Oxfam Discussion Paper

The Social Impacts of the Global Economic Crisis on Enterprises and Workers in Vietnamese Industrial Parks
A rapid assessment report
Nguyen Ngoc Anh (DEPOCEN) and Nguyen Thi Thu Phuong (Center for Analysis and Forecasting – Vietnam Academy of Social Sciences) For the Viet Nam Academy of Social Sciences, with support from Oxfam GB and the World Bank July 2010 For this study of the social impact of the global economic crisis on the formal sector in Vietnam, interviews were carried out with four enterprises and 23 workers at industrial parks near Ha Noi. Four key findings have been extrapolated: businesses have been trying to retain some production and skilled workforce despite lack of orders by a variety of strategies; nonetheless there has been huge unemployment; those still employed have reduced income and raised living costs; workers are responding to this by: accepting lower-paid jobs, waiting for more vacancies on the industrial parks, studying, or returning to their home towns; loss of remittances for education is impacting workers and their families, but the impact of home areas is otherwise low or unknown. Oxfam Discussion Papers
Oxfam Discussion Papers are written to contribute to public debate and to invite feedback on development and humanitarian policy issues. They are ’work in progress’ documents, and do not necessarily constitute final publications or reflect Oxfam policy positions. The views and recommendations expressed are those of the author and not necessarily those of Oxfam. For more information, or to comment on this paper, email research@oxfam.org.uk

A. Impacts on enterprises in industrial parks1
1. Background information
The research for this section was conducted in early 2009 at two industrial parks near Hanoi, Thang Long Industrial Park and Quang Minh Industrial Park. Originally, the research was planned to focus only on Thang Long Industrial Park. However, the response rate from enterprises located in Thang Long Industrial Park was unusually low. Only two enterprises out of nearly 50 contacted agreed to meet with the researchers, although the research team made considerable efforts to increase the response rate.2 This may be explained by the difficult situation that enterprises are currently facing. They hesitate to disclose information at this sensitive time. Therefore, the research team decided to conduct further interviews with enterprise owners at a similar park, Quang Minh Industrial Park. These interviews were only possible thanks to personal contacts and connections. Quang Minh is a good substitute for Thang Long Industrial Park for several reasons. Firstly, like Thang Long Park, Quang Minh Park mainly hosts investors from Japan. Secondly, Quang Minh Industrial Park is located quite close to Thang Long Industrial Park (they are on the same road from Noi Bai airport to Hanoi city centre, only 15 minutes’ drive away from each other). In total, the research teams conducted four interviews with enterprise owners, two in Thang Long Industrial Park and two in Quang Minh Industrial Park.

Brief overview of Thang Long Industrial Park
Thang Long Industrial Park was established in 1997 by Sumitomo Corporation in a joint venture with a local partner, Dong Anh Mechanic Company. The park is located in Dong Anh district, just across the Red River from the centre of Hanoi. The location is considered by investors as ideal as it is situated between Noi Bai airport and the centre of Hanoi. The park is considered one of the biggest and most successful in the north of Vietnam. In total, there are 85 investors (tenants) in the Park, of which 67 are manufacturing factories, and the remainder are offices. The park houses many big names such as Canon and Yamaha. The majority of investors are export-oriented firms.

Brief overview of Quang Minh Industrial Park
Quang Minh Industrial Park was established in 2001, and is one of the seven biggest industrial parks in Viet Nam. The park is located in Me Linh district (formerly part of Vinh Phuc province). Similarly to Thang Long Park, the location of Quang Minh IP is considered by investors as ideal as it is situated between Noi Bai airport and the centre of Hanoi. The park hosts both foreign direct investors (FDIs) and domestic investors whose production is mainly for the export market.


2. Major findings3
The impact of the economic crisis
To varying degrees, almost all FDI enterprises, from hi-tech to labour intensive, in the two industrial parks are being affected by the economic crisis. There is evidence that labour-intensive enterprises are more likely to be affected. The economic crisis has hit investors in the parks quite hard. Most of the factories have cut back their production, only one or two being able to maintain their production levels. With the economic crisis unfolding since November/December 2008, the production of investors in the ThangLong and Quang Minh industrial parks has contracted significantly, especially for electronics and automobile manufacturers, and other sub-contractors, due to the fact that they are export-oriented manufacturers. For example, the severe situation in Thang Long Industrial Park can be seen in the fact that industrial water usage within the park has decreased by 30–40%.4 Although no mass cancellation of orders has taken place, there is evidence that the number of orders has dropped significantly. As a result, the sales and production of these FDI enterprises has dropped significantly, in some cases sales decreasing by 30– 40% (Nissin), and even 50% (Inoac). The cancellations of orders and drop in production and sales are due to a significant drop in export demand, as these companies are set up in the industrial parks for the purpose of producing for the export market.5 In 2008, the demand for labour was very high and it was difficult to recruit enough employees. Vacancies were abundant and employees could shop around for good jobs. However, the situation has changed dramatically since November 2008. The demand for labour is virtually zero, there are no vacancies to be found. Although no direct evidence of financial strain was reported during the interviews, it seems that investors in the Thang Long Park have had to plan a financing scheme to deal with the current financial difficulties. In particular, the Thang Long Management Board (an FDI firm) has had to re-schedule rent payment for many tenants (from advance payment to monthly payment).

