RAPID ASSESSMENT OF THE IMPACTS OF THE ECONOMIC CRISIS

CASE STUDIES ON FORMAL SECTOR: ENTERPRISES AND WORKERS IN INDUSTRIAL PARKS

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A. Impacts on enterprises in the industrial parks1

1. Background information:

The research was conducted at two industrial parks near Hanoi, the Thang Long Industrial Park and the Quang Minh Industrial Park. Originally, the research was planned to focus only on the 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 enterprises agreed to meet with the researchers, although the research team made a lot of efforts to increase the response rate.2 This may be explained by the current difficult situation that enterprises are facing. They hesitate to disclose information at this sensitive time. Therefore, the research team has decided to conduct further interviews with enterprise owners at a similar park, the Quang Minh Industrial Park. The interviews were only possible thanks for personal contacts and connection. Quang Minh is a good substitute for Thang Long Industrial Park for several reasons. First, like Thang Long Park, Quang Minh Park mainly hosts investors from Japan. Second, Quang Minh Industrial Park is located quite close to Thang Long Industrial Park (they are on the same way from Noi Bai airport to Hanoi center, only 15 minute drive away from each others). In total, the research teams conducted 4 interviews with enterprise owners, two in Thang Long Industrial Park and two in Quang Minh Industrial Park.

Brief overview of Thang Long Industrial Park

The 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 to the center of Hanoi. The location is considered by investors as ideal location as it is situated between the Noi Bai Airport and the center of Hanoi Capital. The park is considers as big and one of the most successful part in the nort of Vietnam. In total, there are 85 investors (tenants) in the Park, of which 67 tenants are manufacturing factories, and the remaining 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

The Quang Minh Industrial Park was established in 2001, and is considered one of the 7 biggest Park in Vietnam. The park is located in Me Linh district (formerly part of Vinh Phuc province). Similar to the Thang Long Park, the location of Quang Minh IP is considered by investors as ideal location as it is situated between the Noi Bai Airport and

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.

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the center of Hanoi Capital. The park is hosting both foreign direct investors and domestic investors whose main production is for export market.

2. Major findings3

The impact of the economic recession

To a varying degree, almost all FDI enterprises from hi-tech to labor intensive in the two industrial parks are affected. There are evidences that labor-intensive enterprises are more likely to be affected. The economic crisis has hid the investors in the park quite hard. Most of the factories have cut back their production, only one or two could maintain their production. With the economic crisis unfolding since November/December 2008, due to the fact that they are export-oriented manufacturers, the production of investors in the Thang-Long and Quang Minh industrial parks has contracted significantly, especially for electronics and automobile manufacturers, and other sub-contractors. For example, the severe situation in the Thang Long Industrial Park can be seen through the fact that industrial water usage within the park has decreased by about 30-40%.4

Although no mass cancellation of orders is found, there are evidences that the number of orders has dropped significantly. As a result, the sales and production of these FDI enterprises dropped significantly, in some cases the sale decrease by 30-40% (Nissin), and even 50% (Inoac). The cancellation of orders and fall in production and sales are due to significant drop in export demand, as these companies are set up in the industrial parks for the purpose of producing for export market.5

In the year 2008, the demand for labor was very high and it was difficult to recruit enough employees. Vacancies were abounding and employees could shop around for good jobs. However, the situation has changed dramatically since November 2008. Virtually the demand for labor is zero, there is no vacancy around.

Although no direct evidence of the financial stress is reported during the interviews, it seems that investors in the Thang Long Park have to work out financing scheme to deal with the current financial difficulty. In particular, the Thang Long Management Board (an FDI firm) has to re-schedule rent payment for many tenants (from advance payment to monthly payment).

The coping strategy3 In the context of economic crisis and recession, Vietnam’s low wage is an important advantage. For the management will not to cut wage or the number of employees as much as they would in other countries. The 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 the production from other countries to Vietnam.4 This is also partly reflected by the fact that when the research team contacted for interviews, there were several incidence that the factories were temporary close for some time during the month/week.5 There are some consistent words of mouth that companies in some sectors are not affected by the economic recession. They are high-tech, pharmaceutical and health equipment companies. An interviewed high-tech company inform us that their sales are up 10%, although last year the number is 30%.

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In the face of the economic recession, all interviewed enterprises are cutting back their cost using various strategies..

Cost-saving

The interviewed companies are found to cut cost by intensifying their cost-saving such as cutting back on electricity, office materials and labor cost (examples include no over-time payment, reducing the number of work-shifts, paying 70% of off-work day, encouraging workers to take holiday and vacation).

