I travel regularly between Europe and Vietnam, and a couple of differences stand out increasingly. First is the price difference – it seems as if the cost of everything has suddenly doubled in Europe. The lifestyle effect on the average European is that they cannot afford certain things such as casual dining out, which nobody would think twice about doing in Vietnam. When I recount examples of low Vietnamese prices to European colleagues, they can hardly believe it. They usually say they would like to holiday in Vietnam, but can’t spare the money at the moment.
The second large difference is the widening contrast in productivity. Although often criticized, labor productivity in Vietnam has been increasing steadily over the last couple of decades. True, it’s uneven, with the main productivity gains in the foreign-invested sector – government data shows that a Vietnamese person working for a foreign company in Vietnam is 3.7 times more productive than someone working for a local company. But even so, the Vietnamese work ethic, with its combination of East Asian discipline and South East Asian teamwork, plus a unique local cheeky creativity, is to be commended. In contrast, Europe, and the West in general, are facing productivity declines.
My main business is based in Switzerland, so working simultaneously with suppliers there and Vietnamese staff here brings the difference into daily detail. Here, we answer emails on the same day. In Europe, it can take a week. Technology challenges that we can fix in a day here seem impossible to fix there.
There are still some people performing at high standards in Europe, but the average has come down. When I worked in corporate HR in Europe, poor performance would have been an exception and dealt with by HR. Now it seems pervasive and accepted, presumably with HR departments unable to address it properly at such a scale. The remaining highly productive staff are often now overworked, picking up the slack left by their newly unproductive colleagues.
The causes of this are multiple and complex. However, Covid and economic hardship seem to be at the core. Europe had a difficult time in the early stages of Covid, leaving many people with long-term illnesses. This was exacerbated by mental illnesses and addictions brought on by lockdowns on populations that were not accustomed to hardship. Anecdotal conversations in Europe point towards an increase in depression, especially in young people, whilst everyone seems psychologically worn down by the cost of living crisis. Escapism through drugs that have been newly legalized in certain Western countries also appears to be a problem, with vape shops everywhere and the smell of marijuana literally in the air on high streets (pun intended).
In the above context, continued home working and labor shortages do not help European productivity either. The end effect is a productivity drop, which in a roundabout way is an opportunity for lively Vietnam. As a consequence, high-value work like R&D and AI will likely increasingly migrate here; a phenomenon we can already observe. Time will tell if the European challenge is temporary or structural. One can only hope the situation will improve.
