Vietnam parliament approves radical government cost-cutting drive

Vietnam will cut one in five public sector jobs and slash billions of dollars from government budgets, after the country's rubber-stamp parliament on Tuesday gave the go-ahead to a radical streamlining drive.

The reforms are creating unease in a communist country where working for the state long meant a job for life.

Described as "a revolution" by senior officials, the drive will see the number of government ministries and agencies slashed from 30 to 22.

The National Assembly voted to pass the government's organizational structure, a statement on the parliament's website said.

The ministries of transport, planning and investment, communications and labor have been scrapped, and state media, the civil service, the police and the military will face cuts.

As part of the government restructuring, the National Assembly on Tuesday approved two new deputy prime ministers, taking the total to seven.

Almost two million people worked in the public sector as of 2022, according to the government, although the International Labor Organization puts the figure much higher.

One in five of these jobs will be eliminated over the next five years.

The government has said that 100,000 people will be made redundant or offered early retirement, but it has yet to offer clarity on how the much larger target will be reached.

Vietnam's top leader To Lam, who half a year ago became Communist Party general secretary following the death of his predecessor, has said that state agencies should not be "safe havens for weak officials".

"If we want to have a healthy body, sometimes we must take bitter medicine and endure pain to remove tumors," Lam said in December.

He has also said that the plan had received "large consensus from the people".

But several workers told AFP they were laid off with little notice and were concerned that decisions about which employees to keep were not based on ability.

Thanh, a pseudonym to protect his identity, told AFP his 12-year career as a TV producer was "aggressively" terminated last month.

The state-controlled news channel where he worked was shuttered, one of five broadcasters already closed, and Thanh was given two weeks' notice.

"It is painful to talk about," said Thanh, a father who has turned to driving a taxi.

Building on stellar economic growth of 7.1 percent in 2024, Vietnam —a global manufacturing hub heavily reliant on exports — is aiming for eight percent this year.

But anxiety is mounting over the country's potential vulnerability to tariffs under the new Trump administration.

A bloated bureaucracy is also seen as a brake on growth, as is a high-profile anti-corruption campaign that has slowed everyday transactions.

Authorities say savings from the cuts in spending could total $4.5 billion over the next five years, despite costs of more than $5 billion for retirement and severance packages.

Streamlining the bureaucracy has been a Communist Party policy for nearly a decade but Lam is pushing the scheme ahead rapidly.

Lam has also enthusiastically pursued an anti-graft campaign that has swept up dozens of business leaders and senior government figures, including two presidents and three deputy prime ministers since 2021.

Critics accuse him of targeting his rivals through the action, but the drive has proved popular with the public and analysts say Lam may be looking to bolster his legitimacy ahead of the next Communist Party congress in early 2026.

The turmoil, however, has threatened the country's reputation for stability and there are fears the bureaucratic reforms could also cause short-term chaos.

At a press conference last week, Pham Thu Hang, spokesperson for the foreign affairs ministry, said the drive "would not affect the investment and business environment in Vietnam."