Workers hit hard by mass layoffs in Vietnam; weak demand also has fuelled unsold inventory

Tough times: Employees work at a shoe factory in Hanoi. A report shows that to date, around 500 companies have had to downsize their workforce amid the economic downturn, putting 640,000 workers on the line. — Reuters

HANOI: Many Vietnamese firms are going through rounds of layoffs as the global economic downturn shows no sign of abating since starting last year.

PouYuen Vietnam Co Ltd is one of those that have felt the pinch of the economic retreat. The company has announced a plan to terminate 2,300 posts and trim ranks at its Sections C and D in the short term.

The situation was not better for Ampfield Vietnam Co Ltd, which had to reduce headcounts on the payroll from 700 to 100. The company has cited falling orders as the cause of its actions.

“The economic downturn has triggered a sharp fall in orders, hitting us hard,” said Vo Thi Sau, Amfield Vietnam’s Union Leader.

She said the company was seeking new orders to pick up the operational slack. Its workers had to work in shifts to keep the ball rolling for now.

Dony Garment Co Ltd, another clothing company, followed suit amid the wave of job cuts. It shed part-time workers and retained just enough full-time staff to have a skeleton crew.

Dony director Pham Quang Anh said the move was part of the company’s efforts to deal with the recession-triggered fall in orders. He also said some deals had fallen because their partners offered too low a bid price.

According to the Ho Chi Minh City’s Union of Business Association (HUBA), orders from the European Union, a major clothing importer, have dropped by 60%. In contrast, orders from the United States have fallen by around 40%.

The weak demand has fuelled unsold inventory and driven down bid prices. The aggregate unsold inventory level in textiles has reached nearly 25%. Meanwhile, traders offer a bid price as high as half the usual.

A report prepared by the Vietnam Confederation of Labour (VCL) shows that to date, around 500 companies have had to downsize their workforce amid the economic downturn, putting 640,000 workers on the line.

The wood-processing industry took the full brunt of the force, with 70% of its workers either facing redundancies or having working hours cut.

The manufacturing industry came next with 50%, footwear around 25% and textiles 20%.

Duong Thi Bich Thuy, a worker with a 17-year tenure at Ty Hung Co Ltd, has never thought that she would be among those facing the axe. She was shocked and devastated when the bad news came.

She said she was already old, so finding a new job would not be easy. She hopes the authorities take measures to help those like her get a suitable job more easily.

Nguyen Van Tam, another worker with a 20-year tenure at PouYuen, felt frantic after the company’s announcement of layoffs. While waiting for a decent severance package for his 20 years of service, he worked as a Grab rider to pay the bills.

Mass layoffs hit people hard and harder those in vulnerable groups, especially the old and the disadvantaged. Some return to their rural hometown to rely on family, and others take temporary jobs to make ends meet.

PouYuen’s Union leader Cu Phat Nghiep claimed that his company had exhausted all options to create enough jobs for everyone but to little results.

Stretched to its limit, the company has no choice but to lighten payroll to stay afloat. It seems tough, but there is no way around that.

The company has set aside 275 billion dong (US$11.7mil or RM51.6mil) for severance pay to compensate the workers being let go in March. On average, they will be paid 80% of their monthly salary for each year in service.

The pay could come to 379 million dong (RM71,161) per person for the longest-tenured workers. Apart from severance pay, workers will be paid a sum for their accrued untaken holiday entitlement and be entitled to unemployment benefits.

The union leader called for governmental job-matching efforts to help the workers come out of the layoffs on board.

Meanwhile, in Ty Hung Co, dismissed workers will leave with a golden handshake amounting to two months of their salary plus benefits. — Viet Nam News/ANN

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