High consumer price increases cause labor shortage

The labor market has become scorching hot as many workers have left their enterprises due to the too low wages, which cannot support their lives in the context of high inflation.

The high consumer price index (CPI) increased in the first six months of the year has badly affected the labor market, according to the HCM City Manpower Forecast Center. Especially, small and medium enterprises, which cannot pay the salaries high enough to cover basic needs of workers, have been facing serious labor shortage.

Labor supply only can meet 60 percent of demand

In general, the demand for recruiting new workers in HCM City has been increasing with the demand up by 30 percent in the first six months of 2011, in comparison with the same period of last six months of 2010. However, according to the center, the labor supply just can meet 60 percent of the total demand.

Especially, the demand has been increasing sharply in labor-intensive industries such as garment, footwear, marketing and services. The demand for unskilled workers remains high, which accounts for 60 percent of the total demand from industries.

The labor market witnessed a lot of big changes in the first six months of 2011, since the market bears the influences of the consumer price indexes. Analysts said that the labor market became difficult to be controlled.

A lot of enterprises, which are put under hard pressure, have to cut out waste in their institutions and lay off staff, especially administrative officers. Meanwhile, many workers have resigned from their posts, because the salaries were not high enough to feed them.

The biggest changes in the labor structure could be seen in industrial zones (IZ) and export processing zones (EPZ). In the first six months of 2011, about 30,000 workers stopped working or gave up their jobs. The number accounts for nearly 12 percent of the total number of 252,268 workers in IZs and EPZs.

Experts have blamed the high inflation on the big changes in the labor market. The continued price increases have made the salaries become too small to cover the basic needs of workers. The workers have to quit their jobs to look for the employers who can pay higher salaries and offer better welfare policies.

As a result, small and medium enterprises, which cannot pay high wages, have to let their workers leave, and face serious labor shortage.

135,000 workers needed in second half

The HCM City Manpower Forecast Center believes that the labor market would see further changes in the last six months of 2011. Especially, it would see strong structural changes in the required qualifications and unskilled laborers.

The demand for qualified workers would dominate the market with the demand for workers with university or junior college degrees to account for 25 percent, and the demand for vocational school degrees by 35 percent. The demand for unskilled workers is thought to account for 40 percent of the total demand.

The survey on the recruitment demand conducted at 10,696 enterprises in HCM City shows that the city will need 135,000 workers in the last six months of the year.

It is expected that in the third quarter of the year, HCM City would need some 60,000 workers. During that period, the labor demand in labor intensive fields like footwear, garment production, would decrease significantly, while the industries would just need 40 percent of the total demand.

Meanwhile, the biggest demands would come from electronics production (38 percent), mechanical engineering (15 percent), food and services (12-15 percent).

The IZs and EPZs in HCM City would need laborers mostly for the fields of electronics production, mechanical engineering, services, while the demand in other fields would only account for 8-11 percent of the total demand. – TBKTSG

Tags: Vietnam labor shortage