2010年-世界发展银行全球_How_Deep_Was_the_Impact_of_the_Economic_Crisis_in_Vietnam____A_Focus_on_the_Informal_Sector_in_Hanoi_and_Ho_Chi_Minh_City_10页_638kb

Summary of the Impact of the Economic Crisis on the Informal Sector in Vietnam

Core Content

This policy brief examines the impact of the global economic crisis on the informal sector in Hanoi and Ho Chi Minh City (HCMC), using data from the Household Business & Informal Sector (HB&IS) surveys conducted in 2007 and 2009. It highlights the role of the informal sector as a major employer and its response to the crisis, as well as the challenges it faces in terms of income, employment conditions, and integration into the formal economy.

Main Points

• Vietnam's Economic Performance During the Crisis
  Vietnam did not experience recession in 2009 but faced significant macroeconomic challenges, including a slowdown in GDP growth and a sharp rise in inflation. The informal sector, which absorbs a large portion of the labor force, was heavily impacted.

• Employment Growth in the Informal Sector
  Despite the economic crisis, the informal sector saw an increase in employment and the number of informal household businesses (IHBs).

  • In Hanoi, the number of IHBs increased by 23% between 2007 and 2009.
  • In HCMC, the growth was 29%.
  • The informal sector accounted for 32% of employment in Hanoi and 34% in HCMC in 2009, making it the largest employer in both cities.

• Informalization Process
  A significant number of formal household businesses (FHBs) transitioned to the informal sector, while fewer IHBs formalized.

  • 31% of FHBs in Hanoi and 15% in HCMC became informal.
  • Only 10% of IHBs in each city became formal.
  • The informalization rate was highest in the services sector, especially in Hanoi (47.3%).

• Impact on Income and Working Conditions

  • The informal sector's income levels remained low, with the average income in Hanoi being 3.7 million VND/month and in HCMC 2.7 million VND/month in 2009.
  • In Hanoi, 22% of IHBs reported an increase in income, while 23% reported a decrease.
  • In HCMC, 45.6% of IHBs reported a decrease in income, indicating a more severe impact.
  • The informal sector experienced a high mortality rate (15–21% in Hanoi, 21–31% in HCMC), suggesting significant instability.
  • Working conditions in the informal sector were precarious, with limited access to social security, profit sharing, and formal premises.

• Regional Differences

  • HCMC was more severely affected by the crisis than Hanoi, likely due to its greater integration into global markets and its reliance on export-oriented activities.
  • The informal sector in Hanoi showed more resilience, possibly due to its smaller exposure to external shocks and a more diversified economic structure.

Key Findings

• The informal sector expanded during the crisis, absorbing labor that the formal and agricultural sectors could not employ.
• Income growth was uneven, with Hanoi showing a positive trend while HCMC experienced a decline.
• Working conditions deteriorated, particularly in HCMC, with more households having to reduce expenditures on food, health, and education.
• Informalization was widespread, especially in the services sector, and was driven by economic instability and the need for flexibility.
• Access to credit and market opportunities were critical needs for IHBs, with HCMC reporting the highest demand for both.
• Training programs and social protection schemes are needed to improve the productivity and security of informal sector workers.

Policy Implications

• Formalization incentives should be promoted to improve the economic performance and reduce vulnerability of IHBs.
• Micro-finance institutions need to be established to provide easier access to credit.
• Market integration policies should be developed to help IHBs access larger orders and improve their economic stability.
• Training programs tailored to the informal sector should be introduced to enhance skill returns.
• Social protection schemes should be expanded to address the high precariousness of informal sector employment.
• Clear regulatory frameworks are necessary to reduce the grey zone between formal and informal businesses and improve transparency.

Limitations and Considerations

• Data limitations made it challenging to accurately assess the crisis impact, especially due to the change in Hanoi's administrative boundaries in 2008.
• Qualitative data suggested a more negative picture of the crisis than quantitative data, possibly due to underreporting or misinterpretation.
• Inflation may have distorted income measurements, as official indices did not fully reflect the impact on poor households.

Conclusion

The economic crisis had a mixed impact on the informal sector in Vietnam, with HCMC being more affected than Hanoi. Despite its role in absorbing labor, the informal sector faced significant challenges in terms of income stability, working conditions, and access to formal opportunities. The findings underscore the need for targeted policies to support this sector, particularly in improving access to credit, enhancing market integration, and strengthening social protection mechanisms.