Coping strategies
In the face of the economic recession, all the enterprises interviewed are cutting back their costs using various strategies. Cost-saving The companies interviewed were found to have cut costs by intensifying their cost savings such as cutting back on electricity, office materials and labour cost (examples include no over-time payments, reducing the number of work shifts, paying 70% wages for days off and encouraging workers to take holidays). Laying off employees As most of the enterprises in the two industrial parks were using temporary and seasonal workers, these workers were the first to be made redundant. As these workers are employed on short-term contracts, the employers tend to let them go once their contracts expire. A representative of the developer (landlord) of Thang Long Industrial Park says that among 50 000 workers in TLIP, 3 000 have lost their jobs since late 2008; and the current demand for new workers is reaching zero. However, it seems that a much higher number of jobs in TLIP have been lost in reality, according to our interviews with workers and some sources from mass media.


The FDI enterprises in TLIP prefer a worker’s “voluntary resignation” rather than a “redundancy” in downsizing, as redundancies need to follow a strict procedure stipulated by the Labour Code and may affect the company’s prestige. In fact, the representative of the TLIP developer comments that none of the reported 3 000 workers who have lost their jobs in the past several months were made redundant. Regarding permanent workers who have often received training, the decision is more difficult for the employers. They tend to keep key and important staff while encouraging the less skilled to resign. The employers do not lay off their employees in a straightforward manner. They instead encourage voluntary redundancy, whereby the workers will submit their resignation in return for some benefits such as a lump-sum payment equivalent to one or two months’ wages. Another factor is that the economic down-turn occurred at the annual Tet holiday; this encouraged workers to hand in their resignation to get the compensation money to go back home for Tet. However, laying-off, especially for permanent employees, seems to be a difficult decision for investors due to the cost of re-hiring and training later. As a result they have adopted several tactics such as work-sharing schemes, encouraging employees to take long holidays and paying 70% of wages for employees to stay at home for some time. At the same time, to keep up the morale of the remaining employees, while still paying their wages, they ask them employees to do such things as cleaning and maintaining the factories. Finding new customers/orders One of the solutions often suggested is to find new customers and orders. In the face of economic recession, companies now realise that they rely too much on orders from big producers. Given the decreased number of orders, they are now attempting to switch to other lines of products. Stock-piling Firms that produce mainly for export, in order to keep their employees expecting the current economic recession to be over soon, have tried to maintain a minimum level of production, and keep stock-piling.


B. Impacts on workers in Thang Long industrial park6
1. Characteristics of workers in Thang Long Industrial Park – who are they?
Most of the workers in Thang Long Industrial Park (IP) in Hanoi are migrant workers, mainly from the northern provinces of Vinh Phuc, Son La, Nghe An, Bac Giang, Ninh Binh, Phu Tho, Ha Tinh and Ha Tay. According to Vietnam Economics News (2009), 70% of the total of 737 500 workers in IPs and EPZs are migrant workers. They are often from households facing shortage of land or low income in rural areas. Land policy since 1993 provides land for current household members at that time. No more land is given due to births or taken due to deaths since 1993. This means that those currently becoming adults face the risk of landlessness. Since the IP recruits labour from 18 to 24 years old only, most young workers cite landlessness as the first reason why they migrated to the urban IP7 (Box 1).

Box 1 – Landlessness led to migration for work in the IP
Female worker Nguyễn Thị H, from Phu Tho province comes from a family of five (parents and two brothers) with only 4 sao of rice field (1 sao=360m2) and no livestock. She and her elder brother are both migrant workers and only the youngest is now studying, due to landlessness. Only her parents are now working on the field.

Most migrant workers have to rent a place to live. Not every enterprise has a dormitory for migrant workers. Even migrant workers for big enterprises which have hostels felt uncomfortable with the hostel regulations because they often work overtime and late shifts. Two or three workers share a room of eight to ten square metres. One characteristic of IP workers is their specific position in a production line. To undertake a certain role in a mass production line, the worker is given a short training period (maximum about 1 month for technical work and just 2 days for simple jobs). As working in a production line requires different actions for each role, there are no big differences in skills between newly-recruited and experienced workers. However, young workers have an advantage in a working environment of high pressure for accuracy, concentration, speed and productivity. As a certain position in a production line may not require very high qualifications, most of workers obtain only an upper secondary education.8 High school graduates are able to find work after passing entrance tests of simple skills. Faced with rush orders and lack of workers, enterprises will also recruit lower secondary graduates. Only technical positions require higher education qualifications. Shift working is a principal requirement for IP workers. Enterprises can divide production into three shifts (e.g. 6 am–2 pm, 2 pm–10 pm, and 10 pm–6am the next day) or 2 shifts (e.g. day shift from 8 am to 8:30 :pm, and night shift from 8:30 pm to 8 am the next day). According to the Labour Code, shift and overtime work paid at at least one and a half times normal pay. Under high pressure of productivity and volume, shift work and overtime for rush orders are very hard even for young workers. Most of the workers are female.9 The proportion of women depends on the characteristics of the work and products. In factories doing work such as electronics assembly, women


