tools, data management and analysis, critical thinking, and decision-making to be essential for preparing their workforce for the future.

To upgrade the labour skills in Vietnam's food processing industry will require both supply-side and demand-side solutions. Until recently, efforts have mainly focused on expanding and reforming the supply of skills through changes in the higher education sector. The objective has been to alleviate the shortage of skilled professional workers by developing specialized vocational training programs for the workforce. However, the training programs at the universities need to be upgraded to meet the changing objectives and challenges of the food processing Industry, which currently center on higher-value-added production and the integration of the Vietnamese food sector into the global supply chain. Universities should incorporate more technical skills and information about the sector's digitalization into the food technology curriculum so that new employees with the necessary qualifications can help the industry increase production efficiency and keep up with technological progress and global competition. Although not completely ignored, policymakers have paid less attention to the demand side. However, focusing on the supply of skills may be a necessary but insufficient strategy to maximize the returns from the significant investments that governments, businesses, and individuals have made in higher education. The private sector should be more actively involved in financing education, providing training to their employees, collaborating with educational institutions in curriculum development, and offering relevant internships to students, who will eventually be part of their future workforce. Due to a considerable skill gap among employees, enterprises will also face a challenge in finding ways to upgrade low-skilled workers while the economy is growing.

Public-private partnerships must be a part of the education and training systems, even though governments are likely to continue playing a crucial role in establishing policies for skill development. Industry and other external stakeholders should be encouraged to collaborate with the education sector in raising the standard of knowledge and skills and improving the relevance and connections between training programs and the needs of the labour market (Thorn and Schleicher 2013). 

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Declarations

Availability of data and materials

The datasets used in this work are available from the corresponding author.

Competing interests

The authors declare that they have no competing interests.

Funding

The study was funded by a grant from the Danish International Development Agency (DANIDA) for the project "Innovating Vietnam's TVET System for Sustainable Growth" (VIETSKILL).

Authors' contributions

All authors read and approved the final manuscript.

Acknowledgements

Not applicable.