Vietnam has been rising as a manufacturing powerhouse. It also had an 8.02% GDP growth in 2022. Still, layoffs among garment, footwear, and woodworkers have been all too common in recent months. Even as the country enjoys a wave of foreign direct investment (FDI) from major tech firms, a sluggish global economy has slashed demand for garments and similar products.
In November, Ty Hung terminated almost 1,200 workers’ contracts due to low orders from overseas. That places it among almost 530 enterprises, mostly in and around Ho Chi Minh City, that had orders reduced by the end of December 2022.
Vietnam’s factories have laid off or reduced hours for more than 637,000 workers. Because of their reliance on the export market, the textile, garment, leather, footwear, wood processing, and mechanical sectors are expected to encounter challenges and job shortages.
The job losses expose a deeper issue and pose long-term threats to the country’s economy. Low-cost labor is a key driver attracting multinational companies to manufacture in Vietnam but leaves most factory workers with little left to fall back on, says Tu Phuong Nguyen, an adjunct fellow at the University of Adelaide.
“Many workers have no or limited savings, even after they spent 10 to 15 years at work,” she says. “They are faced with very difficult choices.”
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