As coronavirus subsides, Vietnam looks to boost businesses and halt job losses

Against that background, various measures have been introduced to help companies rebound, maintain jobs, and halt income reductions, but much still remains to be done.

Over 30 million jobs affected

According to the General Statistics Office (GSO), 30.8 million Vietnamese workers were hit by the coronavirus in the first half of 2020, including those losing jobs, working alternate days, or having their working hours and income reduced. Those with income cuts accounted for the largest part at 57.3% of affected workers.

Workers in the services sector suffered the most, followed by industry-construction and farming. The April-June quarter saw the number of people with jobs down 2.4% from the first three months and down 2.6 million from the same period last year, which the GSO has said is the biggest decline in the past decade.

The statistical agency added that the ratio of workers who were unable to work at their full potential also increased by 1.5 times compared with the previous year, especially among workers below 34.

The average monthly income also fell in the second quarter, the first time in the past five years, but the decrease was not considerable as one third of the working population are in the farming sector, which has been minimally affected by the virus.

According to the National Centre for Job Services, the number of applications for unemployment benefits in the second quarter surged by 24% compared with the same quarter in 2019. Vietnam’s jobless rate in the first half of 2020 was 2.73%, up 0.57 percentage point from the same period in 2019 but still lower than the global average.

Business registration also remains no different from the job situation in the first six months of 2020, with newly established enterprises, registered capital and expected number of hirings down by 7.3%, 22% and 21.8%, respectively.

Signs of rebound began to appear in May after social distancing measures were lifted, and many businesses have resumed their operation. Data showed the number of new businesses in May and June returned to growth across 17 sectors and those resuming activities in the first six months of 2020 rose by 16.4%.

Long-term support package needed

Many countries around the world are still struggling to contain the coronavirus with possible risks of a second wave, which will definitely continue to affect jobs and incomes of Vietnamese workers.

Economists have stated that the first half of 2020 was not yet the peak of job losses because enterprises were still fulfilling orders from last year. Labour-intensive sectors are expected to suffer a serious blow in the third quarter as there have been no orders for manufacturing in the final months of the year, and workers’ jobs and incomes will largely rely on the resilience of their enterprises.

In order to support business recovery, the GSO suggested accelerating the implementation of the government’s VND62 trillion (US$2.67 billion) package while ensuring that it is correctly targeted and effectively spent.

GSO Deputy Director Pham Quang Vinh said that as of June 2020, the disbursement rate was just a little over 18%, especially disbursement for household businesses and workers who have lost their jobs. At the same time, it is necessary to effectively implement business support policies so as to boost economic recovery, especially in such sectors as manufacturing, wholesale and retail, transport, accommodation and eatery services.

As the coronavirus is still gripping many countries around the world and the number of workers unable to work at their full capacity is rising, the government needs to introduce policies to encourage workers to enhance their skills in order to meet the new requirements of employers in the post-coronavirus period. Support is also needed to help employers retrain their employees and adopt innovations. At the same time, enterprises and workers need to recognise the requirements of the economy in a new situation and take necessary changes accordingly.

Since Vietnamese enterprises are still weak, especially small and medium-sized ones, economists have warned that in addition to measures to deal with the effects of the coronavirus, it is necessary to introduce special policies to boost business restructuring in terms of inputs, investment and labour in order to increase the economy’s overall resilience.

Support packages should be a long-term plan, not only for 2020 but also for one or two subsequent years. Currently the government is commissioning the formulation of a general plan to stimulate the economy in the long run, with various policy tools to boost growth and address the difficulties facing enterprises and the people.