Thousands lose jobs to pandemic in Vietnam

New orders have been dwindling since March, said Cu Phat Nghiep, trade union chairman at Pouyuen Vietnam Co. Ltd., a Taiwanese-run footwear maker and Ho Chi Minh City’s largest employer with over 60,000 staff.

New orders for June have fallen 50 percent year-on-year, and while this has gradually increased for July, August and September, the company has nothing for the fourth quarter yet, Nghiep said.

The union leader said the company was doing its best to retain workers, but could only work on old orders now. "The company expects to let go of around 6,000 employees, we are finalising the list and will announce it on June 20," Nghiep said.

The employees losing jobs will be in operations that have not received new orders, and they will be let go gradually in accordance with a three-month roadmap from June 20 to August this year, he added.

Local shoemaker Hue Phong Leather Shoe Co. Ltd., based in HCMC’s Go Vap District, has also recently sent a document to the municipal Department of Labor, Invalids and Social Affairs detailing plans to reduce operations due to the Covid-19 crisis.

The company said that despite looking at many possible solutions it was still unable to recover production to pre-Covid-19 levels, and will have to let 2,222 workers go and relocate its premises to Tra Vinh Town in the eponymous Mekong Delta province.

Many businesses outside the textiles and footwear industries are also reporting reductions in wages and personnel.

The representative of a game development company in Ho Chi Minh City, who wished to remain anonymous, said they were struggling with plummeting sales. The source said they were planning to cut 50 percent of their staff and reduce wages of the rest by between 20-25 percent.

According to a survey done by recruitment firm VietnamWorks covering 400 enterprises and 3,400 job seekers, over 40 percent of enterprises said they have lost the capacity to maintain and continue business development after the nationwide social distancing campaign ended on April 23.

Three-fourths of these businesses said that they had to reduce personnel to survive through the crisis, while the rest said they had to both cut down on staff and reduce salary and benefits.

Truong Van Cam, vice president of the Vietnam Textile and Apparel Association (VITAS), said that textiles has been the most affected industry as it is heavily dependent on exports. New export orders fell 25 percent year-on-year in April, and over 30 percent in May, as a result of Covid-19 forcing the closure of major export markets, in turn slashing demand, he said.

In addition, the shortage of raw input materials was a major reason companies had to cut down production and reduce the labor force, he said.

According to the General Statistics Office (GSO), as of May, 39.6 percent of FDI enterprises said they faced input material shortages. 56.9 percent of all materials importing companies reported shortages. As many as 70.3 percent and 71 percent textiles and footwear firms reported shortages, respectively.

The pandemic has cost nearly five million workers their jobs as of mid-April, taking Q1 employment figures to a 10-year low, with just 75.4 percent of population in working age having jobs.

Manufacturing was the worst affected with 1.2 million jobs lost, followed by wholesale and retail (1.1 million) and accommodation and catering services (740,000), according to the GSO.