HCMC – The novel coronavirus pandemic will affect the livelihoods of 4.6 to 10.3 million workers in Vietnam by the end of the second quarter, whether through a decline in working hours or wages or the loss of jobs, according to the International Labor Organization (ILO).
The ILO stated in its briefing note released on April 21 that Vietnam has managed to contain the health crisis remarkably well over the first months of 2020 as the country adopted early and progressively more stringent measures to limit the spread of the infection.
“These measures reduced economic activity for a period. In the meantime, countries across the world, and among them Vietnam’s top export partners are applying similar measures aimed at fighting the virus, with various degrees of stringency,” noted the ILO.
The organization pointed out that the overall impact on the Vietnamese economy through both direct (generated by domestic decisions) and indirect channels (caused by government response to the crisis in other countries) was significant in the first quarter, with a further deterioration of performance expected for the coming months.
Workers in the informal economy, a major contributor to the livelihoods of people in Vietnam, will be severely affected as they lack State-funded social safety nets, according to the organization.
Millions of informal workers in the Southeast Asian nation do not have access to health insurance. In 2019, 38.1 million people were in informal employment.
The ILO noted that vulnerable workers are especially exposed to economic risk because most of them work informally in low-paid occupations and are unlikely to be able to count on savings.
Also, female workers are overrepresented in most sectors experiencing widespread reductions in economic activity. For example, women in the retail trade industry account for almost 64% of all workers, and garment manufacturing has a workforce that is more than 77% female.
“Even before the Covid-19 crisis, women were more likely than men to be found contributing to family work and facing a pay gap. The current economic shock will exacerbate these challenges,” said the ILO.
With schools closed since early February and social distancing measures in place, the ILO predicted childcare responsibilities are likely to fall heavily on women, possibly forcing them to make decisions regarding their employment and further reducing their income.
Based on the higher impact scenario, the affected workers include 3.8 million people in manufacturing, 2.6 million in the wholesale and retail trade and repair of motor vehicles and motorcycles sector and 1.4 million in accommodation and food services.
In the lower impact scenario, 1.8 million manufacturing workers will be at risk, as well as 0.9 million workers in wholesale and retail trade and 0.9 million in accommodation and food services.
Agriculture, forestry and fishing, which employs some 18.9 million workers, is considered a low-risk sector overall, but challenges may arise for subsectors working on exports.
The ILO remarked that the actual extent of livelihood loss will depend on the evolution of the pandemic and the measures taken by the Government of Vietnam and other countries.
When the note was prepared, Vietnam was easing lockdown restrictions in some parts of the country for one week. The measure excludes several provinces and Vietnam’s economic hubs of Hanoi and HCMC, and where it applies, it does not remove social distancing rules altogether.
Still, this measure will bring some relief to the direct channels suffering economic shock. In the meantime, however, Vietnam’s trade partners are still engaged in the fight against Covid-19, the disease caused by the new coronavirus.
“Several of the top export partners have increased the stringency of their processes since the beginning of April. It is difficult to predict when there will be some relief for the indirect channels suffering economic shock,” according to the ILO.
The organization pointed out that in the medium term, even if Vietnam should choose to lift social distancing measures across the country, the crisis, whether directly or indirectly brought to the country’s economy, may affect overall consumption by eroding the financial means of individuals and therefore the ability of domestic demand to sustain the economy.
The Vietnamese Government is unveiling a range of monetary and fiscal measures to keep enterprises afloat and safeguard incomes in the short term. Plans to push economic recovery in the medium and long term are taking shape.
While the health crisis is being brought under control, Vietnam’s leadership will need to address the economic crisis in an equally aggressive manner, said the ILO.
By Gia Phong
