Major manufacturers lay off 6,000 workers and orders decrease
PouYuen Vietnam, one of Vietnam’s largest shoe factories that supply sportswear brands Nike, Adidas and others, will lay off thousands of workers by the end of next month due to a drop in orders. Vietnam is one of the world’s largest exporters of clothing, footwear and furniture, and other countries import in large quantities. However, severely affected by the economic crisis in Europe and the United States, the purchasing power of global consumers is shrinking. The development prospects of the world economy are yet to be verified. According to reports, PouYuen Vietnam, a subsidiary of Taiwan-based Pou Chen Group, said they would lay off nearly 6,000 long-term contract workers starting from the end of next month. Many other businesses have similar plans.
According to data from the General Statistics Office of Vietnam on May 29, in the first five months of this year, Vietnam’s exports decreased by 11.6% year-on-year to $136.17 billion, while imports decreased by 17.9% year-on-year to $126.37 billion. As Vietnam’s largest export commodity, the export value of mobile phones and their accessories in the first five months of this year decreased by 16% year-on-year to $21.17 billion. Industries that rely heavily on exports, such as textiles and footwear, suffered severe setbacks, with orders plummeting by 70%-80%. Vietnam’s export data in various industries has a tendency to decrease, and this issue has attracted worldwide attention.
Unemployment continues to rise
Statistics from the Ministry of Industry and Trade of Vietnam show that in the first quarter, 42,900 closed businesses nationwide, a year-on-year increase of 20.1%. About 12,800 enterprises closed down and awaited dissolution, a year-on-year increase of 13.1%. 4,600 enterprises completed dissolution, a year-on-year increase of 6.5%. At the end of March this year, the Vietnam Economic Review reported that the shortage of orders at the end of 2022 continued, causing many southern enterprises to continuously reduce production scale, lay off employees, shorten working hours and so on. At present, more than 7,500 enterprises have registered to suspend business within a time limit, suspend business pending dissolution, and complete dissolution procedures. In addition, orders from key export industries such as furniture, textiles, footwear, and seafood have mostly declined, putting pressure on the 6% export growth target for 2023.
On May 10, 2023, the Ministry of Labor, Invalids and Social Affairs predicted that in the third quarter of this year, Vietnam’s labor market will still face many challenges. The number of jobs in the textile and clothing and furniture industries will continue to decrease. It is estimated that the number of jobs in the textile and clothing industry will decrease by 38,100, and that in the furniture production industry will decrease by 3,800. According to statistics, in the first three months of this year, nearly 294,000 enterprise workers in Vietnam were suspended or shortened their working hours due to the reduction of enterprise orders.
Trade remains under pressure amid sluggish demand
The Deputy Minister of Industry and Trade of Vietnam said that the economic situation is very difficult. Many markets have reduced consumption, which directly affects industrial production and import and export. Cao Huu Hieu, general manager of Vinatex, said that it is expected that the production and operation situation in the second quarter will continue to develop in an unfavorable direction, orders will decrease, and the market shows no signs of improvement. As one of the export-dependent economies, Vietnam’s economy is vulnerable to a slowdown in global demand. Vietnam’s processing and manufacturing sector experienced a sharp drop in the first quarter as trading partners such as the United States, European Union and Japan grapple with a slowing economy and falling demand, Vietnam’s Deputy Minister of Planning and Investment said. Vietnam’s economy is expected to continue to face trade pressures for the rest of the year. Sellers all over the world should pay more attention to economic trends and make timely adjustments.