account for 90 per cent of the workers. On the other hand, male workers are the majority in motorbike factories, or heavy and harmful jobs. About 80% of workers are unmarried, said those interviewed.10 Many female workers think of getting married after some years working in the IP. Some other workers over the advantageous age of 18–24 try to focus on hard work to earn money while their health is good enough for the IP production environment. On the other hand, shift work of 12 hours a day is hard to combine with marriage and having children. Migrant workers are characterized by relatively high social capital. Workers from the same home town or living in the same hostel often support each other by such means as informing each other about job opportunities, lending money, recommending well-paid jobs, etc. When 60–70% of labourers from the commune of origin migrate for work, the base of information available from their network is huge, said a female worker. Information from an IP worker from the same home town helped him to avoid paying millions of dong to an employment agency, said a worker from Vinh Phuc province. Workers do not highly value the trade union’s role due to its irregular activities and poor support in terms of job information and labour contracts.


2. The economic crisis – boom and IP workers’ unemployment
The fourth quarter of 2008 is considered to have marked the peak of the laying-off of IP workers due to the economic crisis. Many companies have cut jobs and made redundancies since October 2008, leading to a sharp increase in numbers of laid-off workers. The workers interviewed describe large numbers of workers crowding and some even crying on the road in front of the IP entrance when thousands lost jobs in November 2008. The first quarter of 2009 has still seen redundancies on smaller scales. According to the Thang Long IP Management Board, in the two months before lunar New Year 2009 alone, nearly 1 000 workers in the IP became jobless solely due to enterprises cutting jobs (Viet Nam Express, 2009) (Box 2). The peak in cutting jobs before Tet seems to coincide with the business cycle in IPs when 1-year contracts of workers come to an end. Annually, enterprises start new recruitment after the Tet holiday. Then, before the lunar New Year (Tet holiday), many of workers who had completed their 1-year contracts were informed their labour contracts would not be extended.

Box 2 – Nearly 20% of all workers laid off in Thang Long IP
Panasonic announces it will cut 500 jobs in its optical disk factory in the first wave. Nissei Company encourages workers to terminate their contracts due to the lack of orders and gets 1 600 to leave before Tet. Canon cuts 1 200 jobs. Sumimoto makes 1 500 and 600 workers redundant in December 2008 and after Tet, respectively. Nguyen Phu Diep, head of the Labour Management Department in Hanoi IPs and EPZs, says that 19 enterprises in Hanoi IPs and EPZs have cut 4 300 job and that about 20% of all workers, equivalent to 10 000 workers in Thang Long IP, are estimated to be jobless this coming year (Viet Nam Express, 2/2009).

Worker reduction in production lines also results in redundancies in the dependant services group. The cooking group is to cut 30% of jobs. The scale of redundancies depends on enterprise scale; big companies often make a huge cuts in the number of workers. For instance, enterprises can reduce from 6 000 to 1 000, or 15 000 to 10 000, and 1 000 to 800 workers, but in enterprises with about 600 workers, the number remains constant with reduced workload or temporary rotational days off. In addition, cuts seem to be characterized by products. Enterprises which produce household commodities (knives, scissors, etc.) do not downsize workers but reduce overtime because of diminished orders. Electronics assembly companies seem to face more redundancies. This can also depend on the market where the product is sold. Bigger cuts take place USmarket-oriented enterprises than those selling in Japan or developing countries. In addition to outright redundancies, enterprises have offered workers 60–70 per cent of their salaries for temporary rotational days off since Tet/February 2009. They feared that they would be unable to recruit sufficiently skilled workers when the economy recovered. The Tet holiday allowance was longer than usual this year – about 10 days. Temporary days off can go up to 3–4 months. One enterprise announced 20 days off and then 2 weeks following. Enterprises tighten their regulations in order to increase the number of unplanned dismissals. Any small harmless mistake against production regulations will immediately lead to the worker being dismissed that day.


3. The economic crisis – Changes in IP workers’ jobs and income
3.1. Current employees11
a. Changes of job and productivity Workload in IP factories has experienced a huge drop. For instance, working time decreases from 10–12 hours before to about 4 hours per day, only 3–4 days per week, with no working overtime or shifts or during the weekend (Saturday and Sunday). Only some production lines remain in operation with low productivity (Box 3) where workers take 10–15 minutes’ rest after each 5 minutes working. In lines without any operation, workers are arranged to do other things such as cleaning, storing, cutting grass, etc. In case of no more odd jobs remaining to be done, workers are still in their lines without doing anything.

