The Vietnamese economy has recorded strong growth for more than two decades, and, among Asian economies, only China has grown faster since 2000. But the alarm bells have been ringing for a few years now about a productivity gap between Vietnam and some of its regional neighbours, and these concerns are linked in part to issues of skills training and employability of graduates from the country’s universities and colleges. The International Labour Organization (ILO) reported in 2014 that , estimating that productivity in Singapore was nearly 15 times greater. The ILO analysis found that even when benchmarked against other middle-income ASEAN countries, such as Malaysia and Thailand, Vietnam trailed badly as well. The McKinsey Global Institute (MGI), meanwhile, has estimated that Vietnam now needs to boost labour productivity growth by more than 50% in order to keep its economy growing at the current fast clip. MGI points out that some of the important drivers of economic growth in recent years - including an expanding labour force - are starting to weaken and that continued growth will rely more on productivity gains going forward. Improving access to education, and the quality and relevance of programmes on offer, will be a big part of the country’s answer to this challenge. Vietnam has greatly expanded its higher education system over the past 15 years, and total tertiary enrolment tripled between 2000 and 2013. But there are significant quality issues in Vietnam’s universities and colleges, and, as a result, ongoing challenges in terms of employability of graduates. There are real concerns about youth unemployment in particular: 6.3% of those aged 15-to-24 are out of work, compared to a national unemployment rate of 2.3% – and the General Statistics Office indicates that one of every five unemployed people in Vietnam has a bachelor’s or master’s degree. These figures are even more striking when placed against the statistic that nearly two-thirds (62%) of Vietnamese employers say they have difficulties in filling job vacancies. This mismatch between employer requirements and graduate skills now appears to be contributing to an increase in demand for vocational training. A recent item in VietnamNet Bridge highlights dramatic reductions in the number of high school leavers planning to attend university. "In the past, university was the choice of the majority of students," says the report. "However, students seem to have become more practical. The fact that hundreds of thousands of university graduates are unemployed has opened their eyes. Many university graduates have to ‘put bachelor’s degree into a drawer’ and go back to vocational school because industrial zones and factories only need skilled workers, not bachelor degree graduates." Another recent report from echoes the point, noting that some university graduates are now returning to vocational studies in order to improve their prospects: "Now, a completely upside down trend has emerged as a large number of graduates, who were trained to work as white-collar staff, now have to hide their degrees and switch to cooking, tourism, mechanics, pharmacy or even factory work." The latest figures from districts around the country also reflect that high school students are choosing vocational studies in greater numbers. As many as 40% of high school leavers in central Nghệ An Province will sit the exams for a high school graduation certificate this term, as opposed to university admission exams. "[This] means these students will not choose higher education, but turn to apprentice training institutions after high school," says Vietnam News. The same is true in Hanoi where the number of students opting out of a university admissions path has increased by nearly 50% this year, and in Hoa Binh Province only 30% of this year’s high school leavers are expected to apply for university. This emerging pattern lines up with some larger policy goals of the Vietnamese government. Only 15% of working-age Vietnamese have completed formal vocational training and the government has set a target that 55% of workers will have skills training (with one-third completing advanced vocational training) by 2020. But to get there, Vietnam has had to undertake – and will need to extend – some substantive reforms in its vocational training system. A national strategy calls for a restructuring of technical and vocational training institutions and the system by which they are administered. It aims as well to boost quality controls, strengthen curricula, and expand international collaboration. In terms of international partners, the Asian Development Bank, and other international development agencies, have contributed to recent reform projects and capacity building initiatives. And there are a number of significant collaborations between Vietnamese ministries and institutions and those overseas, including with partners in Canada, Australia, and the UK. The challenges facing the Vietnamese system are considerable, but there are some large forces at work here too in terms of a government commitment to expand and improve vocational training, a growing range of international partnerships, and especially the pressing skills requirements of employers in a rapidly growing and evolving economy. The bottom line is that the Vietnamese economy needs skills: English skills, IT skills, and targeted training for a wide range of occupations and industries. The patterns we now seeing playing out in Vietnam indicate that students are now going to access skills training through a variety of new models and new collaborations and, increasingly, outside of a university campus.