Vietnamese shoe factories are having a hard time in 2023! 7,500 factories are closed and dissolved.

Translation: According to the Vietnam Economic Review on March 27th, 2022, the shortage of orders at the end of the year continues, causing many southern enterprises to continuously reduce production scale, lay off employees, and?shorten working hours.

Currently, more than 7,500 companies have registered for suspension of business, suspension for pending dissolution, or completed?dissolution procedures. This number has added to the list of companies facing difficulties and forced to exit the market. In addition, the orders for key export industries such as furniture, textiles, shoes, and seafood have mostly declined, putting pressure on the export growth target of 6% for 2023.

Shoe factories are struggling to retain their workforce. In March of this year, Pou Yuen, the largest?shoe factory?in Vietnam, submitted a document to relevant departments regarding the execution of an agreement to terminate labor contracts with nearly 2,400 workers due to difficulties in orders. This shows that leather, shoe, and?textile enterprises?are indeed struggling.

Starting from March 31st, the sole?processing workshop?of 800 employees at TW MTC Company located in the?Tien Giang Province?and the?second industrial zone?will stop production due to a lack of orders.

Companies are encouraging employees to resign, and there are policies to support employees who have worked for less than 20 years to receive half a month's salary each year, and employees who have worked for more than 20 years to receive one month's salary each year. If employees want to continue working, they can move to another branch.

In these difficult times, maintaining the workforce or a large part of the?fixed workforce?is a huge effort for companies.?Selective recruitment,?reasonable scheduling, average?workload distribution, and other methods are used by many enterprises to retain employees. Although lacking orders, Toan Thang Co., Ltd (Binh Chieu Industrial Park, Thu Duc City) is still trying to maintain a six-day workweek for its workers.

Mr. Dinh Van Giai, the production manager of the company, stated that the company took the initiative to increase productivity in the?processing stage, allowing workers to receive?production bonuses?of 1-2 million Vietnamese dong per month to compensate for the insufficient productivity.

Trying every possible means, waiting for orders

Like the?textile industry, Long Cuong Manufacturing, Trading and Service Co., Ltd (Thu Duc City) has no orders in May and June, but the workers are not too worried because the board of directors is not too anxious. They proactively report the situation of the enterprise and promise to make efforts to find new orders to stabilize the livelihoods of the workers.

"The?grassroots union?is cooperating with the board of directors to find new markets. If there are still difficulties, the company will consider arranging for workers to take a long break on April 30th and May 1st," said Ms. Phan Thi Thien, the company's union chairman.

Jia Han Interior and Exterior Decoration Co., Ltd in Qui?Nhon City?(Binh Dinh Province) organizes workers to rotate shifts, with each person working 10-15 days a month, so that everyone has a moderate amount of work.

"This plan is agreed upon by all workers. Despite the difficulties, no one resigns, and we are waiting for the day when things return to normal. We expect the company to receive new orders before June 2023 and then the company's operations will prosper again," emphasized Mr. Nguyen Thanh Cong, the company's director.

Mr. Nguyen Liem, the chairman of the Phu Yen Woodworking Association and a director of Lam Viet Wood Company, said that the association's enterprises are trying to retain workers by rotating production shifts. If workers are laid off, they will find other jobs or return to their hometowns, and when orders return, there will be no production workers, and recruitment is very difficult, especially for skilled workers.

The heavy burden of difficulties that companies have to bear includes worker salaries, insurance, sewage treatment costs, regular environmental testing, infrastructure usage fees, and more.

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