Population as a Basis for Labor Demand and Economic Pressure

popularized in different periods to contribute to improving the efficiency of investment in education.

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Figure 31 shows that the number and ratio have tended to stop and decrease in recent years. This is consistent with the process of decreasing birth rates after 1996 of the 20th century.

Chart 31: Number of high school students and ratio by population

Source: Ministry of Labor, War Invalids and Social Affairs, Annual Labor and Employment Survey

If we compare the State's expenditure on education from 2000 to 2004, we can see that the investment rate for education and training always accounts for about 11%-12% of national income, equivalent to about 3-3.5% of the total annual investment of the State. Thus, according to the process of increasing national income, the increase rate of investment in education can be estimated to be equivalent to the increase rate of national income. While household investment in education has also increased continuously, the total number of students in these years has decreased (although not much). Thus, the average investment per student has increased.

The high school student force is a potential force when entering the working age with the ability to train high-quality workers. The number and rate of high school students increased quite rapidly in the period 1996-2004. Although at the end of this period, the number of high school students decreased due to the birth rate of the previous 15 years.

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However, currently, each year we have about 2.53 million high school students, of which about 800,000 students complete this level of education. It can be estimated that the rate of new workers entering the current social labor force is only about 53% who have completed high school. This is a significant difficulty in the process of modernizing the country's production. Chart 32 describes this situation.

Chart 32: Level and rate of increase in the number of high school students 1977-2004

Source: Ministry of Labor, War Invalids and Social Affairs, Annual labor and employment survey; Statistical yearbook.

3.4- Number of graduates from training programs

Statistics from the Ministry of Education and Training in recent years on the number of people graduating from various levels of training are as follows:

Level DT

School year
1999-2000	2000-2001	2001-2002	2002-2003	2003-2004	2004-2005
University	90791	117353	121804	113763	110110	134508
College	30902	45757	47133	50197	55562	61125
High School	51751	53925	49888	92047	115844	138839
Total	173444	217035	218825	256007	281516	334472

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Thus, if each year about 1 million more residents join the labor market, the trained rate will not exceed 34%, of which the number trained in vocational secondary school (an important vocational level) accounts for only

less than 14%. The rapid increase in the number of high school graduates in the early years of the 21st century is a remarkable sign. Chart 33 shows the relationship between the three levels of training providing human resources for the labor market in recent years.

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Chart 33: Number of people by training level 1999-2004

Source: Ministry of Labor, War Invalids and Social Affairs, Annual Labor and Employment Survey

Looking back over a longer period (1986-2004) on the number of university and vocational high school graduates (through chart 34), it can be seen that the general trend is still that university training dominates the training systems.

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Figure 34: Number of people by training level 1986-2004

Source: Ministry of Labor, War Invalids and Social Affairs, Annual labor and employment survey; Statistical yearbook.

Currently, there is no relatively complete research on the economic and social effectiveness of training systems in Vietnam. If there is any, it is only research on the position of trained workers in the labor market. The conclusions obtained from these studies (Labor and employment statistics every year)

(Ministry of Labor, Invalids and Social Affairs) shows that the advantage of workers with higher technical expertise is only shown in the management and state economic sectors.

3.5- Urban population

In the context of the population growth rate being successfully controlled, the expansion of industrial zones and the migration from rural to urban areas every day and every hour are concerns for State management agencies. The urban population has doubled after 16 years. The increase in urban population has many causes. One of them is urbanization according to the socio-economic development strategy. However, according to some studies on migration to large cities, there are other reasons such as differences in living conditions, lack of jobs and the desire to have higher levels of education and technical expertise.

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Figure 35: Urban and rural population ratio 1976-2000

Source: Vietnam Statistics 20th Century

In theory, the increase in the number of people and the urban population ratio indicates an improvement in the cultural living standards of the community. For developing countries, the downside of this process is the pressure on employment. While rural unemployment is only expressed through analysis and comparison, urban unemployment takes on a clear and visible form in the “job markets” as well as the jobs that different classes of people with different levels of education are using to earn a living.

Above, the thesis has analyzed the population fluctuations in Vietnam during historical periods, and also pointed out some causes of these fluctuations. In the next part of the chapter, the thesis will analyze the impact of population fluctuations on the socio-economic development process in Vietnam.

IV- IMPACT OF POPULATION CHANGES ON SOCIO-ECONOMIC PROCESSES

4.1- Population as a resource

Approaching the social economy from the side of material wealth creation usually begins with an aggregate production function.

Y= F(K,L,....)

With K being capital; L being labor, ... and other factors.

