Over the next few months, workers in areas like garments and textiles are bracing for bad news, photo Le Toan

PouYuen Vietnam, a subsidiary of Taiwan-based Pou Chen Group, will lay off more than 5,700 workers in the next few weeks.

The termination of labour contracts will be divided into two phases, with around 4,520 employees to be fired by the end of June and 1,225 others at the beginning of July.

PouYuen, a company specialising in manufacturing leather and footwear, once boasted 100,000 employees at its peak. However, the number has declined drastically since the pandemic – it let go of more than 2,300 employees in February this year alone, and the total for the first five months of 2023 has reached nearly 8,000 people. The company has cited falling orders in the main export markets as the cause of the redundancies. It has also had to deal with customers offering prices at half of what they used to be.

According to a socioeconomic report by the National Assembly Economic Committee, in the first four months of this year the number of businesses nationwide with halted operations reached nearly 50,000, up 21.8 per cent on-year. Nearly 21,000 enterprises stopped operations and waited for dissolution procedures, up nearly 40 per cent. Some 6,100 businesses completed such procedures, up 10.1 per cent. On average, each month saw 19,275 enterprises kicked out of the market.

The report also quoted the Vietnam General Confederation of Labour from September 2022 to January 2023, in which nearly 547,000 employees at 1,300 enterprises had their working hours reduced or lost their jobs due to reduced orders, of which labour in foreign-invested enterprises (FIEs) accounted for three-quarters.

According to the Department of Labour, Invalids and Social Affairs in Ho Chi Minh City, 10 FIEs in the city have had to reduce their workforce in the first four months of the year with a total of more than 19,000 lay-offs, including employees at PouYuen, Footgearmex Footwear Co., Ltd.

In the southern province of Dong Nai, three FIEs have had to cut more than 2,000 employees due to lack of orders this year so far. Pousung Vietnam reduced by 1,000 workers, Pou Phong Vietnam laid off 227, and Taekwang MTC has terminated the contracts of nearly 800 employees.

Meanwhile, in the nearby province of Binh Duong, more than 36,000 workers were laid off due to a lack of orders, dissolution, or suspension of production and business.

In the north, the number of workers who lost their jobs in industrial zones in Bac Ninh and Bac Giang was 14,000 and 7,700 respectively by the end of April.

Textiles and footwear are the sectors that are being affected the most, and many businesses have had to look for more sustainable employment solutions such as production downsizing, reduction of working hours, and staff reductions.

Dinh Sy Phuc, head of the trade union at Taekwang Vina Industrial JSC in Bien Hoa 2 industrial park in Dong Nai, said, “Currently, there are not many orders, so the company only allows employees to work four days a week. We are trying to maintain production, but if we continue to face difficulties, we will have to reduce working hours further in the near future.”

Meanwhile, workers in car manufacturing and some other related fields fear losing their jobs as sales are also plummeting.

According to a sales report for April from the Vietnam Automobile Manufacturers Association, sales of its members decreased by almost half compared to the same period last year, and dipped 21 per cent compared to March.

As one of the largest foreign-invested enterprises in Vinh Phuc province, Toyota Vietnam also saw a 37 per cent decrease in quarterly output, with sales decreasing by 24 per cent.

Na Huong, general director of helmet producer Protec Vietnam at Ba Thien II Industrial Park in the northern province of Vinh Phuc, said that her business has no plans to cut workers, but is facing many difficulties as its two main markets, the US and Europe, have registered a serious decline in orders.

“Protec can maintain the current number of employees because the business situation in the Japanese market is still stable. However, we are only temporarily surviving, and there are still no signs of a brighter future,” Huong said.

According to a report published by the Vietnam Association of Foreign Invested Enterprises in mid-April, besides the positive contributions to the labour market, there are still limitations as the economic downturn has caused many businesses to show signs of exhaustion and face the risk of withdrawing from the market.

Meanwhile, the Provincial Competitiveness Index report published by the Vietnam Confederation of Commerce and Industry in April said that in Q1, about 60,200 enterprises withdrew from the market, an increase of 17.4 per cent.

“For the first time in many years, the number of enterprises that ceased operation, closed or dissolved exceeded the number of enterprises entering the market,” the report said. “This situation may become even more difficult going forward.”

Ngo Xuan Lieu, director of the National Centre for Employment Services under the Ministry of Labour, Invalids and Social Affairs, said that about 70 per cent of unemployed workers are unskilled. The high number of unemployed unskilled workers will put great pressure on localities in creating jobs as well as social security.

“The ministry encourages localities to implement policies to support businesses in production, as well as business recovery to retain employees and quickly introduce new jobs for workers,” he said.