The economy and labor market performance in the first quarter of 2022: mixed signals
There are indications that the economy was improving in the first quarter of 2022
The number of cases increased rapidly in most provinces and cities in quarter one, owing to the faster spread of the BA.2 variant of the Omicron strain, but the number of severe cases decreased due to the country's high rate of vaccine coverage. According to the General Statistical Office (GSO), GDP grew by 5.03% in the first quarter of 2022 compared to the same period last year, which is higher than the growth rates of 4.72% in the first quarter of 2021 and 3.66% in the first quarter of 2020, but still lower than the growth rate of 6.85% in the first quarter of 2019.
However, the labor market continued to deteriorate, with both working hours and real income falling year on year in the first quarter of 2022
Overall, the mean and median number of working hours in the first quarter of 2022 decreased by 3.43 percent and 10.42 percent, respectively, when compared to the first quarter of 2021. However, the drops in the textile and garment and hospitality sectors were significantly higher, at 8.12 and 9.34 percent (mean values), and 11 and 12.5 percent, respectively (median values).
The median real income of all workers fell slightly, from approximately VND 5.3 million in the first quarter of 2021 to about VND 5.2 million in the first quarter of 2022 (Figure 2), or declined by 1.04 percent year on year. The drop was however smaller than in quarter 1 of 2021, when the real income of workers declined by 5.71 percent.
While real income in the textile and garment industries fell, it increased in the hospitality industry
Workers in the hospitality sector saw a 2.24 percent increase in wages from VND 4.6 million in Quarter 1 of 2021 to VND 4.7 million in Quarter 1 of 2021, despite an overall real wage decline. This could be explained by the government's relaxation of mobility restrictions since October 2021, when it switched from a Zero COVID strategy to flexible adaptation. Meanwhile, the median real income of textile and garment workers fell by 1.2 percent, from VND 5.8 million in the first quarter of 2021 to VND 5.6 million in the first quarter of 2022. This was most likely due to relatively frequent disruptions in the supply of parts and components from China, which continues to employ a Zero COVID strategy.