Lay-off

As most of the enterprises in the two industrial parks were using temporary and seasonal workers, these workers are the first to become redundant. As these workers are employed on a short-term contract, the employers tend to let them go once their contracts expire.

Representative of the developer (landlord) of Thang Long industrial park says that among 50000 workers in the TLIP, 3000 have lost their jobs since late 2008; and the current demand for new workers is reaching zero. However, it seems that a much bigger number of jobs in TLIP has been lost in reality, according to our interviews with workers and some sources from mass media.

The FDI enterprises in TLIP prefer the worker’s “voluntary resignation” rather than the “lay-offs” in downsizing, as lay-offs needs to follow a strict procedure stipulated by the Labour Code and may affect the company’s prestige. In fact, the representative of TLIP developer comments that none of the reported 3000 workers who have lost jobs in the past several months are under the “lay-offs” cases.

For the permanent workers who often received training the decision is more difficult for the employers. They tend to keep the 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 lay-off, whereby the workers will submit their resignation in return for some benefits such as a lump-sum payment equivalent to one/two-month wage. Another factor is that the economic down-turn came about at the Tet holiday, this encouraged the workers to hand in their resignation to get the compensation money to go back home for the Tet.

However, the lay-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 resultsthey have adopted several things such as work-sharing scheme, encouraging employees to take long holiday, paying 70% of wages for employees to stay at home for some time. At the same time, to keep the moral of the retaining employees, while still paying their wage, they ask their employees to do such things as cleaning, keeping and maintaining the factories.

Finding new customers/orders

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One of the often suggested solutions is to find new customers and orders. In the face of economic recession, companies now realize that they rely too much on orders from big producers. Given the decreased number of orders, they are now attempting to switch to other line of products.

Stock-piling

For firms that produce mainly for exporting, in order to keep their employees expecting the current economic recession to be over soon, they have tried to maintain a minimum level of production, and keep stock-piling.

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B. Impacts on workers of Thang Long industrial park in Hanoi6

1. Characteristics of workers of Thang Long Industrial Park in Hanoi – who are they?

Most of workers of Thang Long Industrial Park in Hanoi (IP) are labour migrants, mainly from Northern provinces of Vinh Phuc, Son La, Nghe An, Bac Giang, Ninh Binh, Phu Tho, Ha Tinh, Ha Tay… According to Vietnam Economics News (2009), 70% of the total of 737,500 workers in IPs and EPZs are labour migrants. They are often from households facing shortage of land or low income in rural areas.

Land policy since 1993 provides lands for current households members at that time. No more land is given to the births or taken from the deaths after that. It makes who currently becomes 18 years old face the risk of landlessness. Since the IP recruits labour from 18 to 24 years old only, most of young workers think of landlessness for the first reason why they migrated to the urban IP7 (Box 1).

Box 1 – Landlessness led to migration for works in IP Female worker Nguyễn Thị H, from Phu Tho province. Her household of 5 members (parents and 2 more brothers) has only 4 sao of rice field (1 sao equal 360m2) and no animal raising. She and her elder brother are both migrant workers and only the youngest is studying now. The reason is because of landlessness. Only her parents are now working on the field.

Image: Recruit annoucement at IP board notice – Only 18-24 years old

Most of migrant workers have to rent a place for living. Not every enterprise has a dormitory for migrant workers. Even migrant workers of big enterprises which has a hostel felt uncomfortable with the hostel regulation because they often work overtime and late workshift. Two or three workers share a room of eight to ten- square-metres wide.

One characteristic of IP workers is their specific position in a production line. To undertake a certain position in a mass production line, the worker is provided a short job training (maximum about 1 month for technical works and even only 2 days for simply jobs). As working in production line requires specific manipulation, there is no big differences in skills between newly-recruited and senior workers. However, young workers are more advantaged in the working environment of high pressures of accuracy, concentration, intensity and productivity.

