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The Vietnam News

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Labour shortage in Vietnam discouraging foreign customers

HANOI - A labour shortage in the two main foreign exchange earners of Vietnam, the garment and footwear industries, have discouraged foreign customers from signing export contracts. Director of Lien Anh Footwear Co Ltd in Ho Chi Minh City Truong Thi Thuy Lien said that in the past it took the company only two days to receive about 50 applicants, but now a lot of former labourers have left their work for numerous reasons, and the company cannot fill positions.

The enterprise lacks about a quarter of its total labour needs, said Lien, adding that: "Winter contracts from European partners were not delivered on schedule because workers quit unexpectedly, and the company was forced to pay compensation." Chairman of the Ho Chi Minh City Textile, Garment and Embroidery Association Nguyen Duc Hoan affirmed that almost all clothing makers are suffering from a serious lack of employees. Also as a director of Song Ngoc Garment Co, Hoan added that his firm had to search Hue and Quang Ngai to look for a labour force.

However, many of these new workers have insufficient skills, and the firm had to train them for at least three months. To lure personnel, Song Ngoc paid them a monthly wage of US$32 in addition to a bonus, and accommodation during the first three months of training, which averages out the salary at US$63 per month. Hoan explained that the labour situation stemmed from a prejudice that people employed in the industry receive a low income and have to work hard.

Industrial experts attributed low salaries to the higher costs hitting the garment and footwear sectors. The consumer price index was also higher this year, which forced input costs up, and subcontract prices remained the same forcing firms to tighten their belts. Many local producers primarily implement subcontracts for international conglomerates, yet net profits from subcontracts remain low. Goods produced for the international market are sold at a price 10-fold higher than the subcontracted price received by the manufacturing company.

Foreign customers are also worried that a shortage of labour will impact products' quality. "Many international partners have hesitated to ink deals for next year and other customers have requested terms of agreements cover labour stability," said Lien.

Vietnam News Agency - October 19, 2005.