Unemployment rate up, but labor picture not too dark

The unemployment rate tends to increase as enterprises have laid off workers in the context of high inflation and low purchasing power. However, labor forecasting agencies believe that the situation is not too bad.

The latest report by the Vietnam General Confederation of Labor shows that the percentage, of workers who have lost jobs, has increased significantly.

The unemployment rate in Hanoi is forecast to increase further in the upcoming months, since enterprises tend to scale down the production in the economic downturn. Enterprises now seriously lack capital to maintain their normal production and business, because commercial banks have tightened their credit policies.

In fact, enterprises also do not plan to expand business, because their products remain unsalable due to the weak demand. Meanwhile, construction projects do not need many workers because they have been delayed due to the policy on cutting public investments to fight against inflation.

Besides this, enterprises also have to lay off workers because of the anticipated policy on increasing the minimum wages. The new policy means that enterprises will have to pay higher on every laborer; therefore, they have to lay off workers.

Also according to the Vietnam Labor General Confederation, a lot of workers have become redundant because of the policies of labor-intensive enterprises to relocate factories to suburb areas and restructure the labor force.

According to the Job Department under the Ministry of Labor, War Invalids and Social Affairs, by the end of August 2011, 147,000 people had registered their unemployment state, the figure which was triple than the same period of 2010.

Prior to that, the statistics released by Vietnamworks, the biggest online recruitment network in Vietnam, showed that in July, the employment demand decreased by 12 percent in comparison with June.

Vu Trung Chinh, Director of the Hanoi Job Center, also thinks that the lay offs would increase in the time to come, because businesses seem to become “exhausted” after a long period of struggling with the input cost increases and high bank loan interest rates.

Chinh said that the demand for workers in the production sector has been decreasing sharply over the last few months. “There have been signs of the inflation decreases, but the interest rates remain very high, and businesses still find it difficult to access bank loans. Therefore, the labor force cut proves to be inevitable,” Chinh said.

In fact, the increasing unemployment rate is not the problem of Hanoi only. The same situation can be seen in many other provinces and cities. Ho Viet Phuong, Deputy Director of Nival, an electric equipment production company which has the factory in Hung Yen province, has confirmed that the sale has slowed down because many projects have been delayed.

In Bac Giang province, the report by the provincial business association shows that 43 local enterprises have halted operation so far this year, an increase of 30 percent over 2010. Meanwhile, 44 enterprises in Bac Ninh province have got dissolved because they could not survive the difficulties.

Experts, though believing that the unemployment rate would increase, still think that the situation would not be too bad. According to Vietnamworks, the demand for workers is still high in some business fields. Banks, securities companies, retailers and food processing, for example, still have the employment demand increasing by 20-30 percent.

Chinh also thinks that the demand for workers still keeps rising in the service sector, the demand for which always accounts for more than 50 percent of the total demand.

“There are still many job opportunities, but employers tend to require high qualifications,” he said. “Besides, a lot of companies are considering restructuring their labor force to prepare for the business plan to be carried out when the difficult period is over.”

According to Vietnamworks, though big opportunities still exist, the supply would still be higher than the demand. This means that employees will have to compete more fiercely in order to obtain good jobs. Administration, personnel jobs and import-export will be the fields which have the highest competitiveness.

Tags: Vietnam Unemployment rates