6Nguyen Thi Thu Phuong (Center for Analysis and Forecasting – Vietnam Academy of Social Sciences), 2/2009. This component report provides case studies on workers in Thang Long Industrial Park, to provide input for the overall Rapid Assessment on Social Impacts of Economic Crisis in Vietnam which is conducted by Center for Analysis and Forecasting, Oxfam GB and World Bank Vietnam.The research team did interview 18 female and 5 male workers in total, in range of 19-27 years old at their hostels near Thang Long industrial park. Three focus group discussion (1 male and 2 female groups). Among 18 female workers, 5 are laid-off, 7 are rotational day-off with 70% of salary, 5 are currently working and going to be rotational day-off with 70% of salary, and 1 is currently working. Among them, 5 are students in a vocational school nearby the industrial park. Among 5 male workers, 3 are currently working (2 work in the kitchen) and 2 are rotational day-off with 60 and 70% of salary.7 Out of 16 workers talking about migration reason, 9 mentioned landlessness at their hometown. 5 said about social network when their friends and relatives informed job opportunities after they completed the secondary level. Other reasons are low income from agriculture (2 workers) and other non-agriculture (2 workers).

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A certain position in a production line may require not very high qualifications then most of workers obtain only upper-secondary education8. High school graduates are able to be recruited after passing the entrance tests of simply skills. Facing rush orders and lack of workers, enterprises recruit also lower secondary graduates. Only technical positions require qualifications of higher education.

Shift-based working is a principle requirement for IP workers. Enterprises can divide production into 3 shifts (e.g. 6 AM –14 PM, 14 AM-22 PM, and 22 PM-6AM the next day) or 2 shifts (e.g. day shift from 8 AM to 8.30 PM, and the night one from 8.30 PM to 8 AM the next day). As in the Labour code, shift-based and overtime working is compensated by at least 1.5 times. Under high pressure of productivity and volume, shift-based working and overtime for rush orders are much hard to even young workers.

Most of workers are female9. Female proportion depends on characteristics of works and products. In such factories of electronics assembling, female workers account for 90 per cent of total workers. On the contrary, male workers are major in motorbike factories, or heavy and harmful jobs.

About 80% workers are unmarried, said workers10. Many female workers think of getting marriage after some years working in IP. Some other workers over advantageous age of 18-24 try to focuse on hard work to earn money when their health is good enough for IP production environment. On the other hand, shift-based working of 12 hours per day is hard for marriage and having children.

Migrant workers are characterized with rather high social capital. Workers from same hometown or living in same hostel often support each others such as informing about job opportunities, lending money, recommending well-paid jobs, etc. When 60-70% of labours at the commune as origin migrate for jobs, information from their network is huge, said a female worker. Information from an IP worker from the same hometown help him to save some million VND from paying to a job agency, said a worker from Vinh Phuc province.

Workers have not highly appreciated trade union’s role due to its irregular activities and poor supports in terms of job information and labor contract.

2. Economic crisis – Boom time and IP workers’ jobless

The fourth quarter of 2008 is considered as the peak of waves of laid-off IP workers facing the economic crisis. Many companies have cut jobs since October 2008 and then laid-off workers sharply increase. The interviewed workers describe the situation of numerous workers crowding and some even crying on the road in front of the IP entrance when thousands of workers lost jobs in November 2008.

8 Out of 18 workers interviewed, 16 finished upper secondary education, and only 2 obtained the college education.

9 According to Vietnam Economics Times (2009), there are 60 per cent female among 737,500 workers in IPs and EPZs in Hanoi.10 Only 1 married workers in 23 interviewees.

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First quarter 2009 still sees laid-off series at smaller scales. According to Thang Long IP Management Board, in 2 months before the Lunar New Year 2009 alone, nearly 1,000 workers in the IP became jobless totally due to cutting jobs of enterprises (Vnexpress, 2009) (Box 2).

The milestone of cutting jobs before Tet seems to be coincident with the business cycle in IP when 1-year contracts of workers come to the end. Annually, enterprises start new recruitments after the Tet holiday. Then, before this Lunar New year (Tet holiday), series of workers who completed their 1 year contracts were informed not to extend their labour contracts.

Box 2 – Nearly 20% of total workers being laid-off in Thang Long IP Panasonic informs to cut 500 jobs in optical disk factory in the first wave. Nissei Company encourages workers to stop their contracts due to the lacks of orders and get 1,600 dismissed before Tet. Cannon cuts 1,200 jobs. Sumimoto lays 1,500 and 600 workers off in December 2008 and after Tet, respectively.

Nguyen Phu Diep, head of Labour Management Department in Hanoi IPs and EPZs, says that 19 enterprises in Hanoi IPs and EPZs have cut 4,300 job and about 20% of total workers, equivalent to 10,000 workers in Thang Long IP are estimated to be jobless in this yearanticipation (VNexpress, 2/2009).

Worker reduction in production lines also result in redundancy of dependant services group. The cooking group is to cut 30% jobs.

