Layoff wave sweeps Vietnam's manufacturing hub as export orders dwindle

In early September, the Ho Chi Minh City-based S.K Vina garment factory that employed nearly 900 workers had to stop all operations at the South Korean parent company's request.

A fashion brand had suddenly canceled all orders and the parent company could not find an alternative.

The company, which had been functioning in HCMC for 15 years, looks to complete its dissolution this month.

The parent company will spend nearly VND30 billion ($1.2 million) on paying wages, compensation and other support for factory workers.

The dissolution has taken the company itself by surprise since it was receiving orders for production since the middle of this year. "None of us were prepared for the dissolution situation," a company representative said.

About 200 kilometers away from the S.K Vina factory, An Giang Samho Co., Ltd., which produces footwear and other leather products, plans to lay off more than 5,300 factory workers, accounting for 53% of its workforce, by December.

In a recent document to the authorities, the company noted that its major partner, who accounts for 40% of its production, has stopped placing orders. Besides, it is also seeing a decline in other export orders.

The company’s leaders said they were prioritizing retaining workers in vulnerable situations like those who are pregnant, have 12-month-old children and are poor households.

Pham Son, deputy director of the An Giang Department of Labor, Invalids and Social Affairs, said that in all the years that he has worked, he has never seen workers being laid off in such large numbers.

S.K Vina and An Giang Samho are just two of many factories in the south that have to cut workers due to a shortage of orders.

According to the Vietnam General Confederation of Labor, the ongoing order shortage has affected more than 630,000 workers in 28 provinces and cities from September-November.

Nearly 570,000 workers have had their working hours reduced, another 34,000 plus have lost their jobs and moer than 31,000 have had their contracts suspended and cases of unpaid leave or contract suspension.

The most affected industries are wood processing, textiles, footwear, electronics, food, services, and tourism.

According to the Binh Duong Social Insurance Agency, as of October, about 28,000 people had stopped working. A survey by the provincial trade union showed that about 240,000 workers have been affected.

In Dong Nai province, about 30,000 workers have been terminated in the past five months and in Long An, the number is more than 1,000 people.

In Ho Chi Minh City, in mid-October, Nguyen Van Lam, deputy director of the municipal Department of Labor, Invalids and Social Affairs, estimated that more than 2,800 workers will lose their jobs this year.

However, data from localities shows that with three factories in Districts 12, Binh Tan and Cu Chi, the number of workers laid off has crossed 3,400.

With over 30 years of experience in the garment industry, Pham Xuan Hong, chairman of the Ho Chi Minh City Textile and Apparel-Embroidery Association and Chairman of the Saigon No. 3 Garment JSC, said that this was the first time he has witnessed workers underemployed and factories lacking orders on this scale.

The situation is more difficult now than when Covid-19 broke out, he said.

It will be tougher because it is hard to new markets now. Many businesses were willing to accept low-priced orders, even at a loss, to maintain jobs for workers, he added.