Capital is evaluated in terms of its industrial structure and technological level. Labor is evaluated in terms of its size and productivity. A relatively stable unemployment rate and a limited birth rate allow for the creation of a replacement labor force.

Estimated results from businesses in recent years show that labor is still an important factor in creating production value, while investment has not been effective, especially long-term investment.

The following model is estimated with data from 1636 enterprises12 in the region.

industrial production, the selected variables are: TSLD: Current assets and long-term investment; TSCĐ: Fixed assets and long-term investment; GO: Production value

Two common functional forms are chosen: Cobb-Douglas and linear. When estimating, the Cobb-Douglas functional form suffers from multicollinearity.

12 - Enterprise survey data 2001-2003. General Statistics Office.

linear (VIF coefficients greater than 30), acceptable linear function with no multicollinearity (See Appendix 3).

GO = 1.932TSLD + 0.125 TSCĐ + 40.535 Labor (Se) 0.038 0.0196 5.694

n=1636; R2 =0.802; F = 42.107 - Sig = 0.000 (9.2)

Although there are still many issues to be discussed in terms of the quality of our country's labor force, the role of labor as a resource is not yet easily replaceable. The above results are only from industrial enterprises. In other sectors such as agriculture, forestry, fishery, services, ... where investment in science and technology is slower, the role of labor can be much larger.

However, that does not mean that the amount of labor plays a leading role in creating social wealth. As analyzed in the above sections, our country is in a period when the amount of labor used depends mainly on the ability to expand production and the ability to attract domestic and foreign investment capital. The decisive nature of labor as a real resource cannot be achieved when the production sector lacks capital and science, technology and engineering are backward. The slowing population growth in current conditions is creating conditions for improving the quality of labor and the efficiency of labor production.

4.2- Population as a basis for meeting labor needs and economic pressures

In the case of too high labor supply, the problem is often only the professional structure and training level of the labor force, in the opposite case, the problem will be very difficult (also in other social aspects). In the short term, labor as a resource is almost only expressed through the labor demand function: L=L(K0,Y). This demand is often easily satisfied in terms of quantity but not in terms of quality structure. Thus, the burden

Overpopulation is not only expressed through supply exceeding demand, but also in the mismatch between the structure and technical expertise of the labor force.

According to the general rule, if the total wealth created remains unchanged, the increase in investment and modernization of production techniques will go hand in hand with a decrease in labor demand for each unit of wealth created. Labor demand for each unit of production value at equilibrium will be a decreasing function of the technical structure of production (K/L) and capital (K). In the opposite case, the result may be that investment is mainly aimed at expanding production or does not really promote the efficiency of capital. This will lead to a mutually increasing relationship between capital and labor.

The following are the results of the regression model tested with 1,634 industrial enterprises, with the variables: D_LD is the number of workers for a unit of production value; K is capital; K_L is the coefficient of capital equipment for labor (K/L):

D _ LD  0.322 + 0.0000023K- 0.188K/L

(t) (30.6) (2.55) (-4.13)

(10.2)

R2  0.98; F  448.18

This result shows that when the coefficient of capital equipment for labor increases by 1 unit, the demand for labor for a unit of production value decreases by an average of 0.188 units. On the other hand, the coefficient of the variable K in the estimated results is positive (although very small), reflecting the ongoing investment in production expansion in the observed industries.

Considering the entire economy, when technical progress has not exceeded a certain level, the total demand for labor is an increasing function of national income. This can partially meet the labor needs of the growing economically active population when the population of a country is not in a steady state.

Testing with the period 1989-2004 in Vietnam, from official data sources, the following results were obtained:

Population process:

P(t) = 61759e0.090124t

(11.2)

This estimate may be slightly lower than the actual figure due to the rapid decline in population growth rates in the observed years. However, it still signals a population growth process over time and will increase the social labor force.

Labor content used:

LD(t)  16317GDP(t)0.061079 e0.010587t

(12.2)

LD: Labor employed; GDP: national income, t: time with 1989=1.

According to the above results, to create an additional 1% of domestic income, the economy only needs to add (on average) 0.06% of labor.

A GDP growth rate of 7%/year to 8%/year, if there is no sudden impact of technology (reducing labor demand), then in the next 10 years this GDP growth rate will increase labor demand each year from 0.42 to 0.48%, other factors increase labor demand (on average) 1%/year. The image of labor demand can be seen in chart 36.

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Figure 36: Additional labor demand assuming 7% annual economic growth

Source: Calculation results from the model

While the working-age population is stabilizing (as shown in Figure 37), the unemployment burden may gradually decrease. According to population data from 1989 to 2004 and the working-age survival rate calculated from the 2004 population change survey, the number of new workers ready to be added annually in the coming period is shown in Figure 37.

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