The size of laid-off waves depends on enterprise scale such as the big one often goes with hugh drop 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 such enterprises with about 600 workers, the number remains still with less workload or temporary rotational days-off.

In addition, the cut seems to be characterized by the products. An enterprise which produces household commodities (knife, scissors, etc.) do not downsize workers but reduce overtime because of fewer orders. Enterprises of electronics assembling seem to face more laid-off workers. Besides, it can depend on the market where the product goes to. Bigger cut happens as for US-marketed enterprises than Japan or the third marketed ones where the product is going to be completed.

In adition to out-right lay-off, enterprises offer workers 60-70 per cent of their salaries for temporary rotational days-off since after Tet - February 2009. They feared that they would be unable to recruit sufficiently skilled workers when the economy recovers. Tet holiday was longer this year – about 10 day. Temporary days-off can go up to 3-4 months. An enterprise announced 20 days off and then 2 weeks next.

Enterprises tighten the regulation in order to increase the number of unplanned dismissed cases. Any small unharmful mistake against the production regulation will immediately lead the worker to being dismissed in the day.

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3. Economic crisis – Changes in IP workers’ job and income

3.1. Current employees11

a. Changes of job and productivity

Workload in IP factories experiences hugh drop. For instance, working time decreases from 10-12 hours before to about 4 hours per day, only 3-4 days per week, no working overtime or shifts or during the weekend (Saturday and Sunday).

Only some production lines remain operation with low productivity (Box 3) when workers can take 10-15 minute rest after each 5 minute working. In such lines without operation, workers are arranged to do other things such as cleaning, storing, cutting grass, etc. In case of no more odd works, workers are still in their line without doing anything.

Box 3 – Workers in an electronics assembling enterprise: hugh drop in workload and productivityJobless happended with 60 per cent of 5,000 workers in an electronics assembling enterprise after 2 waves of lay-off. The enterprise has 3 factories of TV remote controller, chip and speaker which has 8 lines per each. After two high lay-off, there is now only about 100 workers in 1 line in each of 2 factories of chip and speaker. Six out of 8 lines in the factory of TV remote controller are still operating with half reduction in volume. It decreased from 6,000 units per day per line since the beginning of the year until August 2008, to 3,000 units only at present. Workers have 2 working days per week standing still without operation in the line in February 2009.

b. Changes of incomes

Enterprises, in difficult time, can seek for some cost saving solutions but can not reduce basic salary of workers. Firstly, the reason is that basic salaries in other sectors, and the labour market in general are rising. Secondly, salary increasing trend in other enterprises in the IP as one way to attract workers, especially in rush time of orders, itself makes the enterprise can not do that. Enterprise are to increase salary or otherwise to challenge with worker strike. (Box 4).

Box 4 – Strike for higher salaryA female worker in Company X in North Thang Long IP has joined 2 strikes in October and November 2008 to request a higher salary at knowing an increase in salary in other companies. As a result, her basic salary increases from VND 1,120,000 to 1,220,000 per month. However, she complained “I am still dissatisfied as it is lower than the rate of VND 1,300,000 per month of my friends in other companies”.

Thus, in order to attract workers, it is impossible to reduce salary. Factually, basic salary has increased in 2008 and the growth rate is about 8 percent annually.

11 Out of 23 interviewees, 18 are current workers. However, 9 of them have rotational days-off. And 5 more are informed of the coming rotational days-off. Rotational days-off workers only receive 60-70% of their salary in those days-off. One worker is the team leader who is going to quit the job because of maternity. She will migrate back to her hometown as IP working environment is not appropriate for a mother.

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Despite a little bit increase in basic salary in 2008, workers’ income still reduced a lot since their incomes mainly from working overtime and extra shifts. In the past, workers were paid about VND 2 million per month for 12 working hours per each of 4 days in a week. They even could earn about VND 3 million per month if they worked more overtime in Saturday and Sunday, get the best qualification rank of level A, and have management allowances. In crisis time, no overtime and extra works due to lack of orders reduces their incomes to the basis salary only at about VND 1.3 million per month. Moreover, if those workers receive 70 per cent of their salaries for rotational days-off instead of an outright lay-off, their income stays at only about VND 1 million per month. That income is unaffordable in the context of increasing prices and living costs in the IP (Box 5).

