Vietnam - A tough job to get nation’s labour pool fully working

Unemployment is rearing its ugly head in Vietnam as local enterprises struggle with soaring costs and shrinking demand.

The number of people registered as unemployed climbed to 147,000 in late August, a three-fold increase on-year, according to figures released by the Ministry of Labour, War Invalids and Social Affairs (MoLISA)’s Employment Bureau.

The latest report from the Vietnam General Confederation of Labour (VGCL) on the country’s labour situation showed the jobless rate was rising dramatically as domestic enterprises scaled down production in the wake of a credit squeeze.

Tightened credit and public investment have also meant delays to many projects. Moreover, the increase in the minimum salary which comes into force on October 1 had forced some enterprises to downsize their workforce.

The VGCL also pointed out business restructuring due to economic difficulties was partly to blame.

Vietnam’s inflation last month hit 23.02 per cent on-year, the highest level in Asia.

The VGCL also said  some labour-intensive enterprises had shifted manufacturing facilities to suburban areas under the government’s plans to reduce inner-city pollution.

Vu Trung Chinh, director of the Hanoi Job Promotion Centre, said lay-offs would continue to rise as enterprises battled with surging input and borrowing costs.

“Employment demand in the manufacturing sector has nosedived remarkably in recent months. Though inflation is declining slightly, labour cuts are inevitable as borrowing costs remain too high while access to credit is too narrow,” Chinh added.

Ho Viet Phuong, vice director of electric equipment maker Nival Company in Hung Yen province, said demand for construction materials dropped sharply with many construction projects suspended due to capital shortage.

Bac Giang Business Association’s report showed that 43 enterprises based in this northern province had shut up shop this year, up 30 per cent against 2010. Meanwhile, 44 enterprises in neighbouring Bac Ninh province had closed their doors for good.

While job losses are on the rise generally, the VGCL stressed that enterprises in industrial and export processing zones in some southern cities and provinces were desperate for recruiting workers.

The MoLISA’s Employment Bureau statistics show that enterprises in southern Binh Duong province, one of Vietnam’s investment hubs, wanted to recruit 68,125 workers in 2011, but had so far could only employ just 20 per cent of this figure.

The recruitment supply to demand ratios for Danang and the northern province of Vinh Phuc are 30 and 12 per cent, respectively.  The low salaries on offer are one of the main reasons behind these difficulties.

Many labourers job-hopped and many immigrant workers opted to return to their home provinces to work due to the low wages, according to the VGCL’s report. It highlighted that a high ratio of workers at foreign-invested enterprises were receiving very low salaries, while many labourers at state-owned enterprises boasted  high wages.  These pay levels did not, however, reflect the business outcomes of the enterprises in question.

Nguyen Chung | vir.com.vn

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