Friday , December 9 2022

Amid reduced incomes, rising prices make it a double whammy for working class


With prices rising while incomes are shrinking due to the Covid-19 lockdowns, working people are struggling to afford the barest necessities.

In HCMC’s Binh Tan District, Nguyen Thi Thuy, 37, describes a common and dire situation well when she says, “We earned next to nothing during the lockdown, and now prices are surging; what a perfect storm!”

She has used up a third of her meager VND45 million (US$2,000) savings to pay for food and other expenses in the past few months.

Like most other factory workers, during the fourth wave of the Covid-19 pandemic she saw her working hours and pay being cut, and she has been trying to get back on track ever since.

Her husband is a motorbike-taxi driver with an uncertain income, and so even a slight increase in living expenses can become an enormous burden.

“The price of a 12-kg gas cylinder has jumped from VND340,000 to VND500,000,” Thuy says.

Though other items have not seen such a dizzy rise in prices, consumers have suffered an increase of 10-30 percent across the board, especially in the prices of essential goods like fresh food, milk, rice, and cooking oil.

Though production has been resuming across the country, higher prices of inputs like fuel, packaging and transportation together with lower productivity due to unavailability of labor have pushed prices up, making life hard for both consumers and retailers.

Consumers, especially those in the lower income segments, are forced to cut their daily spending on groceries.

In supermarkets in HCMC and Hanoi, many housewives carefully examine prices before buying and look for items that have promotions or discounts.

“The supermarket is not filled with lines of shoppers during weekends any more,” Trinh Thu Lan who works at a supermarket in Hanoi’s Long Bien District, says. “People are wary of the surging prices”.

Many housewives also say the rising prices are leaving them exhausted.

Phan Thi Quynh Chi of HCMC’s District 8 complains about the rises in the prices of meat, fish and vegetables.

“In the past I used to spend around VND300,000 day on food for my family of four. Now, it costs VND450,000-500,000 .”

These days she spends sparingly and sometimes even has to cut down on portions.

In times of crisis, daily existence can become precarious for the working class, though ironically the Covid-19 pandemic has dampened economic growth and helped reduce inequality in income distribution faster.

Indeed, according to the General Statistics Office, Vietnam’s Gini coefficient, a measure of income disparity widely used by economists, saw a 0.002-point reduction between 2018 and 2019, but it jumped 25 times to 0.05 points between 2019 and 2020.

In 2020, Vietnam’s income inequality index was 0.373, considered “average” by world standards.

For the poorer in society though, a survey done in early August by VNExpress and the government’s Committee on Private Sector Development and Research can shed some light on how they fare when the going gets tough.

Over two-thirds of nearly 70,000 workers who were polled said they had lost their jobs because of the pandemic.

Of them, half said they only had enough money to live on for less than a month, 40 percent said they did not receive any support from relatives, charities, former employers, or the government, and 48 percent said they had no hope of finding a new job.

Only 38 percent of respondents still had a job. But even of these lucky ones less than half still got their full salary while 37 percent suffered cuts of up to 80 percent.

The pandemic has also brought about various extra expenses to weigh down on workers’ modest incomes.

In the survey, most people said they had to spend extra amounts to facilitate their children’s online schooling, support loved ones who lost jobs or got stuck in locked-down areas or pay for Covid tests.

Besides, rent and loan repayments, despite not increasing, became more burdensome because of reduced or lack of regular incomes.

Nguyen Thi Kim Lien, 38, a butcher at a market in HCMC’s District 3, is struggling to pay for her utilities and housing.

She has seen her income drop because many of her customers, mostly workers living nearby, have stopped buying meat after she increased prices.

“My supplier has increased hers, so I have no choice but to do the same,” she says, capturing the dilemma many retailers face of whether to increase prices because producers have increased theirs or risk losing sales.

“Even though business has been picking up after the city reopened, I still barely make any profit because customers do not want to pay higher prices for their pork,” she says.

If the situation does not improve, she says she might close down her business before the Lunar New Year [in early February].

“I have had cut my family’s spending in the last few months to stay afloat. This is brutal.”

Lien’s family has recently received a VND1 million per person cash aid package from the municipal government but such an amount didn’t help her much.

During the pandemic, the central government has pumped hundreds of trillions of dong (tens of billions of dollars) into the economy to help businesses and workers through various financial and social policies deferring tax and rent payment, restructuring debts, reducing bank loan interest rates, and supporting workers who lost their jobs and informal worker, who are particularly vulnerable.

The macroeconomic picture thus remains positive. Industry and trade authorities say the current inflation is an inevitable but temporary outcome and will cool down once production recovers fully.

The Ministry of Planning and Investment has forecast growth of 3.5 percent this year compared to 2.9 percent last year.

Inflation was 1.84 percent in the first 11 months, the lowest rate since 2016.

However, for individuals, while hopefully the difficulty is only going to be temporary, it is pernicious while it lasts.

In Hanoi, Phan Quoc Viet, 26, a worker at a paper company, has been trying to weather the Covid storm and rising prices.

“It is very difficult for me to cover my normal expenses when the prices of gas and food keep rising,” he says.

As a result, he has stopped eating breakfast and carries lunch from home.

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