Box 3 – Workers in an electronics assembling enterprise: huge drop in workload and productivity
60% of 5 000 workers in an electronics assembling enterprise were made redundant in 2 waves. The enterprise has three factories for TV remote controllers, chips and speakers which have eight production lines each. After two large layings-off, there are now only about 100 workers in one line in the chip and speaker factories. Six out of eight production lines in the remote controller factory are still operating with a 50% reduction in output, from 6 000 units per day per line from the beginning of the year until August 2008, to only 3000 units at present. Workers were spending two working days per week standing still without operation in the line in February 2009.

b. Changes in incomes Enterprises, in difficult time, can seek for some cost saving solutions but cannot reduce the basic salary of workers, for two reasons. Firstly, basic salaries in other sectors, and the labour market in general, are rising. Secondly, the trend to increase salaries in other enterprises in the IP as one way to attract workers, especially in times of rush orders, itself means enterprises cannot cut salaries. Enterprises have to increase salaries or else deal with worker strikes (Box 4).

Box 4 – Striking for higher salaries
A female worker in Company X in North Thang Long IP joined two strikes in October and November 2008 to request a higher salary on hearing of an increase in salary in other companies. As a result, her basic salary has increased from 1 120 000 dong to 1 220 000 dong per month. However, she complained “I am still dissatisfied, as it is lower than the rate of 1 300 000 dong per month paid to my friends in other companies”.

Thus, in order to attract workers, it is impossible to reduce salaries. In fact, basic salaries have increased in 2008 and the growth rate is about eight per cent annually. Despite a small increase in basic salary in 2008, workers’ income still fell sharply as their incomes were mainly from working overtime and extra shifts. In the past, workers were paid about 2 million dong per month for working 12 hours a day, 4 days a week. They even could earn about 3 million dong per month if they worked more overtime in Saturday and Sunday, got the best qualification rank of level A, and had management allowances. In the economic crisis, no overtime or extra work due to lack of orders has reduced their income to the basis salary alone, at about 1.3 million dong per month. Moreover, if those workers receive 70% of their salary for rotational days off instead of an outright lay-off, their income sits at only about 1 million dong per month. That


income is unsustainable in the context of increasing prices and living costs in the IP (Box 5).

Box 5 – Salary increase cannot catch up with increases in prices
Monthly rent for a room for two– to three people has risen 60% from about 250 000 dong two years ago to 400 000 dong in 2009. In 2008, workers earned only 100 000 dong extra in their salary at 1 250 000 dong per month while they had to pay 30 000 dong more for rent, and 10 000 more for electricity and water supply, and more for the increase in prices in daily markets. Daily costs are estimated to have doubled when workers face increases from 10 000 to 20 000 dong for a meal and 5 000 to 10 000 dong for a kilo of rice. In general, all workers interviewed have found that their salary increase cannot cover the price increases.

In addition to their basic salary, workers are often paid extra monthly allowances such as 200 000 dong for transport, 50 000 dong for regular attendance, overtime allowances, or 50 000 dong for accommodation. Team leaders can get extra management allowances per month, e.g. 50 000 dong or even 300 000-500 000 dong for higher management level. Workers can get 200 000 dong as hazard allowance for such jobs as thermal treatment. By taking out social and healthcare insurance over a year, workers are granted a social insurance book. Female workers can enjoy maternity benefits. However, most female workers are unmarried and sometimes constrained by internal regulations to “work over six months before marriage”. The crisis has led to cuts in allowances. Rotational daysoff on request by the enterprise precludes a regular attendance allowance. Enterprises announce they will drop some allowances such as travel. At the same time, labour qualification ranking and cutting the salaries of less-qualified workers is also a way to cut down workers’ income in the crisis. c. Changes in labour contract terms Newly recruited workers normally have a 3 month contract of training on the job first, then a 1-year, and then 3-year or long-term contracts. In fact, most workers in North Thang Long IP have contracts of 3 years as the longest duration due to the IP’s recent establishment. Since October 2008, aware of coming difficulties, enterprises have only signed short-term contracts of just 3 or 6 months. Labour screening can be seen in qualification ranking and contract extension duration. In detail, in order to keep skilled workers, enterprises sign 1year contracts with them but shorter ones with less skilled workers. However, enterprises can still fail to keep workers on 1-year contracts when they grow frustrated with getting only 70% of their salaries for rotational days off instead of an outright redundancy.

3.2. Laid-off workers12
a. Who becomes unemployed first? Newly recruited workers become unemployed first when their contracts are not renewed after completion of their 3-month contracts for training on the job. Second are some cases of employees with some months remaining of their first 1-year contracts who voluntarily submit proposals to terminate them due to worry about being dismissed first as being newly recruited. The next voluntary leavers are workers who are ranked as the lowest qualified labour in the production line and fear being dismissed without unemployment support (Box 6).


