Wednesday, December 17, 2008

Workers head for gloomy Tet as jobs are axed

Workers at the Song Than IP in Binh Duong Province leave for home after a hard working day.
Unemployment could worsen next year, the deputy minister of labor warns.

It is just mid-December and Tet is more than a month away, but Nguyen Trung Dung and Ha Huy Hung are already waiting for a bus to take them from Hanoi to their home in Phu Tho Province.

“We are going to have an early Tet (Lunar New Year),” they told Thanh Nien.

Dung, who used to work for the Japanese-owned Suncall Technology Ltd. Co. based in Hanoi, said a mass job cut last month had left him with no choice.

“My salary had started to fall in August as overseas orders fell and I was laid off last month.”

Dung’s friend Hung quit his job at the Nissei Electric Hanoi Company because his salary had fallen steeply as well.

While Vietnamese everywhere return to celebrate Tet with their families, Dung and Hung are in no festive mood, given the meager savings left from a year hit hard by the global economic slowdown.

The two told Thanh Nien they had tried to apply for jobs at other Hanoi-based companies but there were very few vacancies with “outof-reach’ requirements.

At the same bus station, Nguyen Thi Huong, who hails from the north-central province of Thanh Hoa, said she had also given notice despite the fact that she was not retrenched by Denso Ltd. Co. the Japanese auto parts maker.

“Earlier, I could make around 1,000 products per day but the number had fallen to between 200 and 300 recently,” Huong said.

She told Thanh Nien many of her colleagues had also left because of decreased orders from abroad.

“I am not expecting the Tet bonuses to be good enough,” she said.

Such stories have become very common all over the country, as more and more workers bear the brunt of the global downturn.

Struggling companies, hit hard by the turmoil, have started to cut jobs and scrimp on their expenditures.

The mass retrenchment was first felt in the south but it has now taken a toll on firms based in the north.

The Hanoi Export Processing and Industrial Zones Authority said during the last four months, particularly this month, many companies have announced massive job cuts.

For instance, at the Thang Long Industrial Park (IP), Cannon has retrenched some 2,000 employees, while Nissei Electric has laid off around 300.

Companies based in the Noi Bai IP have also cut some 30 to 50 jobs each.

The job cuts have also spread to Hanoi’s neighboring provinces and cities in the north with many big companies saying they would continue cutting jobs next year.

Bracing for worse

The unemployment situation could exacerbate by early next year, Nguyen Thanh Hoa, deputy Minister of Labor, War Invalids and Social Affairs, said at a press conference on Monday.

The ministry will soon announce the official statistics of jobless people nationwide, Hoa said.

The International Labor Organization recently warned the number of unemployed worldwide could rise from 190 million in 2007 to 210 million by late 2009.

Overseas job opportunities for Vietnamese laborers have also dried up due to the slowing global economy.

Vietnam’s four major labor export markets are Taiwan, South Korea, Malaysia, and Japan.

Concerned agencies will study more carefully the potential of foreign labor markets to secure the interests of Vietnamese workers abroad, Hoa said.

Local governments have been asked to keep a close watch on the situation and work out feasible measures to tackle the unemployment problem, he added.

Companies were being encouraged to offer unemployment allowances for retrenched staff, said Dang Minh Thuan, vice chairman of the Hanoi Labor Union.

He cited the example of Cannon which was planning to lay off around 1,200 workers, but offered them unemployment benefits of a month’s salary and VND1.4 million each, prompting some 2,000 workers to give notice.

On Monday, the government issued a decree under the Social Insurance Law, stipulating that Vietnamese employees who have signed contracts of at least a year will be eligible for unemployment insurance.

The compensation rate will be 60 percent of the average salary or wage of the employee for the last six months before being unemployed, which will be paid for between three and 12 months depending on the time the employee had paid insurance premiums.

Vietnam has been enjoying high growth rates for more than a decade based on export-oriented production in many sectors. With its leading export markets hit hard by the global economic downturn, many struggling local companies are bound to reduce jobs and their workforce in coming months.