Businesses struggle for New Year worker bonus amid dearth of orders

Companies in Ho Chi Minh City and neighboring provinces are struggling to find money for workers' Tet bonus amid a thirst for orders as the Lunar New Year holiday is drawing near.

At the beginning of the year, to meet production demand, Hoang Thong Wood Co., Ltd in Binh Duong province had to increase workers’ wages by 5-10%. The firm recruited enough 3,600 workers for its two factories in Di An town and Tan Uyen township.

However, since May, the factories have seen falling orders. Many workers quit their jobs because overtime work for extra money was cut. Only nearly 1,000 workers took turns to maintain production.

"The company plans to give workers an early Tet holiday," said Duong Quang Hiep, human resources director at Hoang Thong.

Similarly, Chien Carpentry Co., Ltd in Dong Nai province intends to give employees a Tet leave for nearly one month. Nguyen Thi Thanh Tin, deputy general director and president of the trade union at the company, said the firm will consult employees before making a final decision.

Such situation has been seen in many manufacturing companies in the fields of support industries, footwear, and garment-textiles due to a serious lack of orders.

The leadership of V.P Footwear Company in HCMC’s Binh Tan district has held many meetings to seek capital sources for Tet bonuses to nearly 400 workers. The firm needs about VND2.8 billion ($117,000) to give its employees a bonus worth a month’s salary.

The company's products are mainly exported to Europe, especially Spain. However, its orders have decreased by nearly 40% since October. In order to maintain jobs for workers until January next year, the business only organizes day shifts, resulting in increasing production costs, a company representative said, adding with the Tet bonuses, the company’s revenue will go negative this year.

"However, as the Tet bonus is included in the collective bargaining agreement, the company has to fulfill its commitment. In order to give Tet bonuses to workers, the management board persuaded raw material suppliers to extend the payment deadlines. The board members also managed to borrow money from many sources," the representative told the press.

Similarly, since August, Dony Garment Co., Ltd in the city’s Tan Binh district has suffered a 20% reduction in orders for uniforms and 50% for fashion items. Over the past time, the business has operated almost without profit, with its entire capital used to maintain production and pay for workers.

Pham Quang Anh, director of the company, said that at this time, the firm accepts no profit, even a loss, to give Tet bonuses to workers. The company plans to give Tet bonus equivalent to a month's salary or half.

The government has agreed on the labour ministry's proposal whereby the Lunar New Year holiday will last from January 20 to the end of January 26, 2023. The above schedule will apply to civil servants and public employees, but the ministry encourages all companies to apply it for employees.

Joint efforts to aid workers

According to the Vietnam General Confederation of Labor, from September to November, more than 631,300 workers in 28 provinces and cities, mainly in the south, were affected by declines in orders.

Of them, nearly 570,000 had their working hours reduced, more than 34,500 lost their jobs and over 31,000 took unpaid leave or had their labor contracts suspended. The most affected industries are wood processing, textiles, footwear, electronics, food, services, and tourism.

The job cuts go against the normal trend in which factories usually increase recruitments to complete their orders at the year-end, it said.

Nguyen Thanh Do, head of the HCMC Labor Federation's policy and legal affairs department, told the press that garment, footwear and electronic factories are facing a myriad of difficulties from reduction in orders, forcing them to organize only day shifts, give workers rotating leaves or cut off personnel.

Meanwhile, Pham Chi Tam, vice president of the federation, said that in the last three months, rising inflation in many countries has pushed up costs for raw materials, while the total world demand dropped.

Some brands have canceled contracts and reduced orders, pushing many Vietnamese enterprises into difficult situation, especially those in the wood processing, footwear, and textile industries. Workers had to take rotating leaves or had their labor contracts terminated.

"Due to difficulties, some businesses plan to not give Tet bonus and the 13th month salary to their employees. Over the past time, local trade unions at all levels have joined business owners to map out plans for paying wages, Tet bonuses and other benefits for workers. They will spend about VND140 billion ($5.85 million) supporting people in need during Tet," Tam said.

According to Dao Quang Vinh, former director of the Institute of Labor Science and Social Affairs under the Ministry of Labour, Invalids and Social Affairs, both employers and employees were seriously affected by the pandemic. Now, they continue to be hit by reduced orders.

The expert forecast that in the fourth quarter of 2022 and the first quarter of 2023, many businesses will continue to lose orders, threatening workers’ employment.

While processing and manufacturing industries will continue to face difficulties in the coming time, some others like services, construction and agriculture will create many jobs for workers, he added.