HCMC records highest number of layoffs in years due to Covid-19

Le Minh Tan, director of the municipal Department of Labor, Invalids and Social Affairs, ascribed the high number of layoffs to diminished business resources and orders as a result of the pandemic.

"Around 8,400 businesses that faces shutdown due to Covid-19 had to lay off a large number of staff," he said, adding around 14,000 local companies were affected by the pandemic, citing the municipal Statistics Office.

The Hue Phong Leather Shoe Co. Ltd., in Go Vap District laid off 2,222 of its 4,500 workers last month due to its inability to recover production to pre-Covid-19 levels. The city’s largest employer, Taiwanese shoemaker Pouyuen Vietnam Co. Ltd in Binh Tan District, also ended contracts with nearly 2,800 of its 60,000 workers last month as the pandemic cut new orders.

Ho Chi Minh City's labor department has anticipated two different scenarios in order to prevent further job losses and to support workers for the remainder of 2020.

In the first scenario, Vietnam would continue to contain Covid-19, presenting opportunities for production and businesses to flourish, which would eventually attract workers and reduce job loss. However, certain sectors like tourism and the service industry would still be affected by the pandemic. In this scenario, around 4,400 businesses in the city would be impacted, leading to another 100,000-120,000 employees losing their jobs.

In the second scenario, whereby the Covid-19 situation worsens in Vietnam, around 4,800-5,000 local businesses operating in the service, construction, food processing and textile industries, would be affected, leading to around 160,000-180,000 layoffs.

While the figures are mere predictions, Tan noted the number of those having lost their jobs in 2020 is the highest in four years. This showed the Covid-19 impact on the job market was "very severe," he said. In order to safeguard workers’ rights, businesses who lay off staff must inform them at least 45 days prior, said Tan.

The city would further cooperate with companies to transfer staff to others in the same industry, he said. Those who wish to would be supported by the department to enter vocational training to assist them to switch careers in future.

The Vietnamese government in April passed a VND62 trillion ($2.6 billion) financial support package for individuals and businesses after the Covid-19 pandemic wreaked havoc on the nation’s economy and people’s livelihood.

By the end of June, HCMC had supported over 510,000 out of 542,000 individuals and businesses affected by Covid-19 with VND560 billion ($24.26 million) as per the national financial support package. Recipients include the poor, laid off workers, small businesses and street vendors.

The southern metropolis also has its own VND1.8 trillion ($77.8 million) financial support package, announced in late March, to support those who lost their jobs to the Covid-19 pandemic but were not eligible to receive unemployment benefits. But not everyone has been supported yet due to several procedural hurdles, including employers being slow to check with social insurance agencies and workers’ failure to correctly apply for assistance, said Tan.

Around 310,000 employees in HCMC were eligible to file for unemployment benefits due to layoffs within the first five months this year. But around 80,000 were unable to receive benefits due to not having paid enough for 12 months unemployment insurance, Tan said.