Box 5 – Salary increase can not catch up with that increase in pricesMonthly rent for a room for 2 -3 people grows 60% from about VND 250,000 2 years ago to 400,000 in 2009. In 2008, workers get only VND 100,000 as an increase in their salary at VND 1,250,000 per month while they had to pay VND 30,000 more for rent, and 10,000 more for electricity and water supply, and more for the increase in prices in daily markets. Daily costs is estimated to be double when they face increase from VND 10,000 to 20,000 for a meal, VND 5,000 to 10,000 for a kg of rice. In general, all interviewed workers find that salary increase cannot afford price increase.

In addition to basic salary, workers are often paid some extra monthly allowances such as VND 200,000 for traveling, VND 50,000 for regular presence, overtime allowances, VND 50,000 for accommodation. Team leaders can get more management allowances per month, e.g. VND 50,000, or even, VND 300,000 – 500,000 for higher management level. Workers can get VND 200,000 as harmful allowances for such jobs as thermal treatment.

Participating the social and healthcare insurance over 1-year, workers are granted the social insurance book. Female workers can enjoy maternity benefits. However, most of female workers are unmarried and sometimes under the constraint of internal regulation of “working over 6 months before marriage”.

Crisis leads to cuts in allowances. Rotational days-off on request by the enterprise makes them out of allowance for regular presence. Enterprises inform to drop some allowances such as traveling. At the same time, labour qualification ranking and subtracting salary of less-qualified workers is also one way to cut down workers’ income in crisis.

c. Changes in labour contract terms

Newly recruited workers normally pass a 3-months contract of training on the job first, then an 1-year, and then 3-year or long-term contracts. In fact, most of workers in North Thang Long IP have contracts of 3 years as longest duration due to the IP’s new establishment.

Since October 2008, aware of coming difficulties, enterprises only sign short-term contracts of only 3 or 6 months. Labor screening can be seen through qualification ranking and contract extension duration. In details, in order to keep skillful workers, enterprises sign 1 year contracts with them but shorter duration for less skilled ones. However, enterprises can still fail to keep those 1-year contracted workers when they are so tired of getting only 70 per cent of their salaries for rotational days-off instead of an outright lay-off.

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3.2. Laid-off workers12

a. Who become jobless first?

Newly recruited workers become jobless the first when they failed to renew contracts after completion of their 3 month contracts for training on the job. Secondly, cases working for some more months of the first 1-year contracts also voluntarily submit proposals to stop contracts upon worry about being dismissed first as being newly recruited. Then, the next voluntary leaves are workers who are ranked as the lowest qualified labor in the production line and fear of being dismissed without unemployment supports (Box 6).

Box 3 – Labor ranking or screening? - Voluntary leaves for unemployment benefits upon fear of being dismissed.Enterprise under the Corporation X: Totally 5,000 workers in the enterprise were announced to be voluntary unemployed due to the lack of orders. The enterprise provides supports unemployment benefits for the first 2,000 volunteers. Therefore, worry about becoming jobless without benefit hurry workers to submit proposals to stop contracts.

Labour ranking in Company Y – Workers in a line have to rank by themselves their production performance from A as the best to B, C, and D. Bonus for Lunar new year of 2009 was VND 14,000 for level D, 500,000 for level C, 1.4 million for level B, and 1.7 for level A which has 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 percent of the total), level B (30 percent), level C (20 percent), and level D (the remaining 35 percent). Workers were given 130 percent of the thirteenth salary as bonus for Tet 2008, but only one-month salary and additionally VND 500,000 for level A in Tet 2009 (VND 300,000, VND 150,000 for the cases of level B, C, respectively, and nothing more for the D ones).

Labour ranking, on one hand, is the basis for Tet bonus. On the other hand, it implies unqualified workers of C and D levels who should fear of unemployment without benefit. Then, those workers voluntarily submit proposals to stop contracts for unemployment benefits.

Additionally, a group of workers become jobless after a period of time of tired rotational days-off or too low salary jobs. Beyond their expectation of having 1 or 2-month salaries as unemployment benefits and getting new jobs with higher salaries somewhere else, workers now hardly find new jobs in crisis time. Price increases and too low salary lead to voluntary leave of a female worker in Company X as her monthly salary of VND 1,200,000 and 200,000 more for allowances fail to cover her daily life.

Unplanned dismissed cases because of mistakes against the production regulation arise in the crisis period. Interviewees mention the tighten supervision and even the smallest

12 Five out of 23 interviewees are laid-off. In which, one voluntarily left the job to receive 2 month salary benefit for unemployment. One left the job because of too low income. Three of them were refused to extend the labor contract and did not mention about the unemployment benefit. None of them are dismissed because of mistakes against the production regulation. These 5 laid-off workers are staying at the hostels close to the IP and searching for new job opportunities.

