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Decline in exports could see textile firms shed more jobs
With Vietnamese companies hit hard by the global downturn, thousands of textile and garment workers have already lost their jobs but the unemployment situation could worsen, an industry official warned.
The recession has reduced demand for goods in the US, Europe and Japan, hurting exporters in Vietnam who said they have no choice but to cut jobs and even stop manufacturing.
According to the Ho Chi Minh City Labor Union, 31 city-based companies closed or had to suspend production last year, two-thirds of them in the garment and textile sector. Most of these companies had 200-400 workers.
The Vietnam National Textile and Garment Group (Vinatex) said last year around 10,000 workers lost their jobs.
But Nguyen Duc Hoan, chairman of the HCMC Garment, Textile, Embroidery and Knitting Association, warned that things could get much worse.
If global demand continues to fall this year, mass job cuts can be expected in the second quarter, he said.
“When businesses run out of funds, a 20 percent drop in export orders could put around 400,000 [in the garment sector] out of work,” he estimated.
Vinatex said exports account for two-thirds of its member-companies’ revenues but new orders have declined by 20 percent in the last few months.
Pham Xuan Hong, general director of Saigon 3 Garment Company, said some of his company’s partners have said they would cut orders by 30 percent.
At many other companies, this was as high as 50 percent, Hoan said.
At this time every year exporters get orders for three quarters, but now many do not have enough orders for the first three months, he said.
Bloodletting begins
Some companies are already folding up.
Sambu Vina Sport, a handbag and backpack manufacturing company, said recently that it would lay off 224 workers on January 11.
Some other companies, including Sony Vietnam, Castrol BP Petco and Dai-Ichi Vietnam, had earlier reported to the authorities they were laying offs 1,000 employees in all.
Garment and textile businesses said since they hire a large number of workers, the government should bail them out by cutting taxes and interest rates.
Vinatex chairman Le Quoc An said at this juncture it is necessary to pay unemployment benefits to workers because it would help boost consumption and maintain social stability.
He also said Vinatex member-companies are cooperating with each other by forming production chains and exchanging workers so that companies with lots of orders can support the others.
An suggested that small businesses should join these chains to survive.
The International Labor Organization recently warned that the number of unemployed worldwide could rise from 190 million in 2007 to 210 million by late 2009.
Vietnam has a labor force of 44 million, with another 1.7 million set to join work this year.
TBKTSG
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