Older workers fear targeted for layoffs

By Le Tuyet   September 6, 2023 | 08:32 pm PT
Vo Thi Thuy, 40, has survived four consecutive layoffs at Taiwanese shoemaker Pou Yuen, the largest employer in Ho Chi Minh City, and she's more worried than ever she could be let go.

As companies cut their workforce to deal with drops in orders, older workers like Thuy believe that they will be targeted due to lower productivity. They worry about uncertain future knowing they cannot find a new job that is as good as the current one, or afford to start their own business.

Thuy and her husband are both migrant workers in HCMC. They have two children, aged seven and 15.

As a new academic year has begun, the couple need to pay more than VND10 million (US$418) for their children's public school tuitions. The sum is about what Thuy earns each month after 21 years working at Pou Yuen, a contractor for major brands like Adidas, Nike, and Reebok.

Her husband works as a mason at construction sites and his income has been unstable for the past year as struggles in the sector have delayed a large number of projects. He now also works as a driver for a ride-hailing firm, but things are still unsteady and challenging as there are often whole days he goes without a single customer.

Thuy said she has never been as afraid of losing her job as she is now because the entire family is relying on her salary.

In February, Pou Yuen laid off more than 2,300 workers, and then sacked more than 6,000 others in June, citing a lack of orders.

Thuy said she wants to keep working at the company so she and her children can rely on a stable source of funds, and she can access a pension when she reaches retirement age.

But the company has continued to downsize.

And Thuy said she's now "too old" to find a new job at another factory.

If she gets laid off and the company gives her its highest severance amount of VND200 million, Thuy said she does not think it would be enough for her to start her own business.

Another factory worker in HCMC, Nguyen Thi Tram, is under the same pressure.

Tram has been working at Nobland Vietnam Co., Ltd, a textile and garment company, for 17 years now. Over the past month, she hasn't been able to focus on work because she’s constantly afraid of answering the phone to hear the HR team on the other end ready to fire her.

Tram belongs to the first generation of workers at Nobland.

Ever since she began working there 17 years ago, she has been paid hourly. She now makes VND11 million per month, excluding benefits.

In recent years, the company has partially switched to paying salaries in line with the number of products a worker makes each month. For this payment method, the company keeps a fixed salary at less than VND5 million and it is up to the individual worker to fulfill more orders to make more money.

Workers at a factory of Nobland Vietnam Co., Ltd in 2021. Photo by VnExpress/Le Tuyet

Workers at a factory of Nobland Vietnam Co., Ltd in 2021. Photo by VnExpress/Le Tuyet

Two years ago, when the company announced the product-based salary method, Tram and other senior workers refused and went on strike.

Tram said there is no way she could keep up with young workers and would soon be let go for failing to complete enough products.

The company then came up with a plan to lay off more than 600 senior workers, most of whom were still receiving hourly-based salaries.

Tram and others sent around petitions asking for help, which prompted authorities to require Nobland to put that plan on hold.

"I'm so stressed out these days," she said.

According to the mother of two, all she's trying to do now is to stay on the contract for the 20 years she needs to be eligible for retirement pension.

"But now that is not my decision to make anymore," Tram said.

Assoc. Prof. Dr. Nguyen Duc Loc, Director of the Social Life Research Institute, said the worries of older workers like Thuy and Tram are reasonable and founded.

He said Pou Yuen laid off more than 2,300 employees during its first downsizing early this year, and 54% of them were over 40 years old, while 39% were 30-40.

Then for the second layoff, more than 50% of 6,000 workers who lost their jobs were over 40.

Loc said older workers who lose their jobs face more risks than younger ones.

Old age makes it harder to start one's own business with their severance money and it also makes it harder to find a new job and go back to work at another factory. Therefore, many elder laid-off workers are forced to accept seasonal jobs and low wages at small factories with worse working conditions, and little to zero benefits, said Loc.

Nguyen Van Binh, director of the Legal Department at the Ministry of Labor, War Invalids and Social Affairs, said there are some professions where workers with more than 10 years of experience can become valuable assets.

However, in the labor sector, workers' productivity decreases with time while the salary system is based on seniority. That means productivity and wages will mismatch and businesses will look for ways to cut costs.

"When letting go of older workers, businesses will certainly avoid using age as a reason, and they'll come up with other excuses instead," Binh said.

Labor reduction due to structural change is not prohibited by law. However, if most of the downsized group are older workers, it is "a sign of labor discrimination," and that is against the law in Vietnam and many other countries, he said.

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