As businesses gradually resume production after the Lunar New Year, Vietnam’s southern provinces are facing challenges in recruiting human resources.
In mid-February, the CEO of a textile company with a factory in Sonadezi Chau Duc Industrial Park (Ba Ria – Vung Tau) reported that his firm had only managed to recruit 10% of the employees they’d planned for before Tet. “If there are not enough people, the production progress will be affected, and the company may face the risk of contractual penalties,” he said.
In Binh Duong, all businesses are searching for workers, turning recruitment into the most critical task after Tet. Posters are plastered along every road leading to the industrial park and job flyers are scattered everywhere. Most companies need to hire about 300 to 500 people, while manufacturing plants require thousands of recruits. The discouraging number of applications has thrown businesses into a hiring competition.
Many factories in Ho Chi Minh City, Dong Nai, Binh Duong, and other places are trying to attract workers by offering a generous salary or extra bonuses on occasions such as the Tet holidays. In some companies, employees who refer candidates are rewarded with about VND 2 million or even VND 4 million per referral. Businesses also launch initiatives to help improve workers’ quality of life, such as housing support, commuting allowances, or three to six months’ worth of rent for those who come from distant provinces.
Ms. Tran Thuy Tram, Deputy Director of Dong Nai Job Placement Center, commented: “There is now a war to find unskilled workers, who are hard to find and hire. Factories must create many incentive policies to attract new people.”
Statistics presented by the Vietnam General Confederation of Labor (VGCL) at the Conference on Solutions to Restore the Labor Market in early March showed that around 95% of workers had returned to work. This is also the number of workers returning to work in southern provinces, but only compared to the statistics before the Lunar New Year. In fact, in the third and fourth quarters of 2021, millions of foreign workers left the southern provinces in an unprecedented migration due to the intense outbreak of the pandemic in Ho Chi Minh City and many southern provinces. Now that production is resuming, companies in the region are facing a severe labor shortage.
Mr. Vu Hong Quang, Deputy Head of the Policy – Law Department of VGCL, said that some workers in the Northern and Central regions did not return to factories in the South because they had found new jobs at home. For others, especially those with young children or elderly family members, the fear of COVID-19 dissuaded them from going back.
In addition, due to inflation, many employees found their salaries insufficient to cover higher living expenses in the South. Thus, they moved to higher-paying areas or looked for new jobs, causing an imbalance in the labor supply.
Currently, the minimum wage in big provinces and cities such as Binh Duong, Ho Chi Minh City, and Dong Nai is around 7 million VND/month/person, which is considered “not enough for living expenses, kindergarten tuition, or support for one’s family back home.” Meanwhile, if they stay in the countryside and find work, employees can cut many expenses even if their income is only VND 4-5 million a month because they don’t have to live far from home or away from their family. This is the main reason why workers, especially those from areas with new industrial parks, are unlikely to return to major southern industrial zones.
Salary is a key competitive factor in this hiring race, as the vast majority of those working far from home consider out-of-town jobs as a “trip to earn money for going home”. Currently, skilled garment workers in Dak Lak earn higher wages than those in Ho Chi Minh City.
Meanwhile, statistics from the VGCL show that demand for human resources in key southern industrial provinces is constantly rising due to the expansion of projects. For example, Binh Duong currently needs 90,000 workers; Long An needs 51,000 people; Tay Ninh about 46,000 people, and Ca Mau about 35,000 people. Meanwhile, Ho Chi Minh City would need to recruit as many as 380,000 workers this year.
In fact, labor shortages after Tet have long been an “annual” issue, but this problem is particularly concerning in 2022 as a “consequence of the Covid-19 pandemic”. Labor shortages not only pose a problem to businesses but also disrupt production activities as Vietnam is trying to join the global supply chain. It could also seriously hinder investment in key southern industrial provinces.
To solve this problem, many local union leaders have proposed that VGCL ask authorities in areas with abundant labor forces to organize job fairs that connect the supply and demand of human resources. In the long run, they also believe that the Government should consider adjusting regional minimum wages, encouraging businesses to increase salaries and benefits, and introduce long-term policies for migrant workers, such as providing affordable housing for workers to rent and buy in key economic regions.
In the meantime, many companies say that they are still looking for ways to “save themselves” by offering appealing policies. They are also reorganizing production, working overtime, and increasing training to help one employee take on different positions, to partially make up for the human resources shortage.
Businesses with better resources are seeking to transform production methods, streamline operations, and adopt more technology and technical equipment to increase capacity and reduce staffing needs. The leader of a wood factory in Tam Phuoc, Bien Hoa (Dong Nai province), shared that he had chosen to reduce his employees. “There will certainly be a shortage of labor in this industry. It is necessary to acknowledge that the workforce is no longer what it used to be. Companies need to restructure to survive,” he affirmed.