Enterprises face difficulties when restoring production

VCN - Many enterprises in the processing and manufacturing industries with large export turnover such as textiles, footwear, wood, etc. are eagerly looking forward to returning to production, when many localities gradually reopen their economies after social distancing. However, complicated conditions, different policies in localities and labor shortage are major challenges that most businesses have to face.
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It is forecast that in the last three months of 2021, the textile, garment and footwear industries will all face a serious labor shortage problem. Photo: N.Thanh
It is forecast that in the last three months of 2021, the textile, garment and footwear industries will all face a serious labor shortage problem. Photo: N.Thanh

Difficulties due to labor shortage

To assess the overall situation when enterprises resume production, in September 2021, the Vietnam Textile and Apparel Association (VITAS) and the Vietnam Leather, Footwear and Handbag Association (LEFASO) conducted a survey with 256 textile, garment and footwear enterprises and 300 workers in these two industries. The results showed that, in the context of social distancing, workers were severely affected in terms of psychology, health, and finance.

“Over 60% of migrant workers want to return to their hometown or have already returned. However, most of them determined that they wanted to return to their hometown for a short time to restore their health for themselves and their children," said Ms. Do Quynh Chi, Director of the Research Center for Employment Relations.

Truong Van Cam, Permanent Vice President of Vitas, said the fear of Covid-19 along with a difficult life due to lacking work and income has caused millions of workers to leave Ho Chi Minh City, Binh Duong and Dong Nai, many of them are textile and footwear workers. The supply chain of textiles, leather and footwear is once again at risk of breaking due to internal factors. Labor scarcity is a major cause.

“This is a problem for textile and footwear enterprises when entering the production recovery phase. It is forecast that in the last three months of 2021, the textile, garment and footwear industries will all face a serious labor shortage problem. Following that is the risk of not being able to achieve the set export target as previously expected,” said Truong Van Cam.

Besides textiles, leather and footwear, information from the Import-Export Department (Ministry of Industry and Trade) shows that, in the last week of September 2021, many provinces and cities gradually reopened their economies, so wood industry enterprises also began to restore production and business activities.

The export of wood and wood products in the last months of 2021 is forecast to grow positively because many enterprises now have orders until the end of the year and even the end of the first quarter of 2022.

However, from the perspective of specific export enterprises, Nguyen Liem, Director of Lam Viet Company (Binh Duong), said about 20% of workers have left Binh Duong to return to home. The demand for human resources for wood production, processing and export is very high, and there is a risk of shortage if enterprises speed up production.

Le Van Minh, Vice Chairman of Binh Duong Furniture Association (BIFA), said businesses are very worried about losing workers; customers are impatient to wait for more, if enterprises only miss the delivery of 1-2 orders, customers may switch to other markets.

"Enterprises are now very interested in the vaccination schedule for workers, when the vaccine is provided, they can open up more production," Minh said.

BIFA Vice President said that the first thing for workers to return is to make them feel safe.

“Provincial leaders need to coordinate with businesses to have a clear and transparent roadmap, for example, the route of vaccination for workers with the second dose. Besides, businesses should closely connect with the authorities to have a reasonable policy when welcoming workers back; there is a roadmap for re-employment of workers that is not massive, appropriate remuneration policy,” Mr. Minh said.

Difficulties from strict regulations

Besides the lack of labor, according to Ms. Phan Thi Thanh Xuan, General Secretary of LEFASO, the problem of enterprises in the textile, leather and footwear industries is that the opening of production has too many complicated conditions.

“Currently, provinces with concentrated leather and footwear factories are covered as the vaccination rate reaches 80-90%, but strict regulations to reopen production have made businesses struggle.”

As far as I know, there are businesses that have reached the edge, they accept to open production and then pay the penalty later because if they continue to close, they will go bankrupt.

“In addition, the problem of circulation between localities is also a big obstacle. The labor force of the two industries of textile, garment, leather and footwear is scattered in several provinces, while travel requires a series of different conditions between provinces,” said Ms. Xuan.

With the wood processing and export industry, Le Van Minh does not want to apply the ask-for-grant mechanism when enterprises resume production. “Binh Duong currently has about 55,000 enterprises, of which about 30,000 have the need to return to production. If applying for permission, the process of approving the application and going to the factory to inspect will take a lot of time.”

“There needs to be a more reasonable mechanism to be both flexible for businesses and the government to avoid having to mobilize large resources. In addition, businesses also proposed to unify conditions to allow circulation between localities in the province as well as to have consistency between Binh Duong and neighboring localities such as Ho Chi Minh City and Dong Nai, creating favorable conditions for businesses to access to the bank's support policies," said Mr. Minh.

Looking back at the difficulties and losses due to the impact of the Covid-19 pandemic, many economic experts believe that in the process of production recovery and subsequent development, businesses need to have a plan to prevent risks and build a hedge fund. Without this fund, businesses can quickly face bankruptcy. In addition to the above factors, Ms. Phan Thi Thanh Xuan said: "It is necessary to have close cooperation between factories and customers to coexist, develop and share in difficult times.”

According to the Ministry of Industry and Trade, in the first nine months of 2021, the processing and manufacturing industry continues to be the growth engine of the whole economy with an increase of 6.05%, contributing 1.53 percentage points to the growth rate of total added value of the whole economy.

The group of processed industrial products continued to make the main contribution to the overall export growth of the country when accounting for 86.27% of the total export turnover.

By Thanh Nguyen/ Kieu Oanh

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