This paper presents the effects of industrialization on economic and employment structure during the economic transition in Vietnam. Although Vietnam has made a significant progress in changing economic structure in which the share of agricultural contribution in GDP has dramatically decreased over the last two decades, the employment structure changed slowly. Consequently, majority of labour force is still in the agricultural sector. The economic reform has failed to shift redundant workers away from agricultural sector since most of the country’s investment has been allocated to capital-intensive industries. Therefore, policy adjustments are needed to absorb more redundant workers from agricultural sector and improve living standards for rural households.