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mistakes such as being late in some minutes or wearing necklace lead to being dismissed for sure. This has never happened before the crisis.

b. No income

Due to regularly working overtime, most of IP workers do not have time and effort to do secondary jobs. As consequently, being laid-off means lost of their unique income for daily expenses. Then, they depend on the unemployment benefit received from the enterprise. This benefit is quite different among different enterprises. Most of cases mentioned are 1 or 2 months of salary or even lower (Box 7). The maximum benefit is 2 months of salary meanwhile the laid-off situation has happended for about half of the year, even since the mid of last year.

Box 7 – Labour screening in Company MWorkers are marked from the 1st – the worst to the 5th – the best performance. Then, wihout short notice, three groups of workers are treated differently. The first group was called to renew contract for 1 year. The second group, in the next day, was called to renew contract for 3 months. And then, in the day after that, the last group was requested to give back the uniform and equipments, stop the contract and out of the factory.

Among laid-off workers, those marked the point 1 are dismissed without any unemployment benefit, and workers with mark 3-4 receive half-month salary allowance for being jobless.

Laid-off workers can not find income from secondary and new jobs, then they can only hang around their hostel and keep an eye on the IP notice board for a job opportunities.

c. Supports by enterprises

The Prime Minister has requested a policy for laid-off workers, however it has not been specified by Ministry of Labour, Invalids and Social Affairs. According to the Labor code, the employer has to pay unemployment benefit of 1 month salary for each working year, In fact, not all enterprises are able to implement such benefit.

In crisis time, enterprises also face too many difficulties to provide high unemployment benefit for laid-off workers. Enterprises apply different lay-off policies. They often pay 1 month salary for voluntary laid-off workers. Some cases get 2-month salaries, which it can be clearly seen that those workers get laid-off before Tet then 1 salary is basically their Tet bonus. Newly recruited workers less than 1 year get only half of a month salary for lay-off. No benefit is paid for workers of “caught mistakes” and dismissal due to their low labour ranking and incompliance to enterprises regulations.

There is also absence of traveling support for laid-off migrant workers. Relations to enterprises come to an end when workers return uniform, working tools and go out of the factory. The last connection is only sending their last month salary and other benefits via ATM account at the end of month, and giving social insurance book 6 months later (in case of over 1 year working). In fact, workers neither withdraw money from the social insurance book nor keeping the book to continue the system participation. Most of laid-off workers are newly recruited for some month, then they lost benefit of already contribution to the social insurance. They have not regconized the social insurance role.

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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 recruit announcements with specific salaries. For instance, workers could stop their existing heavy and pressure job to apply for better jobs of lessened workload and higher incomes in other enterprise.

After Tet, IP notice board often covered fully by recruit announcements for hundreds of workers. But currently, there are few announcements for few positions, e.g. 4 workers only. Outright or temporary laid-off workers are troubled with difficulties to find new jobs in every enterprise. These workers are willing to apply for any suitable positions without consideration on salary.

Image: Scattering recruit announcement on IP notice board.

4. Impacts of crisis on IP workers’ living – How do they cope with?

4.1. Current employees

Cut down expenses, no savings and remittances for families

Workers try to save 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 vegetable and tofu when a better one with meats or fish is served at work. It help them to save about VND 500,000 VND per month for meals. Then, they try to save spending on traveling, and mobile charge are lowered by messages in stead of phone calls.

Box 8 – Workers’ living expensesFemale worker say that they can save almost nothing. Monthly, she usually paid about VND 200,000 for rent with water and electricity, VND 100,000 for sundries as shampoo, shower cream, soap, etc., VND 100,000 for 3-4 times going home, VND 150,000 for breakfasts, VND 300,000 VND for daily meals. In addition, she gets more burden of various spending on clothes, mobile bills, birthday, wedding presents, presents for family, guests, medicines in case of unhealthy, etc. Jobless currently forces her into sleeping over meals. She spends VND 5,000 for vegetable and tofu for some self-cooked meals (one a day). Rice is taken from home.

Another male worker spend about VND 160,000 monthly for rent, VND 100,000 for meals in case of self-cooking which is very rarely, otherwise VND 10,000 – 15,000 for a meal at inns, VND 150,000 for a birthday party, VND 50,000 – 200,000 for a marriage present depending on relations, for tobacco, etc. They fall into debt, or as well as try to reduce all spending.

