Labour Shortage Slows Garment Exports

As orders flood in from the US and Japan, HCM City garment companies fear to accept them because they are seriously short of workers.

It’s 11 am.  An announcement crackles from the loudspeakers in the Viet Hung Garment Company factory:

“Attention, brother and sister workers! We still need to finish 2600 shirts to deliver an order to clients today. Please strictly follow the regulations on rest time and speed up your work to be sure that we can deliver our products on schedule.”

Meanwhile, at one of the company’s shop floors, production lines are idle.  A thick layer of dust shows that the machines have not been used for a long time.  Phan Cong Minh, the company’s General Director, explains that the company is short of workers.

At the entrance of the company, a big notice board says that the company wants to recruit 300 workers who can use industrial machines, 100 apprentices and 100 supporting workers. Salaries start at 2.0 to 3.5 million dong per month, depending on skills and experience. To date, the company has received only a few applications for the jobs.

Minh says that because Viet Hung cannot recruit workers, he has had to refuse many orders. In previous years, when the company was short of workers to fill an order, it could ask for help from other garment companies.  Now, says Minh, the situation is quite different because other companies are just as short of workers.

An executive of a garment company based in Tan Phu District confirms that more and more orders are being placed by buyers in Japan and the US.  However, the export volume has increased by only 15 to 20 percent relative to last year. “We have to be selective about orders,” the executive explains, “because we cannot take them all.  Our work force is nearly 1000 workers less than at its pre-crisis peak.”

Chairman Pham Xuan Hong of Saigon 3 Garment Company says that to reach $10.5 billion in garment export revenues in 2010, Vietnamese enterprises must export nearly $1 billion worth of products monthly for the rest of the year.  To find more workers, many companies are offering higher wages.

Can Vietnam afford higher wages?

At the Vietnam Textile and Apparel Association, Le Quoc An is unsure if Vietnam’s garment exports can continue to grow if Vietnam no longer has the advantage of an abundant, low-wage labor force.

According to An, Asia is expected to be the world center for garment manufacture for the next 10 years. What’s not known is which countries will get the bigger pieces of the cake.  China, India and Pakistan clearly have advantages in size of their labor force and materials supply. Thailand and Malaysia have advantages in design, production quality and marketing capability, while Bangladesh, Indonesia and Cambodia have particularly low labor costs.  In the next wave, North Korean and Burmese labor may be even more competitive.

In 10 years, Vietnam’s garment exports to the US have increased by 100 times, exports to the EU have tripled and exports to Japan have doubled.  The Textile Association judges that Vietnam has potential to grow further, provided that labor productivity increases by 30 percent, local content increases by 20 percent, and Vietnam begins to sell products it designs itself instead of simply filling outsourced orders.


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