Availability and Skill of Workforce

There is no shortage of workers in Vanuatu.  Some estimates have the unemployment rate of job seekers at 40%.  With no welfare or unemployment benefits available these unemployed people have little means to generate an income.  This dire situation is heavily mitigated by the fact that everyone (except those living in Port Vila) can find a place to live and grow their own food so there is no homeless or hunger problem to speak of.

The issues that will impact new businesses are the skill of the workforce and the difficulties of the labor law.  Only 35% of the population of Vanuatu would qualify as literate and very few have any advanced skills like would be readily available in a developed country.  Ni-Vanuatu people are very intelligent and are quick learners so training is a good investment.  It is made more complex when the employee has poor verbal skills and even less developed written skills.

Most training is done through apprentice programs but this is not easy for the start-up company.  Employee acquisition and retention is made far more complicated by Vanuatu's outdated labor laws. 

Vanuatu labor law has very strict conditions for severance of an employee that makes it highly disadvantageous to keep an employee on the payroll for an extended period.   Employers are required at termination to pay an employee severance of 1/2 month of pay for each year or portion of a year that the employee has worked for the employer.  The far more oppressive portion of this law is that an employer is required to give 3 months notice to an employee that has worked for more than 3 years. 

This law creates a strong incentive for employers to retain employees less than 3 years.  This law is vigorously enforced and an employer can only dismiss an employee after 3 years without paying the severance if they can prove in court that the employee was guilty of criminal activity or gross misconduct.  Most employers know the difficulty of proving their case and just pay the severance to avoid the legal trouble.  Employees also understand the system and some will intentionally cause problems or lower the level of their work after they get 3 years of service behind them. 

This law also makes it difficult to attract employees away from an employer.  If a company actively recruits an employee away from another company they must assume the severance obligation and the employee must also give the prior employer 3 months notice if they have been employed more than 3 years.

Given the large pool of unemployed, many employers are now turning over all but their best and most highly trained staff before the 3 year barrier is reached.  This means that there are many skilled people in the ranks of unemployed.