Surveys show SMEs have revenue down, lay off workers

Signs of instability have appeared on the labor market, since 60 percent of small and medium enterprises (SMEs) have reportedly seen their revenue down and have to lay off workers.

Businesses work at moderate level

According to the SME Association, more than 20 percent of the total 500,000 SMEs have gone bankrupt, 60 percent of enterprises have seen revenues going down and have to cut their labor force, while the remaining ones are operating with big difficulties.

Big difficulties can be obviously seen in textile and garment industry. The decision on raising the minimum wage to 2 million dong per month since October 1, means that the wage fund of enterprises will increase by 30-40 percent.

The electricity price has also increased by 15 percent, transport fee by 20 percent and water by 30 percent, which has led to the 20 percent increase in the input costs. Meanwhile, the export orders for the spring-summer (from November 2011 to April 2012) have dropped dramatically by 50-60 percent, and the export prices have also decreased sharply by 5-10 percent.

Construction enterprises are weeping because the material prices have been increasing too sharply, while materials make up 60 percent of total expenses. As a result, a lot of investors have delayed the implementation of high rise and apartment buildings. A lot of others have canceled contracts, pushing thousands people into the unemployment.

As for wooden furniture manufacturing, the Analyst and Forecasting Center under the Vietnam Social Sciences Institute, the production scale of the enterprises has been narrowed by 30 percent in comparison with the same period of the last year. Meanwhile, financial expenditures, such as bank loan interest rates and material costs, have increased by 25 percent.

As such, if counting on the labor wage increases, the total expenses of enterprises have increased by 30 percent, while the export price has increased by five percent only. So, the best solution for now for many businesses is halting operation to avoid loss.

Recruitment demand not increase

The big difficulties have forced labor intensive industries such as garment, wooden furniture and construction to scale down production, which also means the instability in the labor market.

A quick survey conducted by the analyst and forecasting center shows that most enterprises now try to recruit more workers to arrange more production shifts to fulfill export orders. However, the high demand at this moment is just temporary, because enterprises are facing too many risks, including the production cost increases, the big unusable capital due to the big inventory volumes and the lack of orders.

The survey has also pointed out that a lot of enterprises are seeking more workers, but just to offset the numbers of workers who have left the enterprises. Meanwhile, the actual demand for workers does not increase.

Other surveys have also shown unsatisfactory results about the labor situation in traditional craft villages. By the end of August 2011, the number of jobs and income of the workers in the sector had dropped by 60-70 percent in comparison with 2010.

The revenue of the enterprises that make fine arts and craft products for export in the south has decreased by 50 percent, while a lot of workshops in the north once halted their production for three months, while trying to clear the big stocks

Job centers have warned that the labor demand would keep decreasing in the time to come, and that laborers would have to bear double impacts: while they get less jobs, they have to pay higher for essential goods due to the goods price increases.

Source: TBKTVN

Tags: Vietnam companies, Vietnam enterprises, Vietnam SMEs