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Wednesday, June 19, 2024

Labor shortages may impede companies’ recovery

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Adversely affected by the Covid-19 pandemic, the economic growth of Vietnam’s key cities, such as Hanoi and HCMC, has been slower. The exodus of migrant workers leaving HCMC may make the path of recovery planned by enterprises more bumpy.

Retaining the work force the size it used to be in the context of shrinking market is one of the most difficult conundrums to be solved by businesses. More than half a year has elapsed, and more workers have left HCMC for their home provinces due to lackluster performances of their companies and risks of contracting the coronavirus. The wave of workers departing this city will even worsen the dilemma of enterprises that seek to fulfill their orders to be delivered by the end of this year or want to implement their recovery plans. To reach long-term goals, many businesses have done whatever they could to retain their work force.

Serious losses of work force

The exodus of leaving workers bound for their home provinces also means factories and enterprises are losing an important part of their labor force. As this is a social phenomenon, it is beyond employers’ reach with some being deprived of half of their staff or more after only a short time.

A veteran name in the consumer goods industry, Masan, with a network of over 30 factories nationwide, is also facing a high rate of labor turnover. One of the reasons is the application of the “three-on-the-spot” model (workers do their jobs, have meals and rest on the same spot), which causes inconveniences to female workers as they have families to take care of.

“Our rate of turnover in the entire group this year may amount to 100% [rotating leaves, mainly in the retail division], the highest ever rate,” said Nguyen Thi Phuong, permanent general director of VinCommerce.

Labor-intensive industries—such as textile and garments, leather and shoes and woodwork—are among the “hardest-hit” when it comes to labor shortages. According to Nguyen Chanh Phuong, secretary general of the Handicraft and Woodwork Association of HCMC (HAWA), the labor crunch has been long underway; however, since the outbreak of the fourth wave of the coronavirus, it has further deteriorated. The woodwork industry is performing very well and some enterprises in this sector have received orders which are due next March or April. However, the “homecoming” of the labor force is causing difficulties to them in carrying out production plans.

“HAWA’s almost 600 members’ factories mostly based in Binh Duong, Dong Nai, Tay Ninh provinces and some localities in the Mekong Delta are what they can to fulfill orders of export goods,” said Mr. Phuong. “However, the remaining work force is only from 60-70% of our need.”

Meanwhile, a representative of the Vietnam Textile and Apparel Association (VITAS) argued that the garment supply chain is running a risk of disruption as the pandemic has become more complicated. The industry is operating at only 10-15% of its capacity. The same situation occurs when a huge number of factory workers in southern localities, such as HCMC, Binh Duong and Dong Nai, have fled home.

The seafood industry, another sector which requires huge contingents of workers, is in the same shoe. According to statistics released by the Vietnam Association of Seafood Exporters and Producers (VASEP), some 30% of its southern members are still working as they meet the “three-on-the-spot” conditions. Yet the number of workers is only from 30-50% of the normal rate because many of them have returned home.”

Higher costs spent to retain the work force

Enterprises with urgent export orders to fulfill have to comply with the “three-on-the-spot” requirements to race against time. However, nothing is perfect. This model is still somewhat risky and does not ensure total safety. Moreover, to keep this model running and retain the work force to operate production lines, employers have to spend remarkable extra costs.

ABC Bakery, for instance, detected infections among its workers while running in line with the model. Subsequently, its factory had to be closed. The infected cases and hundreds of workers had to be in quarantine or treated. So far, some 20 workers have returned to the company and stayed at assigned accommodations near the factory. ABC Bakery also sets up a team tasked with taking care of these workers, both materially and spiritually.

“That’s what we need to do to retain our workers so that when restarting, our factory could operate again quickly,” said Kao Sieu Luc, general director of ABC Bakery. “Although we have to spend more to maintain the work force, it is worthwhile.”

According to Nguyen Thi Tuyet Mai, deputy secretary general of VITAS, to make workers stay with their workplace, aside from perks and salary increases, Covid-19 vaccination is the most effective way to lure them back.

The recovery does not simply mean a return to the state prior to the pandemic. It also involves necessary changes to keep pace with what is happening in a post-Covid world.

Quite a few businesses are fully aware that without effective measures to retain their skilled work force, even when the pandemic is under control, factories will not operate normally. To persuade workers to stay in the city, employers have to give them basic income and pay social and health insurances for them no matter whether the enterprises concerned run or not. In this case, a great deal of employers accept to pay extra costs to be able to reach their long-term goals.

Le Thi Giau, general director of Binh Tay Food, said to take care of and retain workers, her company has paid them higher than the basic salary, VND7 million a month on average, even they are off work.

“Their income must meet their basic needs so that workers are willing to wait for work to start again and be faithful to our company,” said Ms. Giau. “Although we are in difficulty, we have to spend more so that we can come back strongly and quickly after the pandemic is put under control.”

According to the Center of Forecasting Manpower Needs and Labor Market Information HCMC (Falmi), from now to the end of the year, HCMC is in need of 150,000 jobs in the fields of commerce, information technology, healthcare, garments, leather and shoes and food processing. These are the sectors which are relatively less affected by the pandemic and whose demand remains great. The need for labor in these industries is expected to rise in the future.

During a recent roundtable meeting, Assoc. Prof. Tran Hoang Ngan, rector of the HCMC Institute for Development Studies, contended that when the city obtains herd immunity, production and business will accelerate. It is this reason that the retention of the work force is a way to “rescue” businesses and ensure the city’s economic stability.

By V. Dung

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