Lower demand drives up unemployment

Exports to Europe have fallen by 60 per cent. Some 1,200 companies across the country have had to cut production or put it on hold. Female workers have borne the brunt of the situation.

Hanoi (AsiaNews) – A sharp drop in demand in Europe and the United States is heavily impacting Vietnam’s export-oriented industries with negative consequences for employment.

According to the Vietnam General Confederation of Labour, at least half a million workers have been affected by the crisis after 1,200 companies cut or put on hold production, particularly in the garment, footwear, and furniture sectors.

After exports to the United States and Europe dropped by 30-40 and up to 60 per cent respectively, things are expected to get worse.  

Global manufacturers, like Nike, have put employees on paid leave in rotation, while some, like Samsung, Vietnam’s largest foreign investor, have cut production in factories in the northern part of the country.

Although the authorities expect things to improve in the coming months when inventories will be low and orders are likely to pick up, there is little to justify optimism given uncertainties over supplies and the costs of raw materials, and the evolution of the war in Ukraine.

Over the past few years, exports from several Asian countries have fuelled growth, and the recent drop in demand represents an unexpected setback, especially for Vietnam, one of the fastest-growing economies in South-East Asia, leader in terms of investments and production by foreign companies.

With a large (100 million) and youthful population, the country offers a well-educated and motivated workforce.

Female workers, who represent 80 per cent of the labour force in the garment industry, have been especially affected by the economic downturn.

Yet, even with reduced wages, around US$ 200 per month, they not only meet family needs, but guarantee their social role and autonomy.

Out of 40,000 laid off workers, 30,000 are women over 35. For many, the current situation is worse than during COVID-19, when workers confined at home were provided with food aid and subsidies.

This had laid the ground for the economic recovery that began in late 2021 so that within a few months Vietnam appeared to be back to high levels of production.

This came crashing down when demand dropped and inflation and unemployment rose, stranding many families in a sea of uncertainty and need.

• vietnam
• economic crisis
• exports
• drop
• united states
• europe
• inflation
• unemployment
• female workers
• pandemic
• covid-19