Vietnam: Factory workers hesitate to return to work

  • Following the government’s stringent controls to curb the Covid-19 outbreak in Vietnam, factories have seen an exodus of employees going back to their home villages from the country’s southern industrial belt, which is also the epicentre of the outbreaks. Millions more are poised to follow, as months-long mobility restrictions that confined workers to cramped housing recently eased.
  • Factories slowed or closed, wiping out months of production for companies such as Nike and exacerbating problems in a global supply chain already in disarray.
  • After China, Vietnam is the second-largest supplier of clothes and shoes to the US, according to the American Apparel and Footwear Association. Its importance increased during the trade war between the US and China as manufacturing moved there to avoid tariffs.
  • At this point, there is little brands like Nike, which recently cut its sales forecast largely on the lack of goods from Vietnam, can do. Factories in other countries are overloaded with orders, and it would take months to train workers and move machinery.
  • The missed production will be especially apparent at retailers in Dec 21 and extend well into 1Q21, analysts said, that output from Vietnam would not normalise until the end of 1H22.
  • After lockdown restrictions were lifted earlier Oct 21, staff-starved companies are now imploring workers to return for what would normally be peak production for winter clothing and Christmas gifts. The government is offering transportation back and companies are upping pay and benefits, but little is working.
  • During the lockdowns, factories were instructed to establish on-site accommodations – essentially forcing employees who want to work to live in tents – or temporarily shut down. This left many workers who remained with no paychecks for months, dwindling savings and reliant on government food packages delivered by soldiers.
  • The experience traumatised many migrant workers. Instead of isolating themselves at makeshift factory lodging, or staying in the area without pay cheques, many workers returned to their home provinces. Despite the call from factories for workers to return, many remain reticent as they do not want to risk catching the virus. Vietnam’s vaccination rates remain low, with only about 14% of the population being fully vaccinated.
  • There are signs that the situation may be improving, however. Industrial parks and export processing zones in Ho Chi Minh City reported that about 57% of workers had returned as of 6 Oct 21, up from 24% before the relaxing of restrictions, according to the city’s media centre. Notwithstanding, the city will have to do much more than just providing free meals at work and a fee bump in order to convince their workers to return.

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