Besides, some workers face the risk of rent increase when their old roommates become jobless, and return back to their homeland, then noone share the rent with. They may accept

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to move to further hostel to share the rent with others. In case of unhealthy, pregnancy and burden of kids, workers also face the risk of health expenses.

Before the crisis, workers earn income from overtime and extra shifts, enough to save. Older female workers prove themselves the good thrift practitioners and save more than the younger. They send their families for holding or preparing marriage life. Female workers can have monthly savings of about VND 500,000 to 800,000, or even 1million. Some other workers can save 3 – 4 times of VND 500,000 – 600,000 per year. However, it is also popular to see young workers without binding to support or to take care of the household are unaware of or unable to keep savings due to their low salary.

At the moment, it is impossible for workers to save. On the contrary, savings in the past are now spent during waiting time for new jobs. No savings mean no remittances. Workers can not cut down further their tighten consumption, then they borrow each other or from friends at their hometown. In stead of sending remittances to families, these workers even ask for money from families and friends in their homeland. (Box 9).

Box 9 – Money from home sent to workers waiting for jobs in IPThe case of female worker receives 70 per cent of salary for rotational days-off instead of an outright lay-off. The worker is disencouraged by the notice for the next 20 days-off. She asked for money from home at the rural area as her 70 per cent of salary is not enough for living expense and the fee more than VND 200,000 for a vocational course.

Another male worker having 70 per cent of salary for rotational days-off borrowed his friend in hometown an amount of VND 500,000 when he was back home for rice last month. He cannot borrow his roommates or colleagues because of the same difficult situation.

Staying at hostel and looking for jobs with psychological changes

Being laid-off or rotational days-off, workers staying at hostel fall into weary and tiresomeness. 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 1 or 2-month salary as unemployment benefit.

Box 10 – Enterprises become stricter for “mistake catching” in order to dismiss workersWorkers are always under pressure, uncomfortably and fear of lay-off. The number of lay-off can be higher resulting from more and more mistake catching, said some workers.

A series of enterprises’ regulations become more severe to workers, such as 30 minutes for rest in case of unhealthy instead of 1 hour as before, or subtraction of allowance for regular presence and half of daily salary for 1 minute late. Moreover, dismissal can be laid on any unhealthy workers, workers with failure to work in the third shift, workers with 2-3 days-off, workers with little seating rest during their sub-works as grass cutting, or unmarried workers with rings, earrings at work.

The more days off, the more puzzled workers are. They always worry about lay-off for half or full month. Due to bad mood of lay-off and failure to find new job, workers can do nothing than gossip with others.

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Image: Female workers chating for days-off

Head back to hometown in short time to wait for job opportunities

Most of workers, especially whose hometowns neighbor to the IP, facing long duration of day-off and having high social capital for job information, are about to head back to hometown to wait for job opportunities. Because of too low incomes, backing to hometown help workers to save daily expenses. Backing to hometown can be in within only 2-3 days-off if workers come from provinces surrounding Hanoi and traveling do not cost them much. This strategy can be easily recognized when noone rent 50-70 per cent of rooms in each hostel, even 100%.

Apart from the above 3 risk coping strategies, small percentage of workers who already have experiences and information from secondary jobs try to find other jobs (despite lower income) in the IP (such as working in the kitchen) or outside as mechanic, hair-dresser helper, cooking, meal delivery, etc. Facing difficulties to find 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, keep watching on notice board without any plan of earning.

Some workers studing at the technical school spend more time on studying. The North Thang Long Technical and Economics School are close to the IP and have about 70 per cent of students being IP workers. The school arranges favor conditions for workers to follow courses in the crisis period (Box 11).

Box 11 – Supports for IP workers who are studying at Technical SchoolIn the early 2009, after a notice from 125 outright laid-off and rotational day-off workers, the School encouraged these students to take advantages of days off for studying and supports them by certification for getting social loans for students (about 30% of total students), delay to pay educational fee for 3 months, fee collection by appropriate term, learning result reservation for 1-2 years off study, keeping contacts with IP enterprises for job information.

Worker find hard to work 12 hours and 4.5 hours more for classes daily. They are afraid of informing enterprises their study due to anxiety of making managers worry about their lowered productivity.

4.2. Laid-off workers

Head back to hometown and not migrate for work again is also the strategy of who is unable to sustain life in urban due to marriage and having kids. Avoiding shift-based and overtime works, those workers accept to be back to agricultural production or do some wage employment at hometown. Meanwhile, most of laid-off workers head back to the rural area for short time and search the jobs at the IP later.

