ManpowerGroup Inc. (NYSE: MAN) signed a new three-year partnership with Vietnam to continue work developing the country’s local labor market. The partnership follows a first memorandum of understanding between ManpowerGroup and Vietnam in November 2008 when ManpowerGroup became the first 100 percent foreign-owned employment services company to receive an operating license in Vietnam.

Under the new partnership, ManpowerGroup and Vietnam agreed to redouble efforts to accelerate the efficiency of the Vietnamese labor market. Areas of cooperation will include the enhancement of frameworks for labor market regulation, further joint research on labor market trends and initiatives aimed at developing processes for sustainable labor migration.

The deal was signed with Vietnam 's Ministry of Labour, Invalids and Social Affairs.

“Vietnam is a country with enormous potential and possesses a workforce that is industrious and eager to improve,” said David Arkless, ManpowerGroup president of corporate and government affairs. “Over the next three years, ManpowerGroup will continue to leverage its unrivalled suite of solutions — including skills assessment and job training — to address skills shortages, help the country achieve its growth potential and make even greater strides in the future.”

Respondents to a joint ManpowerGroup/TNS survey rated the country’s workers in the bottom 10 percent regionally, and half of respondents rated the labor force fair or poor with one in three saying they were unable to find the skills they need, according to ManpowerGroup.

“Vietnam has an abundant labor force in the agricultural sector and production line but lacks well-trained laborers,” said Linh Nguyen, general manager, Manpower Vietnam. “The solution is on-the-job training. Companies must be willing to exchange short-term costs of training for long-term labor cost advantage.”

Herb Kochan, executive director of the American Chamber of Commerce in Ho Chi Minh City, said a large number of American multinational companies have moved their operations from China to Vietnam due to labor arbitrage and the country’s favorable business climate, according to ManpowerGroup. However, the country has larger skills gaps than the region’s largest economies such as China and India.

“The low-cost workforce of Vietnam still remains the most appealing factor to foreign investors,” said Darryl Green, ManpowerGroup president, Asia-Pacific and Middle East. “While this low-skill labor has helped fuel Vietnam’s growth, it also presents a major future economic challenge due to demand for more modern skills.”