Box 6 – Labour ranking or screening? Voluntary redundancy for unemployment benefits upon fear of dismissal
Enterprise under Corporation X: in total 5 000 workers in this enterprise were announced to be voluntarily unemployed due to the lack of orders. The enterprise provides unemployment benefits for the first 2 000 volunteers. Therefore, worry about becoming jobless without benefits hurries workers to submit proposals to end contracts. Labour ranking in Company Y: Workers in a production line have to self-assess their production performance from A as the best to B, C and D. Bonuses for the lunar new year of 2009 was 14 000 dong for level D, 500000 for level C, 1.4 million for level B, and 1.7 million for level A, which have to account for 1, 10, 70 and 19% of the total workers, respectively. Labour ranking in Company Z: Similarly, workers rank themselves into in level A (15% of the total), level B (30%), level C (20%), and level D (the remaining 35%). Workers were given 130% of the lunar month salary as bonus for Tet 2008, but only one-month salary plus 500 000 dong for level A in Tet 2009 (300 000, and 150 000 dong for levels B and C respectively, and nothing extra for D).

Labour ranking, on the one hand, is the basis for the Tet bonus. On the other hand, it implies unqualified workers of levels C and D should fear unemployment without benefits. Those workers consequently voluntarily submit proposals to end their contracts to get unemployment benefits. Additionally, a group of workers become jobless after a period in which they become frustrated with rotational days off or too poorly-paid jobs. Despite their expectation of having one or two months’ wages as unemployment benefit and getting new jobs with higher salaries somewhere else, workers now struggle to find new jobs during the crisis. Price increases and too low salaries led to the voluntary resignation of a female worker in Company X as her monthly salary of 1 200 000 dong and 200 000 more in allowances fail to cover her daily expenses. Unplanned dismissal cases because of breaches of production regulations have risen in the crisis period. Interviewees mentioned tightened supervision and even the smallest mistakes such as being a few minutes late arriving or wearing a necklace leading to certain dismissal. This never happened before the crisis. b. No income Due to regularly working overtime, most IP workers do not have the time and energy to do second jobs. As a consequence, being laid off means the loss of their sole income for daily expenses. They then depend on the unemployment benefit received from the enterprise. This benefit is quite different among different enterprises. In most cases it was one or two months’ salary or even less (Box 7). The maximum benefit is two months’ salary, while unemployment has continued for about half of this year or even since the middle of last year.

Box 7 – Labour screening in Company M
Workers were ranked from the 1st group – the worst – to the 5th – the best performance. Then, without notice, three groups of workers were treated differently. The first group were asked to renew their contracts for 1 year. The second group, the next day, were asked to renew their contracts for 3 months. The day after that, the last group were requested to give back their uniforms and equipment, end their contracts and leave the factory.

Among laid-off workers, those ranked pointing group 1 were dismissed without any unemployment benefit, and workers in ranks 3–4 receive half a –month’s salary allowance for being jobless. Laid-off workers cannot find income from secondary and new jobs, and so can only hang around their hostel and watch the IP notice board for job opportunities.


c. Support by enterprises The Prime Minister has requested that a policy be drawn up to provide for laid-off workers; however, it has not been specified by the Ministry of Labour, Invalids and Social Affairs. According to the Labour Code, the employer has to pay unemployment benefit of one month’s salary for each year worked. In practice, not all enterprises are able to implement such a benefit. In the crisis, enterprises face too many difficulties to provide high unemployment benefits for laid-off workers. Enterprises apply different redundancy policies. They often pay one month’s salary for voluntarily redundant workers. Some workers get two months’ salary, where it can be clearly seen that if those workers are laid off before Tet then one months’ salary is basically their Tet bonus. Workers recruited less than a year ago get only half of a month’s salary for redundancy. No benefit is paid for workers “caught making mistakes” or dismissed due to their low labour ranking or incompliance with enterprises regulations. There is also a lack of travel support for laid-off migrant workers. Relations with enterprises come to an end when workers return their uniforms and working tools and leave the factory. The last contact is only sending their last month’s salary and other benefits via an ATM account at the end of the month, and handing over the social insurance book six months later (where they have worked for over a year). In practice, workers neither withdraw money from the social insurance book nor keep it to continue the system participation. Most laid-off workers have only been recruited a few months before and so lose the benefits of the contributions they have already made to the social insurance scheme. They have not recognised the social insurance role. d. Changes in job opportunities Before the crisis, labour mobility was very high even within the IP. Workers could find better jobs thanks to various recruitment announcements with specific salaries. For instance, workers could leave their existing heavy and high-pressure job to apply for better jobs with lighter workloads and higher incomes in other enterprises. After Tet, the IP notice board was often covered fully by recruitment announcements for hundreds of workers. But currently, there are few announcements for few positions, e.g. four workers only. Ouright or temporarily redundant workers are faced with difficulties finding new jobs in every enterprise. These workers are willing to apply for any suitable position without consideration of salary.


4. Impacts of the crisis on IP workers’ lives: How do they cope?
4.1. Current employees
Cut down expenses, no savings and remittances for families Workers are trying to save on all their expenses during the crisis (Box 8). The first item to be cut down is meals. No breakfast, only one self-cooked meal with cheap vegetables and tofu when a better one with meat or fish is served at work. This allows them to save about 500 000 dong per month for meals. Then, they try to save spending on travel, and mobile charges are lowered by sending textmessages instead of making phone calls.

