Vietnam’s 5,200 factories continue to lay off workers
On May 30, according to Vietnamese media reports: About 5,200 companies plan to lay off employees this year. The industries with the most layoffs were footwear, apparel, woodworking, seafood and electronics. Ho Chi Minh City’s biggest employer and footwear maker Pouyuen will cut 8,000 jobs in the first seven months of this year as orders fall.
5,200 companies continue to lay off workers due to lack of orders
On May 30, according to Vietnamese media reports: about 5,200 companies (accounting for 71% of the respondents in the survey) plan to lay off employees this year. This is just a survey sample of the media, and the actual data may be larger. A survey conducted in April with the government’s Private Sector Development Committee found the majority were in manufacturing and construction. The main reason for the layoffs was a lack of orders. The current economy faces many challenges and businesses are severely impacted. Nearly 30% of companies expect their revenue to halve this year. About 82% employers plan to downsize or close. Businesses want the government to cut taxes and fees to help them overcome the challenge. They also want banks to increase lending rates and simplify lending procedures.
Companies have been laying off workers since the second half of last year as the U.S., Europe and Japan cut imports from Vietnam as inflation caused consumers to tighten their wallets. The industries with the most layoffs were apparel, footwear, wood processing, seafood and electronics. According to official data, the number of unemployed people in the city exceeded 149,000 in the first quarter, an increase of nearly 13% from the previous quarter.
Vietnam has no easy solutions
Vietnam’s weak economic data for the first five months of this year has increased pressure on policymakers to take further action, it was reported on May 31. Signs of economic weakness were widespread as exports plummeted on weak global demand and imports slumped. Vietnam’s exports have been hit hard as consumers and businesses around the world cut spending in response to the central bank’s aggressive efforts to curb inflation. Exports fell at an annual rate of 5.3% in May, lower than Vietnam’s figure in August last year, according to the General Statistics Office. From January to May, Vietnam’s total exports amounted to US$136.17 billion, down 11.6% year-on-year, continuing the downward trend of the past nine months.
Exports to its biggest market, the United States, fell 19.5% year-on-year to $37.2 billion in the first five months of this year, while sales to the European Union fell 6.5%, the GSO said, as lower global demand dampened exports. Exports of products including furniture, clothing, footwear and smartphones, which are the country’s biggest foreign exchange earners, have fallen sharply, the data showed. Vietnam’s imports fell 17.9% year-on-year in the January-May period, underscoring a continued contraction in manufacturing activity as factories reduce purchases of raw materials and production equipment. About 94% of Vietnam’s imports were for raw materials and production equipment, down 18.2% year-on-year in the first five months, the GSO noted.
The PMI showed that the index of manufacturing activity fell to 46.7 in April from 47.7 in March, well below the 50 point that distinguishes growth from contraction. “The big issue now is getting new orders so we can revive faltering exports,” said Tran Ngoc Bau, chief executive of data provider WiGroup. “However, the global manufacturing PMI remains below the neutral 50.0 point, indicating a pullback in both global manufacturing and consumption,” he added, who expects Vietnam’s exports to fall further in the next quarter or two. Vietnam will be in focus as the global economy draws closer to recession.
