A shortage of workers after the Lunar New Year (Tet) holiday is looming as businesses, in their thirst for capital and orders, have to cut personnel to survive.
No light at the end of the tunnel
Pham Xuan Hong, chairman of the Ho Chi Minh City Association of Garments, Textiles, Embroidery and Knitting, said this is the first time in over 30 years working in the garment industry that he has seen workers lose their jobs and factories lack orders on such a large scale.
Factories have suffered a 30-50% reduction in orders, so they are forced to cut working hours and give workers rotational leave, he said, adding that the current situation is more difficult than during the Covid-19 pandemic.
"When Covid-19 spread, we had a belief that the pandemic would be controlled and businesses had the basis to propose the government to support workers. Now, we are extremely confused and worried," said Hong, also chairman of Saigon 3 Garment Joint Stock Company.
He described the situation in the last month of this year and the first half of 2023 as having "no light at the end of the tunnel".
The situation will be more difficult as many factories have very few orders for the new year, while finding new markets is not easy. Many businesses are willing to accept low-priced orders, even a loss, to maintain jobs, but it is also difficult, he said.
According to the HCMC Business Association (HUBA), orders from the main export markets of the Vietnamese garment and textile industry like the U.S. and Europe have plunged 30-40% and 60%, respectively.
Meanwhile, inventories increased, accounting for 20-25%. Between the fourth quarter of 2022 and the first quarter of 2023, companies have attracted no new customers and will fiercely compete for orders. Many customers offer prices as low as 40-50%. A large number of businesses have to cut their workforce and reduce production scale.
Bui Thi Ninh from the Vietnam Chamber of Trade and Industry - HCMC branch (VCCI HCMC) said that firms exporting footwear, clothing and furniture products to Europe and the U.S. have been severely affected by falling demand in these two main export markets. Many companies operating in supporting industries serving the Japanese market have also seen their revenue decrease due to the depreciation of the yen, she added.
According to Nguyen Duc Loc, president of the Social Life Research Institute, a survey shows that 60% of workers in factories work without any benefits. It means they are easily recruited and also easily laid off when factories face financial difficulties. More than 10% of elderly workers in southwestern provinces return home from industrial cities when they are yet to reach retirement age.
"This is a consequence of a labor-intensive economy in which workers are easily dismissed in case of an epidemic or an economic recession," he noted.
Loc noted that when foreign markets slow down and factories do not create jobs, the government needs to consider this an occasion to balance the proportion of industries and coordinate labor between production, services and construction. The immediate solution is to accelerate public investment projects in industries and localities.
"At present, hundreds of trillions of Vietnamese dong (VND1 trillion = $42.4 million) are yet to be disbursed, meaning millions of new jobs are yet to created," said Loc.
Solving post-Tet labor problem
Vice chairman of the Vietnam General Confederation of Labor Phan Van Anh said that his agency is finalizing reports to propose the Prime Minister provide support measures for businesses with sharp falls in orders. Trade union organizations will support difficult cases and encourage business owners to retain workers while awaiting recovery.
"Looking at the post-pandemic lesson, businesses that had hastily laid off workers faced a lot of difficulties when the market recovered," Anh said.
Forecasting the labour demand after Tet, Nguyen Hoang Hieu, director of the HCMC Centre of Forecasting Manpower Needs and Labour Market Information, said that the labor market often sees many fluctuations in the post-Tet period. Some workers who return home to celebrate Tet will not come back to work but stay in their hometown to set up their own business. Some others want to change jobs to have a better start in the new year.
In order to minimize the labor shortage after the Lunar New Year holiday, businesses need to actively develop a recruitment plan; map out salaries, bonuses and welfare policies for employees; and regularly care for their health and life. In addition, it is necessary to have regular connections with them through phone, Zalo and Facebook channels to promptly solve their difficulties.
“Municipal authorities should continue to accompany relevant agencies in implementing policies to support employees like providing aid for the unemployed, offering job placement advice, accommodation and transportation services for workers, as well as taking care of their lives," said Hieu.
According to statistics, as of October, the total number of working employees participating in social insurance in the southern economic hub was 2,496,211, an increase of 345,660 from the same period in 2021 and 100,104 compared to the first six months of 2022. At the end of the year, local businesses will need about 43,000 workers, mainly in the fields of trade, services and production for Tet.
The Vietnam General Confederation of Labor has recently announced that it will coordinate with organizations and localities to deploy solutions to support production and business, and keep jobs for workers. It plans to organize meetings and dialogues with businesses, workers and trade unions for timely solutions to their difficulties.
It is expected that about one million workers living in difficulty or suffering job loss will be given a Tet gift worth VND500,000 ($21.2). In addition, trade unions at all levels will also organize Tet fairs in 22 provinces and cities, offering free and discounted essential goods for trade union members and employees.
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.