Jobless at 30: Welfare crisis looms in Vietnam

Labourers work at an assembly of Singlun Star garment factory outside Hanoi, Vietnam. PHOTO: REUTERS

HANOI - Young employees in Vietnam are seeking "retirement" benefits after being laid off by firms looking to save wages and social insurance costs.

The head of the Department of Labour Relations under the Vietnam General Confederation of Labour (VGCL), Mr Ngo Duy Hieu, said at a National Assembly session last week that some companies, including those set up with foreign direct investment (FDI), had ended contracts with workers over 35 because they felt that some of the jobs "no longer" fit the workers' ages.

One reason for this, he explained, was that some employers did not want to spend more on wages and social security.

The exit of workers aged 30-35 was brought about either through increased work pressure, or summary termination without an explanation, he said.

Ms Hong Hang, 35, used to work for a company in the North Thang Long Industrial Park in Hanoi, but resigned after she was transferred to another unit where she felt the job was not good for her.

Mr Hanh sees a pattern in companies getting rid of their employees in their thirties, either by not renewing short-term contracts or giving unsuitable jobs to those with long-term contracts to pressurise them to quit on their own.

Ms Hanh told the VnExpress newspaper that she was now looking for a job at the Dong Anh job promotion centre in the capital.

A VGCL survey on the reasons for termination of labour contracts by FDI firms found that 40 per cent of employees left their companies due to being forced to work overtime, or failure to meet high targets.

Another 15 per cent said they were told they were physically unfit for the job, while 13 per cent were given no explanation.

However, noting that there were no thorough statistics on employees in their 30s being sacked by firms with foreign direct investment, Deputy Minister of Labour Pham Minh Huan said that major layoffs of employees over 30 were specific to one place or sector.

"Hiring or firing is up to employers and employees to decide together. In a market economy, companies will expand production and recruit new employees when they make profit. But if they face market challenges and have to reduce production, they will lay off employees. It is inevitable," said Mr Huan.

Regardless of the reason, the layoffs are having a big impact on the country's welfare system, with the number of people claiming lump-sum social security payments increasing significantly, according to Mr Le Dinh Quang, deputy head of the labour relations department under VGCL.

In recent years, an average of 700,000 people have been submitting claims for lump-sum social security payments every year. That figure was 300,000 in the first five months of this year, with a large number of people from the 35-40 age bracket.

"More than 10,000 people have registered for unemployment benefits in Hanoi and 90 per cent of them are just over 35 years old," said Mr Quang.

The situation was more pronounced in labour-intensive sectors like textiles and garments, footwear and seafood, he said, with many workers in these sectors resigning because they no longer had the health to perform their duties as well as they did in their 20s.

Firms also tried to persuade workers to leave the job and take the lump-sum health and social security payments to reduce the amount the companies had to contribute in this regard.

Mr Dao Viet Anh, the deputy general director of Vietnam Social Security, said the rise in the number of employees seeking early retirement and withdrawing funds from the social security scheme could lead to an imbalance in the pension fund.

Nevertheless, he said the social security reform plan has proposed to reduce the minimum compulsory time to pay for social security from 20 years to 15 years, with plans for a further reduction to 10 years.

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