Labor shortage hampers business attempts to put foot forward

06:00 | 23/01/2021 Society

(VEN) - Enterprises in the leather and footwear industry are expecting growth in 2021 as they regain orders, but they are facing difficulties in labor recruitment.

labor shortage hampers business attempts to put foot forward
Leather and footwear is a labor-intensive industry

Positive signals

Leather and footwear enterprises expect the export market to pick up as the world economy gradually recovers from the Covid-19 pandemic and as a result of the new-generation free trade agreements (FTAs) that went into effect in recent months.

Nguyen Van Khanh, vice president and general secretary of the Ho Chi Minh City Leather Footwear Association, says the EU-Vietnam Free Trade Agreement (EVFTA) and the Regional Comprehensive Economic Partnership (RCEP) will generate motivation to resume growth by providing tax incentives for exporters.

Director of the An Thinh Footwear Co., Ltd. Tran Ngoc Anh is also optimistic about market growth. The company currently has orders until February 2021 and also has enough raw and auxiliary materials for production, ensuring timely delivery of the orders.

Ngoc Anh noted apart from the positive export outlook, Vietnamese SMEs will face many challenges as they have to compete fiercely in the Chinese market from where most raw and auxiliary materials for production are imported.

Fear of prolonged labor shortage

Despite the positive signals, leather and footwear enterprises are short of workers, having had to dismiss 30-70 percent of their labor force when Covid-19 resulted in suspension or cancellation of orders.

Nguyen Le Hung of the Gia Dinh Group Joint Stock Company says that following the delayed production and business period due to Covid-19, its member companies now have new orders for 2021. However, their existing labor force is only about 70 percent of what they require, meaning the factory can only operate at 50-60 percent of its capacity.

ChangShin Vietnam Company Limited faces the same problem. Doan Thi Kim Loan, vice chair of the company’s trade union, said orders for 2021 are almost double its current capacity and it is building more workshops to meet the orders. However, the company needs to recruit about 5,000 workers.

According to Nguyen Van Khanh, during the epidemic outbreak, many orders were suspended or cancelled, forcing enterprises to dismiss 30-70 percent of their employees.

Attempts to recruit labor are encountering difficulties since former workers have moved to other work or returned home to the countryside. Some enterprises have had to temporarily extend work shifts in order to make up the shortfall. In the long run, some businesses may move out of the cities to take advantage of available local labor resources.

Ha Duyen