Slowdown in US and Europe affects half a million workers in Vietnam

After ten years making shoes for international brands like Timberland, or K-Swiss, Phan Thi Nhieu was laid off, as were tens of thousands of other Vietnamese workers who were victims of the slowdown in world consumption.

One of the largest exporters of clothing in the world, Vietnam is suffering from the crisis in the cost of living in the United States and Europe, which has led to a drop in demand from companies in these regions.

In this difficult situation —between inflation and supply difficulties—, the workforce, mainly female, serves as an adjustment variable for companies that wish to stay afloat.

More than 470,000 people switched to part-time work in the last four months of 2022, while another 40,000 lost their jobs. Of these, about 30,000 are women aged 35 or older, according to Vietnam’s most powerful national workers’ union, the VGCL.

In all, this affects 1,200 companies, mainly foreign ones, in the textile, footwear, furniture, or electronics sectors, completes the union.

In early November, 31-year-old Phan Thui Nhieu “cried” when his employer, Taiwanese Ty Hung, announced the layoffs of two-thirds of the 1,800 workers at the Ho Chi Minh factory, including himself, due to a lack of orders. .

“I was so shocked. I cried, but I couldn’t do anything, I have to accept it”, she vented.

Now she survives on a monthly salary of US$220 in a nine-square-metre room she occupies with her husband and two children in the economic capital of southern Vietnam, where the average income is US$370 a month. With two months’ salary as compensation, Nhieu has little to feed his family.

“We don’t have anyone to help us,” he says.

“I’ve never given myself the luxury of dreaming about what I want in life. I only have one wish: to earn enough to survive”, he confesses.

For the 20,000 workers at the Taiwanese giant Puyuen, which is outsourced to Nike, the crisis takes the form of forced leave, by rotation, to share the little work.

According to the press, South Korean Samsung, the largest foreign investor in Vietnam, has reduced its production of smartphones.

Orders from the United States are down between 30% and 40% compared to last year, and the number rises to -60% for Europe, affected by inflation related to the Russian invasion of Ukraine, VGCL details.

Workers calculate that the situation will be worse this winter than during the coronavirus pandemic, which forced them to stay at home and survive thanks to food donations.

For Vietnamese export companies, which were working “at full capacity” during the first half of 2022, the slowdown in activity is clearly noticeable, says the deputy director of the Business Association of Ho Chi Minh-Ville, Tran Viet Anh.

“At the beginning of the third quarter, due to global inflation, consumption fell, which led to the suspension of orders and huge surpluses of stocks”, he explained.

For him, the current slowdown will only be temporary.

“2023 will be a year in which production will be increased to compensate”, he says, adding that foreign investors see Vietnam increasingly seen as an alternative to China, due to the management of Covid-19.