Box 8 – Workers’ living expenses
One female worker says that they can save almost nothing. Monthly, she usually pays about 200 000 dong for rent including water and electricity, 100 000 dong for sundries such as shampoo, shower gel, soap, etc., 100,000 dong for going home three or four times a month, 150 000 dong for breakfast, and 300 000 dong for daily meals. In addition, she has the cost of various spending on clothes, mobile phone bills, birthday and wedding presents, presents for her family, guests, medicines in case of illness, etc. Unemployment currently forces her to sleep over meals. She spends 5 000 dong on vegetables and tofu for some self-cooked meals (one a day). She brings rice from home.

Another male worker spends about 160 000 dong monthly on rent, 100 000 dong for meals when self-catering which is very rarely, otherwise 10 000–15 000 for a meal at restaurants, 150 000 dong for a birthday party, 50 000–200 000 dong on a marriage present depending on relationship, on tobacco, etc. They fall into debt, or also try to reduce all spending. In addition, some workers face the risk of rent increases when their old roommates become unemployed and return to their home areas, and there is no one to share the rent with. They may agree to move to a hostel further away to share the rent with others. In case of illness, pregnancy or dependent children, workers also face the risk of health expenses. Before the crisis, workers earned enough income from overtime and extra shifts to save. Older female workers proved themselves good thrift practitioners and saved more than their juniors. They sent money to their families to save or in preparation for marriage. Female workers could have monthly savings of about 500 000 to 800 000, or even 1 million dong. Some other workers can save three to four sums of 500 000–600 000 dong per year. However, it is also common to see that young workers without duties to support or take care of the household are unaware of or unable to keep savings due to their low salaries. At the moment, it is impossible for workers to save. On the contrary, savings from the past are now being spent while waiting for new jobs. No savings mean no remittances. When workers cannot cut down their already tightened consumption any further, they borrow from each other or from friends in their home towns. Instead of sending remittances to their families, these workers even ask for money from family and friends in their home areas. (Box 9).

Box 9 – Money from home sent to workers waiting for jobs in IP
One female worker receives 70% of her salary for rotational days off instead of an outright dismissal. She was discouraged by notification of having the next 20 days off. She asked for money from her home in the rural areas as her 70% salary is not enough for her living expense and the fee of over 200 000 dong for a vocational course.


Another male worker receiving 70 per cent of salary for rotational days off borrowed 500 000 dong from a friend in his home town when he was back home for rice last month. He cannot borrow from his roommates or colleagues because they are in the same difficult situation. Staying at hostels and looking for jobs with psychological changes Being laid off or on rotational days off, workers staying at hostels fall into lethargy and depression. Under high pressure of dismissal and contract termination (Box 10) as well as fear of no unemployment benefits, workers volunteer to stop working to get one or two months’ salary as unemployment benefit.

Box 10 – Enterprises become stricter in “mistake catching” in order to dismiss workers
Workers are always under pressure, strain and fear of dismissal. The number of redundancies can be higher resulting from more and more mistake catching, said some workers. A series of enterprises’ regulations became more severe to workers, such as 30 minutes for rest in case of illness instead of 1 hour as before, or loss of regular attendance allowance and half of daily salary for being 1 minute late. Moreover, dismissal can be forced on any sick workers, workers who fail to work in the third shift, workers who have two to three days off, workers with little rest sitting down during their alternative tasks such as grass cutting, or unmarried workers with rings or earrings at work.

The more days they have to take off, the more frustrated workers are. They always worry about being laid off for a half or full month. Due to the stress of being laid off and failure to find new jobs, workers can do nothing except gossip with others. Return to home towns in the short term to wait for job opportunities Most workers, especially whose home towns are near to the IP, facing long periods of days off and having high social capital for job information, intend to return to their home towns to wait for job opportunities. Returning to their home towns can help workers to save daily expenses when faced with inadequate incomes. It may be done after only two or three days off if workers come from provinces surrounding Hanoi and travel back does not cost them much. This strategy can be easily recognized by the fact that 50–70% of rooms in each hostel, or even 100%, are unlet. Apart from the above three risk reduction strategies, a small percentage of workers who already have experience and information from secondary jobs try to find other jobs (despite lower salaries) in the IP (such as working in the kitchen) or outside as mechanics, hair-dressers’ assistants, cooking, delivering meals, etc. Facing difficulties finding this kind of work due to unclear information on day-off duration, workers with 70 per cent of their salaries for rotational days off can only hang around in their hostel, watching the notice board without any plan for earning. Some workers studying at the technical school spend more time on studying. The North Thang Long Technical and Economics School is close to the IP and about 70 per cent of its students are IP workers. The school has arranged favourable conditions for workers to follow courses in the crisis period (Box 11).

Box 11 – Support for IP workers who are studying at the Technical School
In early 2009, after a petition from 125 outright laid-off and rotational day-off workers, the School encouraged these students to take advantages of days off for studying and began to support them by certification for getting social loans for students (about 30% of total students), three months’ extra time to pay educational fees, fee collection by appropriate term, assessment results remaining applicable for one to two years not studying study, and maintaining contacts with IP enterprises for job information.


