HCMC's Covid-19 layoffs hit 'worst-case scenario'

"I’m going to lose my job, please buy my yogurt so I can feed my children!" he shouted in front of the company's gates. From afar, a group of female colleagues giggled at his desperate sale's pitch.

"We'll be laid off too," many replied, still coming over to support him. Within 15 minutes, the father had sold about half his yogurt supply.

But starting Monday, Cuong no longer had the chance to rush back and forth like that.

The 25-year-old is one of around 1,600 employees at Hue Phong Leather Shoes Company in Ho Chi Minh City laid off on Monday. With Covid-19 forcing European and U.S. partners to cancel their orders, the company, one of the biggest in HCMC's industrial district Go Vap with around 4,700 staff, had little choice but cut costs to stay afloat.

Cuong had worked at the company for over 12 years. From a lowly start, he ascended to become a deputy team leader earning VND9 million ($391) a month. But like many of his peers, his income had taken a hit as the pandemic swept the globe and wrecked the economy.

Starting August, Cuong's tasks were reduced to maintaining machinery and cleaning workshops as the company limited production. Able to leave work earlier, he picked up side jobs to earn a little extra. His wife, employed at the same company, had already been laid off in June, staying home to make yogurt for sale these past three weeks.

"Most female workers at the company liked the yogurt. But as the company cut more staff, I don't know how the yogurt business would work out then," Cuong said.

An acquaintance who owns a shoe workshop in Taiwan has offered Cuong a position at the company at double his former salary. But a hesitant Cuong does not want to part with his family during this uncertain time.

"Once the pandemic has passed and international flights resume, I might give it a shot."

By the end of August, Hue Phong has laid off over 4,000 workers. Previously in May and June, the firm had cut more than 2,400. Among the group fired on Monday are 198 pregnant women expecting to give birth from September to November. Most are not well off, and will have their monthly social and medical insurance suspended.

Pham Van Tai, deputy chairman of Go Vap District Labor Federation, said workers who were laid off will be assisted in finding new jobs.

Tai said Hue Phong had paid VND31 billion ($1.35 million) as part of a support package in their favor.

Besides Go Vap, over 3,000 workers in Thu Duc District, hosting several textile and shoe factories, have also lost their jobs due to Covid-19, according to the city's Department of Labor, Invalids and Social Affairs. The number of unemployed is expected to rise as outbreaks continue in several localities across the country, it said.

Do Thi Thu Hien, deputy chairwoman of Thu Duc Labor Federation, said that "Two out of three people in Thu Duc are migrant workers. We are considering all possible solutions to help them weather the storm."

Workers have been recommended to work in restaurants or at food stalls to get by, Hien said.

'Worst-case scenario'

Le Minh Tan, director of the labor department, said the pandemic has impacted around 14,000 out of 16,300 surveyed businesses in HCMC. Within the first six months, the southern metropolis saw over 327,000 staff losing their jobs, with another 180,000 at 5,000 businesses expected to follow suit by year end.

"This is the worst-case scenario among those set out by the city," Tan said, adding the most affected fields are services, transport and tourism, followed by shoes, textiles, clothing and food processing.

HCMC is now looking for solutions to prevent businesses from going bankrupt and suspending their operations, as that would only push more staff into unemployment. The municipal People's Committee is also urging the government and the labor ministry to support companies and workers through a support package worth VND62 trillion ($2.67 billion) provided by the state.

The municipal labor department is calling for businesses to either reduce working hours or allow workers alternate shifts instead of ending their employment contracts outright. Employees should also tolerate a lower salary during the pandemic, said Tan.

"Both sides need to share the burden. Once the pandemic is put under control, companies would recommence business, allowing workers their jobs back," he said, adding the city has financially supported over 543,000 people impacted by Covid-19 with around VND600 billion.

Besides the government's VND62 trillion support package, HCMC already deployed its own support package worth VND1.8 trillion, announced in March, for those affected by Covid-19, including factory workers and street vendors. The city has recently proposed a second such package, this time aimed at businesses in fields heavily impacted by the pandemic like tourism, food, hospitality and transport.

Vietnam has recorded 1,044 Covid-19 cases so far, 301 still active. A total 34 have succumbed to the disease, all suffering underlying conditions. The country has not recorded any new transmissions in the last two days.