Labour market segmentation is usually defined as the division of the labour markets into separate submarkets or segments, distinguished by different characteristics and behavioural rules (incomes,contracts, etc.). The economic debate on the segmentation issue has been focusing in developedcountries, and especially in Europe, on contractual segmentation and dualism. However, in developingcountries such as Vietnam which is the focus of this study, wage work is marginal and the approach tolabour market segmentation is necessarily slightly different. Indeed, most workers are engaged in theinformal economy and many of them are self-employed in their own household business. Starting with an analysis of the main characteristics of the national labour market, this paper presents a survey of the literature on informality and labour market segmentation in Vietnam (section 2). Section 3 describes the institutional background related to firm registration and social protection in Vietnam, and analyses the reasons for informality in relationship with the institutional framework. Section 4 describes the reforms being put in place and employment strategies related to the informal economy. Policyrecommendations are proposed in the last section.