Workers find it hard to work twelve hours and then another four and a half hours for classes every day. They are afraid of informing their employers about their studies due to fear of making managers worry about reduced productivity.

4.2. Redundant workers
The strategy of those who are unable to sustain life in the cities due to marriage and children is also to return to their home towns and not migrate for work again. Avoiding shift-based and overtime work, these workers accept returning to agricultural production or find some paid employment in their home town. Meanwhile, most laid off workers head back to the rural areas for a short time and search for jobs at the IP later. Otherwise, redundant workers keep staying in hostels near to the IP and wait for jobs. After the longer Tet holiday than previous years, they migrated back to the city. The Tet holiday was usually from 30th December to 4th January of the lunar year; however, in 2009, workers came to enterprises later, on 10th January at the earliest. This is partly due to enterprises’ policy of a longer holiday; also, as high social capital gave them information about the rarity of recruiting announcements in the IP, they returned more slowly to the city. Workers fund their spending from redundancy benefits and savings or even borrowings from relatives and friends while waiting for job opportunities. This group involves young workers who would be given priority for recruitments in IP. The older workers from 25 to 27 years old who have worked about three years in the IP find it hard to find jobs there and so do not wait for jobs in the IP. Those staying and waiting for jobs cut their daily expenses as much as possible, for instance by sleeping over meals, bringing foodstuffs from home, asking to live in dormitories to reduce accommodation costs, and simple meals. If the situation becomes a long-term crisis without job opportunities, then they are prepared to return to their home towns for paid employment with a lower salary or even go back to agricultural production as the last resort. Another strategy to deal with the situation is to study. A determined group of outright unemployed and rotational day-off workers are making efforts to start intermediate study and vocational training by getting loans or asking for money from home. However, the monthly tuition fee of about 270 000 dong can be a burden on these workers and their households, even when they get social loans for students of 800 000 dong per month. Because the interviewees had not yet finished the training course when this report was written, it is not known whether those who started courses continued to study or not, especially in such difficult circumstances.


5. Other consequences of unemployment in the economic crisis
Impact on other household members Most migrant workers are young and single and leave their home towns for nonagricultural jobs in order to ease the burden on their families due to landlessness. They therefore have little responsibility for household income when they are. As a result, the impact of unemployment in the economic crisis through loss of remittances from migrant workers seems to be low. However, in cases where brothers or sisters migrated together and some did so for study, then becoming outright unemployed or on rotational days off is a serious problem as regards remittances to support their siblings’ education (Box 12). In other cases of working and studying at the same time, redundant workers have to ask for money from home for their daily expenses and fees for ongoing courses. As a consequence, the financial burden on their family can become heavier.

Box 12 – Failure to send money to support a sister’s studies
Worker M is worried as she is unable to get money to pay for her sisters’ education. Her family of two parents with seven children are small traders in their home town. The eldest brother has his own family, two sisters worked at the IP (one unemployed), one younger is studying on an intermediate course in Hanoi, and the three youngest are at primary and secondary schools. Previously, M managed her income of about 2 million dong per month so as to support her sister’s education with 1 million dong. M has received 70 per cent of her salary for rotational days off since December 2008 and can no longer send money for her sister.

Having a brother in university and parents in his home town, another worker on days off, K, sent money to his brother 3 times last year and one time this year (before Tet), sending 400 000–500 000 dong each time. He is now not only unable to send money for his brother but has also borrowed 500 000 dong for daily expenses. He now spends 200 000 dong per month on rent, and 400 000 dong on meals (reduced from 1 million previously). Impacts on the destination become an issue when laid-off workers and rotational day-off workers return to their home towns. The landlessness may be serious. As a result, redundant wage labour is on the rise, since households having land will reduce use of hired labour or availability of land for rent. The possible increase in redundant labour in agricultural home towns and its impact remain as yet unstudied. Impacts on areas surrounding the IP The main impact on areas surrounding the IP is a reduction in services consumption by IP migrant workers (Box 14). Most hostels have had to close 70 per cent of their rooms, despite lower rent, because most workers have returned to their home towns. Availability of other services for workers has declined proportionately.

Box 14 – Sharp decrease in services for migrant workers
Vong La commune provided 60% of the land for the construction of Thang Long IP. Its little remaining agricultural land is not cultivated due to poor internal irrigation. The local economic structure was changed towards services for IP workers and labour for the IP (but only about 200 local people actually work in the IP). Services for IP workers contribute 25 per cent of the GDP of the commune.


Villagers had already invested their land compensation of 65 million dong per sao (1 sao=360m2) into hostels for rent, food shops, and other services for IP workers. Providing hostels for migrant workers become the main livelihood of 200 households in the commune of over 1,500 households in total. The crisis happened exactly at a time of IP expansion (Phase 3), when consequently many households had just invested a lot of money in building hostels. These families suffered from the shock of a drop in demand for rented accommodation and no income from new rooms. In terms of local security, the IP surroundings have been often considered unsecure with problems such as mobile phone and motorbike robbery, theft, etc., for a long time. This situation has not worsened since the crisis started. However, a number of laid-off and day-off workers hanging around the area and having low income pose a potential risk of increasing crime.


