Textile and garment sector facing labor shortage

Intense competition from new FDI investments, and attrition of workers from textile and garment sector to other more lucrative industries has created a severe shortage of labor in the various textile and garment enterprises.

Illustrative photo.

Illustrative photo.

According to Pham Xuan Hong, President of Ho Chi Minh City Association of Garments, Textiles, Embroidery and Knitting, orders in this sector have been increasing steadily, but nonetheless, most textile and garment enterprises are facing a severe shortage of labor.

The main reason is tough competition from FDI companies that have invested heavily in Vietnam recently. Most of these are export companies who are willing to pay higher wages to attract good workers. Even though domestic companies have increased their wages as well as benefits for their workers, the overall income of workers in these companies is still lower than that offered by the FDI sector.

Furthermore, a large number of workers from the textile and garment sectors have moved to other less labor intensive jobs in various sectors or else moved back to their hometowns to reduce living cost. This is yet another reason for the current severe shortage of labor in the textile and garment sector.

The competition between FDI and domestic companies to attract workers was forecast by Navigos at the beginning of 2019. The movement of textile and garment or shoe making companies from China to Vietnam has been the main cause of this sudden disruption among workers, all of who are seeking better opportunities.

According to the May and June newsletters of Ho Chi Minh City Center of Forecasting Manpower Needs and Labor Market Information, the demand for manpower in textile and garment sector is rising and ranks second in demand among top eight companies which have highest requirement for a work force.

On some recruitment websites we see demand for labor having knowledge, experience and English skill being very high for both foreign and domestic textile and garment companies. The salary for these positions is also very attractive.

Some textile and garment companies have invested in higher technologies to reduce the number of labor. However, in the garment sector, high technologies can only be applied to embroidery and knitting jobs as garments are almost all labor intensive. Moreover, the application of technology requires huge capital investment and many months of staff training.

For these reasons, the textile and garment sector as well as other labor-intensive sectors are expecting to face severe shortage of both ordinary workers as well as highly skilled workers in coming times.

Thanh Lam

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