Layoffs could last until year-end: experts
Layoffs could run until the end of 2023 as firms continue to trim their ranks in line with slumping global demand, experts have said.
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According to the Private Economic Development Research Board (Board IV), of the 9,560 companies surveyed in late April, 82 per cent said they would either downsize or cease operation for the rest of the year because of falling orders.
Over 5,200 respondents cited layoffs as a measure to deal with the economic downturn and over 2,100 planned to cut more than half of their workforce. It is worth noting that most of the latter clustered around Ho Chi Minh City and Binh Duong Province.
Based on the survey, Board IV forecast that job cuts could continue unabated between now and the end of the year. And in addition to the redundancies, 30 per cent of the companies would see their revenues drop by half.
The result of the Board IV survey was not so different from that of the survey by the Ministry of Labour, Invalids, and Social Affairs, which forecast in mid-May that rounds of layoffs would re-emerge unless the situation turns around.
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| Job seekers fill out forms at a job fair held by the Hanoi Employment Service Centre. (Photo: vneconomy.vn). |
Job cuts would be more evident in labour-intensive sectors, including textiles, footwear, and seafood. For instance, the Pouyuen Company has planned to slash 8,000 workers between early January and July 8.
The majority of the workers facing the axe would be women and those over 40 years old. They have been scheduled for layoffs on the grounds of "cutting capacity amid falling orders".
Pham Ngoc Toan, Director of the Center for Information, Analytics, and Strategic Forecast, said there were 52.2 million people in the workforce in Q1, of which two-thirds were employed in the informal sector.
He forecast that global weakening demand would continue to cause job losses in the economy. Job-seekers in the textiles and wooden furniture sectors would be among those on the receiving end of the changing consumption patterns.
Ageism would fuel the situation by making it more difficult for middle-aged candidates to get a job. Legally, firms are not allowed to favour one age group over others, but in practice, it is a different story.
"Firms prefer younger candidates in recruitment because they are believed to have higher productivity," Toan said.
The director was concerned that the labor supply-demand imbalance would lead to a soaring number of discouraged job-seekers, who would leave the formal market for good and immediately withdraw their lump-sum social insurance.
He called for new approaches to analytics and forecasting to keep job-seekers and recruiters well-informed about the market, thus mitigating asymmetric information and improving the job-matching process.
In Q1/2023, over 149,000 workers were rendered jobless on the unfavorable economic situation, up 13 per cent quarter by quarter. Layoffs were running rampant here and there, but Hanoi appeared as a bright spot in the grey picture.
Vu Quang Thanh, Deputy Director of the Hanoi Employment Service Centre, said job openings in the city dropped in Q1 but to a smaller extent than in previous quarters. Some firms cut jobs, but others created jobs, offsetting the negative impact.
Remarkably, job opportunities in certain sectors were bucking the trend thanks to resilient small- and medium-sized firms, which had been weathering the global downturn with less severe damages than expected.
"Job openings in Hanoi are increasing in certain sectors, including information technology, e-commerce, and finance," Thanh said.
The deputy director called for a job database to improve the job-matching process in the market. He also highlighted the importance of job fairs and hiring events in balancing labor supply and demand.
"We have established 15 job-matching facilities in 15 districts to connect job-seekers and recruiters," Thanh added.
Hanoi's Municipal Department of Labour, Invalids, and Social Affairs revealed that in the first five months of 2023, the authorities helped 85,784 out of 162,000 job-seekers get employed, reaching 52.9 per cent of the annual target.
The figure was lower than that in the same period last year (96,900 job-seekers getting employed). Such a decline, the department believes, could be attributed to the Ukraine-Russian conflict, the rising fuel prices, and high-interest rates.
"Falling orders are causing widespread damage to the economy and are likely to continue into next year. Sectors bearing the brunt would include textiles, footwear, and timber processing," a department representative said.
(Source: VNA)
