Workers hit hard by mass layoffs

April 03, 2023 - 08:03
PouYuen Vietnam Company LTD is one of those that have felt the pinch of the economic retreat. The company has announced a plan to terminate 2,300 posts and trim ranks at its Sections C and D in the short term.


A job fair at the University of Economics Ho Chi Minh City. — Photo

 HÀ NỘI — Many Vietnamese firms are going through rounds of layoffs as the global economic downturn shows no sign of abating since starting last year.

PouYuen Vietnam Company LTD is one of those that have felt the pinch of the economic retreat. The company has announced a plan to terminate 2,300 posts and trim ranks at its Sections C and D in the short term.

The situation was not better for Ampfield Vietnam Company LTD, which had to reduce headcounts on the payroll from 700 to 100. The company has cited falling orders as the cause of its actions.

"The economic downturn has triggered a sharp fall in orders, hitting us hard," said Võ Thị Sáu, Amfield Vietnam's Union Leader.

She said the company was seeking new orders to pick up the operational slack. Its workers had to work in shifts to keep the ball rolling for now.

Dony Garment Company LTD, another clothing company, followed suit amid the wave of job cuts. It shed part-time workers and retained just enough full-time staff to have a skeleton crew.

Dony Director Phạm Quang Anh said the move was part of the company's efforts to deal with the recession-triggered fall in orders. He also said some deals had fallen because their partners offered too low a bid price.

According to the HCM City's Union of Business Association (HUBA), orders from the EU, a major clothing importer, have dropped by 60 per cent. In contrast, orders from the US have fallen by around 40 per cent. 

The weak demand has fueled unsold inventory and driven down bid prices. The aggregate unsold inventory level in textiles has reached nearly 25 per cent. Meanwhile, traders offer a bid price as high as half the usual.

A report prepared by the Vietnam Confederation of Labour (VCL) shows that, to date, around 500 companies have had to downsize their workforce amid the economic downturn, putting 640,000 workers on the line.

The wood-processing industry took the full brunt of the force, with 70 per cent of its workers either facing redundancies or having working hours cut. The manufacturing industry came next with 50 per cent, footwear around 25 per cent, and textiles 20 per cent.

Dương Thị Bích Thủy, a worker with a 17-year tenure at Tỷ Hùng Company LTD, has never thought that she would be among those facing the axe. She was shocked and devastated when the bad news came.

She said she was already old, so finding a new job would not be easy. She hopes the authorities take measures to help those like her get a suitable job more easily.

Nguyễn Văn Tâm, another worker with a 20-year tenure at PouYuen, felt frantic after the company's announcement of layoffs. While waiting for a decent severance package for his 20 years of service, he worked as a Grab rider to pay the bills. 

Mass layoffs hit people hard and harder those in vulnerable groups, especially the old and the disadvantaged. Some return to their rural hometown to rely on family, and others take temporary jobs to make ends meet.

PouYuen's Union Leader Củ Phát Nghiệp claimed that his company had exhausted all options to create enough jobs for everyone but to little results.

Stretched to its limit, the company has no choice but to lighten payroll to stay afloat. It seems tough, but there is no way around that.

The company has set aside VNĐ275 billion (US$11.7 million) for severance pay to compensate the workers being let go in March. On average, they will be paid 80 per cent of their monthly salary for each year in service.

The pay could come to VNĐ379 million per person for the longest-tenured workers. Apart from severance pay, workers will be paid a sum for their accrued untaken holiday entitlement and be entitled to unemployment benefits.

The union leader called for governmental job-matching efforts to help the workers come out of the layoffs on board. 

Meanwhile, in Tỷ Hùng Company, dismissed workers will leave with a golden handshake amounting to two months of their salary plus benefits. They will also receive assistance in job-searching from unions, VCL, and job centres.

Tỷ Hùng's Deputy Director Phạm Thị Út said the dismissal of workers was inevitable because the company's monthly sales have plunged from 250,000 to 70,000 shoes. The company now has around 500 employees on the payroll.  

HCM City's Department of Labour, Invalids, and Social Affairs said the fall in orders, which had led to mass job cuts, had been a circumstance beyond every firm's control.

Many firms, notably PouYuen, have offered their employees severance packages far higher than required by law, providing them with a good buffer between work and unemployment.

What is more impressive is that PouYuen has left certain vulnerable groups untouched by its restructuring. It has not terminated workers with children below the age of one, workers in financial distress, pregnant workers, or workers with disabilities.

The department claimed that it had stepped up the delivery of unemployment benefits and insurance payments to help job seekers cover their outgoings for now.

It has also requested job centres and vocational schools to offer more job-matching services and training to improve their chances of getting new jobs.

Unions are urged to dispense the VCL-initiated support packages to jobless workers between January 10, 2022, to March 31, 2023, and offer assistance to those on the breadline.

Employers are encouraged to retain workers as much as possible. Layoffs should only be used as a last resort. 

HUBA has sent an appeal to the Government, calling for more measures to bail firms out to rein in the wave of layoffs. Those measures could include preferential loans, debt restructuring, tax cuts, and bond issuance support. 

The union has also called on tax authorities to accelerate tax refunds to lift strapped-for-cash firms, especially wood-processing ones, out of their cash shortages.

HUBA Chairman Nguyễn Ngọc Hòa suggested more trade promotion and business-matching activities to keep firms more commercially connected to foreign markets.

At the end of the day, higher sales from abroad would help them as much as the domestic stimulus. —VNS