1. Nguyen Ngoc Anh (DEPOCEN). 2. The team first sent an introduction letter from the World Bank and Oxfam, and followed up by telephone calls. 3. In the context of the economic crisis and recession, Vietnam’s low wage level is an important advantage. For this reason the managements will not cut wages or the number of employees as much as they would in other countries. Cash-flow is very important and wage is an important element of cash-flow. In some cases, the management of parent companies may consider shifting production from other countries to Vietnam. 4. This is also partly reflected in the fact that when the research team contacted companies to arrange interviews, there were several occasions on which the factories were temporary closed for some time during the month/week. 5. There are some consistent rumours that companies in certain sectors are not affected by the economic recession, namely high-tech, pharmaceutical and health equipment companies. An interviewed high-tech company informed us that their sales were up 10% year on year, although the year before the number was 30%. 6. Nguyen Thi Thu Phuong (Center for Analysis and Forecasting – Vietnam Academy of Social Sciences), 2/2009. The research team interviewed 18 female and 5 male workers in total, aged 19–27 years old, at their hostels near Thang Long Industrial Park. They also carried out three focus group discussions (1 male and 2 female groups). Among the 18 female workers, 5 are laid off, 7 are on rotational days off with 70% of salary, 5 were working when interviewed but would afterwards be on rotational days off with 70% of salary, and 1 was then working. Among them, 5 are students in a vocational school nearby the industrial park. Among 5 male workers, 3 are currently working (2 in kitchens) and 2 are on rotational days off with 60 and 70% of salary. 7. Of 16 workers who talked about the reasons for their migration, 9 mentioned landlessness in their home town. 5 talked about social networks through which their friends and relatives informed them about job opportunities after they completed secondary education. Other reasons mentioned were low income from agriculture (2 workers) and other non-agriculture (2 workers). 8. Out of 18 workers interviewed, 16 finished upper secondary education, but only 2 obtained a college education. 9. According to Vietnam Economics Times (2009), there are 60 per cent women among 737500 workers in IPs and EPZs in Hanoi. 10. Only 1 married worker among 23 interviewees. 11. Of 23 interviewees, 18 are current workers. However, 9 of them have rotational days off and 5 more have been informed of coming rotational days off. Workers with rotational days off only receive 60–70% of their salary on those days. One worker was a team leader who was going to quit the job because of maternity. She would then migrate back to her home town as the IP working environment is not appropriate for a mother. 12. Five out of 23 interviewees are unemployed. Of those, one voluntarily left the job to receive two months’ salary as benefit for unemployment. One left the job because the income was too low. Three were refused extensions to their labour contracts and did not mention unemployment benefit. None of them were dismissed because of breaches of production regulations. These five redundant workers are staying at hostels close to the IP and searching for new job opportunities.


© Oxfam GB July 2010 This paper was written by Nguyen Ngoc Anh (DEPOCEN) and Nguyen Thi Thu Phuong (Center for Analysis and Forecasting – Vietnam Academy of Social Sciences). Oxfam acknowledges the assistance of the Vietnam Academy of Social Sciences Center for Analysis and Forecasting and World Bank Vietnam in its production. The text may be used free of charge for the purposes of advocacy, campaigning, education, and research, provided that the source is acknowledged in full. The copyright holder requests that all such use be registered with them for impact assessment purposes. For copying in any other circumstances, or for re-use in other publications, or for translation or adaptation, permission must be secured and a fee may be charged. E-mail publish@oxfam.org.uk. For further information on the issues raised in this paper please e-mail advocacy@oxfaminternational.org. The information in this publication is correct at the time of going to press. Oxfam is a registered charity in England and Wales (no 202918) and Scotland (SC039042). Oxfam GB is a member of Oxfam International. www.oxfam.org

Oxfam is an international confederation of fourteen organizations working together in more than 100 countries to find lasting solutions to poverty and injustice: Oxfam America (www.oxfamamerica.org), Oxfam Australia (www.oxfam.org.au), Oxfam-in-Belgium (www.oxfamsol.be), Oxfam Canada (www.oxfam.ca), Oxfam France (www.oxfamfrance.org), Oxfam Germany (www.oxfam.de), Oxfam GB (www.oxfam.org.uk), Oxfam Hong Kong (www.oxfam.org.hk), Intermon Oxfam (www.intermonoxfam.org), Oxfam Ireland (www.oxfamireland.org), Oxfam Mexico (www.oxfammexico.org), Oxfam New Zealand (www.oxfam.org.nz), Oxfam Novib (www.oxfamnovib.nl), Oxfam Quebec (www.oxfam.qc.ca) The following organizations are currently observer members of Oxfam, working towards full affiliation: Oxfam India (www.oxfamindia.org) Oxfam Japan (www.oxfam.jp) Ucodep (Italy) www.ucodep.org

Please write to any of the agencies for further information, or visit www.oxfam.org. Email: advocacy@oxfaminternational.org


Sign up to vote on this title
UsefulNot useful