HCM City expects worse to come as exporters fire staff

Authorities in Ho Chi Minh City are worried unemployment will increase after around 7,000 workers at the city’s industrial zones lost their jobs since June as the recession drives down exports.

“Some companies are laying off workers because they don’t have enough orders to maintain production,” Vu Van Hoa, head of the Ho Chi Minh City Export Processing Zones and Industrial Zones Authority, said by phone last week. “We are concerned about the lives of the workers and social welfare and the situation seems to be getting worse this year.”

The government has urged exporters to look for new markets to help the country achieve its economic growth target of 6.5% this year. The nation expanded last year at its slowest pace since 1999 – 6.2%.

Prime Minister Nguyen Tan Dung on December 27, 2008 asked HCMC, which accounts for a fifth of the nation’s gross domestic product, to lead economic expansion and prevent a slowdown.

Around 970 companies based in 12 industrial parks and export-processing zones in the city employ 260,000 workers, according to a report released Thursday by the Authority, known as HEPZA.

A Japanese company producing spare parts for the automobile industry that Hoa visited on January 20 plans to fire 800 workers because sales are dropping, he said. Hoa declined to give the company name.

Vacation or pay cut

Some businesses are offering workers a choice between taking their annual leave now or getting paid 70% of their wages during the slow period, according to HEPZA’s January magazine.

Exports by the companies increased 15% to US$3.1 billion last year from 2007, led by the Tan Thuan and Linh Trung export processing zones with about $1.2 billion each, according to the report.

HEPZA targets similar export and import figures this year and would try to maintain last year’s pledges of investment of $681 million, Hoa said. (Bloomberg)