Vietnam struggles to suppress wave of layoffs


As many as 500,000 workers have lost jobs, stopped working, or have had their working hours cut in 40 cities and provinces, according to the Ministry of Labor, War Invalids and Social Affairs (MOLISA).

The owner of a garment company in Thanh Hoa said he took pride as he had maintained his staff during the two years of Covid-19, and had not dismissed workers during that time, despite difficulties.

But he now has had to lay off workers. As export markets have shrunk and the domestic market is sluggish, many products remain unsold. He had no other choice than lay off 100 workers. The remaining 50 workers work in rotation, with reduced working hours.

The man said that laying off workers was a painful decision and a last resort, because veteran workers are very skilled and have been working for companies for many years already.

Several days ago, local newspapers reported the surprising news that PouYuen Vietnam in HCM City had laid off 5,700 workers.

Though the government, ministries and branches have applied many measures to help businesses and workers, these have not been enough to prevent the new wave of layoffs. Urgent solutions are needed to save enterprises and workers.

MOLISA’s report shows that layoffs are mostly in large cities and provinces at industrial zones (IZs) and export processing zones (EPZs), including HCM City (44,900 workers), Dong Nai (69,400), Binh Duong (80,400), Hanoi (64,600), Bac Giang (27,500), Bac Ninh (14,000) and Thanh Hoa (12,700).

The figure of 500,000 workers losing their jobs shown in official reports does not truly reflect the real situation. The figure could be even higher. This means that hundreds of thousands of families and children now have decreased living standards and many cannot even cover daily basic needs.

A report from the General Statistics Office (GSO) showed that enterprises in many business fields have been lacking orders since the fourth quarter of 2022. 

Analysts say the figure would be much higher if counting workers in the household-run business sector.

Rescuing businesses, stimulating demand

Analysts said the majority of workers losing their jobs are unskilled laborers in the footwear, textile and garment, electronics and electronic component production and woodwork industries. These are the most vulnerable workers in society.

Reports show that many cash-strapped workers who become unemployed decided to get a lump sum social insurance withdrawal to cover current expenses. Experts have warned about this trend, saying that workers will face difficulties in the future, when they run out of money and cannot receive a pension every month.

Analysts say that the number of people choosing lump sum social insurance withdrawal is on the rapid rise. The figure was about 500,000 a year before 2019, and it soared to 900,000 in 2022.

If the situation does not improve, it will threaten social welfare insurance and disrupt the sustainability of the social insurance system.

To support workers, in the immediate time, the social insurance policy needs to receive timely support from unemployment insurance, unemployment allowance and other welfare programs. 

These will help protect laborers after they are dismissed, and give them time and opportunities to seek new jobs.

Also, through credit institutions, trade unions can create favorable conditions for laborers to borrow money at preferential interest rates to solve immediate difficulties and find new jobs.

Most recently, CEP, a micro financial institution belonging to the HCM City Labor Federation, announced it would allocate VND50 trillion to lend money at low interest rates to 1.41 million workers from nine southern cities and provinces to help them avoid ‘black creditors’ which provide loans at exorbitant interest rates.

In the long term, retraining workers and developing high-quality human resources must be a strategic solution to improve the skills and knowledge of laborers. If workers are well trained, they can easily adapt to new technologies and changes in the economy.

According to MOLISA, solutions need to focus on helping enterprises approach markets, seek new orders, and cut production costs by slashing lending interest rates, cutting taxes, and cutting fees and charges.