Policies needed to mitigate mass worker layoffs as export orders remain elusive: experts

Since Tet ended South Korean firm Changshin Vietnam in Dong Nai Province that borders HCMC has had to furlough workers due to lack of orders. On days they are off work, workers get VND180,000 (US$7.60). To persuade them, the company’s board of directors had to discuss the issue with the labor union and negotiate with the workers.

“We are all trying our best, but we don’t know how long we will last,” Dang Tuan Tu, head of the union, said.

He said if production is stopped even for a couple of days in a month there would be around 3,000-4,000 redundant workers.

But he warned that if the order book does not improve soon there could be policy changes.

Current government support policies are not clear or accessible and this needs to improve if the situation continues, he said.

Even the support packages from the General Confederation of Labor for furloughed workers do not benefit workers in his company since they require them to have a monthly income lower than the regional minimum of VND4.68 million, he said.

“No worker at Changshin would be able to benefit from that package even if the factory sees a further drop in the number of orders.”

The company cannot cut workers’ salaries too much since they would not be able to afford living costs then and would quit, he said.

Nguyen Liem, head of the Binh Duong (Province) Furniture Association and chairman of Lam Viet wood company, said the number of orders has been dropping since April last year, and his company has retained over 1,000 workers but is reaching the end of its tether.

“We can only last until the end of the third quarter,” he said.

An investors’ meeting is coming up, but the board does not yet have an agenda for 2024 since it “does not know.”

With the situation likely to persist, support packages for workers worth a few million dong would not be effective, and instead policies should consider the long term and help businesses retain their workers, he said.

The support packages could relate to taxes, loans and social insurance, allowing businesses to gain access to more funds and stay afloat, he said.

For instance, if businesses are allowed to delay paying workers’ social insurance premium by six to 12 months, they would have money to pay salaries, he said.

The government could also help businesses by supporting them with commercial cooperation, especially when they are trying to expand to new markets and find new customers, he said.

“More than anyone else, businesses want to keep their workers. They only resort to layoffs if they can no longer handle the situation. Policies to support factories will help workers as well.”

Nguyen Duc Loc, head of the Social Life Research Institute, said the domestic market needs to be strengthened and small and medium businesses should be assisted with making products for domestic consumption, thus creating jobs.

Export orders depend on the global economic situation, which is difficult to predict, he said.

But the domestic market could be better managed, he said.