Besides, laid-off workers keep staying in hostels near to IP and waiting for jobs. After the longer Tet holiday than years before, they migrated back to the city. Tet holiday was usually from the 30th December to 4th January of lunar year, however, this year workers come to enterprises later on the 10th for earliest. This is partially by enterprises’ policy of longer

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holiday. And, high social capital gave them information about rare recruit announcements in IP, then they more slowly return to the city.

Workers spend on laid-off benefits and savings or even borrowings from relatives and friends during the waiting for job opportunities. This group involves young workers who would be given priority for recruitments in IP. The older one from 25 to 27 years old after working about 3 years in IP is hard to find jobs, then not wait for jobs in IP. For those staying and waiting for jobs, their daily expenses are saved as much as possible, such as by sleeping over meal, bringing foodstuff from home, asking for living in dormitory for less accommodation cost, plain meals.

In case long-term crisis without job opportunities, then they accept to head back to hometown for wage employment with lower salary or even to back to agricultural production as the last choice.

Another strategy coping with the situation is to study. A determined group of outright lay-off and rotational day-off workers make efforts to start intermediate study and vocational training by getting loans or asking money from home. However, the month tuition fee of about VND 270,000 can be the burden on these workers and their households, even when they get social loans for students of VND 800,000 per month. Because the interviewees are going to finish the training course, it is still unknown that whether the freshman is continueing to study or not, especially in such hard circumstance.

5. Other sequences of jobless in crisis

Impacts on other household members

Most of migrant workers are young, single, and leave hometown for non-agricultural jobs in order to ease the burden for families due to landlessness. Then, they have little responsibility with household income at destination. Therefore, impacts of jobless in crisis through the channel of remittances from migrant workers seem to be low.

However, for cases where brothers or sisters together migrated and some did for studies, then becoming outright lay-off or rotational days-off is a serious problem of remittances to support their brothers’ or sisters’ education (Box 12). In other cases of working and studying at the same time, laid-off workers have to ask for money from home for their daily expense and fees for existing courses. As a sequence, burden on their family can be heavier.

Box 12 – Fail to send money for support sister’s studyingThe worker M. worrys as being unable to get money for her sisters’ studying. Her household of two parents with 7 children does small trading in hometown. The eldest brother has his own family, 2 sisters works for IP (one laid-off), one smaller study intermediate course in Hanoi, and the 3 remaining smallers are going to primary and secondary schools. Before, M managed her income of about VND 2 million per month to support her sister’s education with VND 1 million. M has received 70 per cent of her salary for rotational days-off since December 2008 and can not send money for her sister from now on.

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Having a brother in university and parents in hometown, another days-off male worker K sent money to his brother 3 times last year and one time this year (before Tet) with VND 400,000 – 500,000 for each. He is now not only unable to send money for his brother but also borrowing VND 500,000 for daily expenses. He now spends in a month VND 200,000 for rent, and other VND 400,000 for meals (reduced from 1 million in the past).

Impacts on the destination become issue when laid-off workers and rotational day-off workers head back to the hometown. The landlessness may be serious. As a result, redundant wage labour is on the rise since households having land would reduce hired labour or land for rent. Increase in the redundant labor at destination and its impact is still the question for study.

Impacts on local areas surrounding IP

The main impact on local areas surrounding IP is the reduction in services consumption by IP migrant workers (Box 14). Most of hostels have to close 70 per cent of rooms despite lower rent because most of workers return to their hometown. Thus, other services for workers also go down dependently.

Box 14 – Sharp decrease in services for migrant workersVong La commune has provided 60 per cent of land for the planning of Thang Long IP. Little remaining agricultural land is not cultivated due to poor internal irrigation. Local economic structure was changed towards services for IP workers and labor for IP (but only about 200 local persons working in the IP). Services for IP workers contribute 25 per cent of GDP of the commune.

Villagers already invested their land compensation of VND 65 million per 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 as total. The crises happened right at the time of IP expansion (Phase 3) then so many household just invests a lot of money into building hostels. These households did suffer from the shock of rent demand drop and no earning from new rooms.

In terms of local security, IP surroundings have been often considered unsecured with evils as mobile, motorbike robbing, theft, etc., for a long time. This situation has not been increased since the crisis started. However, a number of laid-off and day-off workers hanging around the area and having low income place a potential risk of evils increase.

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