Southern factories face Tet bonus dilemma amid Covid-inflicted financial pain

It took Dang Tuan Tu, chairman of the labor union at footwear maker Chang Shin Vietnam in Dong Nai Province, a month to persuade the company management to pay workers the same bonus as last year.

Three meetings over the course of four weeks with a plethora of emails and documents were needed for Tu to convince the South Korean company.

But though company bosses have agreed to maintain the bonus, they face enormous financial difficulties because of the prolonged closure of the plant in the third quarter due to Covid.

They had initially planned to shut for six days after infections were found, but ended up closing for nearly three months.

The plant reopened in October with just 2,000 employees, or less than 5 percent of the payroll.

The resultant fall in revenues caused the management to consider cutting the Tet bonus by 25 percent from last year.

The law says bonuses depend on performance and are not mandatory, company executives have pointed out.

“But the best way to keep workers from quitting is to pay them the bonus,” Tu said, revealing it was one of the main points he had made to the board during the negotiations.

The company has cash to keep operations going after the fourth wave of Covid while most workers are empty-handed, he added.

The company finally relented, agreeing to pay a minimum bonus of VND5 million ($219). The total cost will come to around VND550 billion.

The story is similar at many other companies around the country, with managements considering cutting Tet bonuses after a year disruptions.

For many workers the bonus is a key factor in their decision to remain at a company or quit.

“I hope there will be some bonus, however much it is,” Chau Ut Anh, an employee at HCMC garment company Vietnam Samho, said.

His company has not decided yet how much it will pay employees for Tet.

It had shut down for nearly three months from the end of July and stopped paying salaries to its 10,000 workers.

Anh received a total of VND3.1 million from the government during his period of unemployment.

To feed his family and pay rent, he had to borrow from friends and family.

He was only called back to work in October, and is working extra hours to repay the debt.

A survey by recruitment company Anphabe of over 50 companies with 54,000 employees found that only half will be able to pay their employees the bonuses they had planned earlier, while the rest will have to reduce the amount.

Huynh Van Tuan, labor union chairman of HCMC’s industrial parks, said Tet bonuses would be reduced with a small number of companies saying they would pay a month’s salary but many others set to cut them by 50-70 percent from 2021.

Footwear maker Freetrend Industrial Vietnam in Thu Duc City has decided to reduce its bonus by 25 percent.

Another southern footwear maker, Taekwang Vina in Dong Nai, also wanted to cut bonuses, but eventually decided to keep them at the same level as this year, VND500 billion, at the request of the labor union.

Dinh Sy Phuc, chairman of the union, said he submitted a list of items whose prices had risen such as cooking oil, fish sauce and fuel to show the company how much the bonus would mean to workers.

Some companies, such as footwear maker Pouyuen in HCMC, have not decided how much the bonus would be.