One of Vietnam’s leading shoe manufacturers, catering to brands like Nike Inc and Adidas AG, announced plans to lay off thousands of employees due to a significant drop in orders. PouYuen Vietnam Co, a subsidiary of Taiwan-based Pou Chen Corp, is set to let go of nearly 6,000 workers with permanent contracts by the end of next month, according to reports from Vietnamese state media. The company cited a slump in demand as the primary reason for the layoffs.
Vietnam is renowned as one of the world’s largest exporters of clothing, footwear, and furniture. However, the country has been hit hard by the ongoing cost-of-living crisis in Europe and the United States, leading to a decline in consumer buying power. The decrease in demand has adversely affected industries in Vietnam, with manufacturers grappling to maintain their workforce due to reduced orders.
PouYuen Vietnam Co has informed local authorities in Ho Chi Minh City about its intention to lay off almost 6,000 employees holding permanent contracts, marking the largest layoff the company has experienced since its establishment in 1996. With approximately 50,000 workers, PouYuen Vietnam is one of the largest employers in the city. The company had previously carried out a similar round of layoffs in February, resulting in the dismissal of around 3,000 permanent staff and non-renewal of contracts for an additional 3,000 temporary workers.
A recent survey conducted by Ho Chi Minh City’s labor department revealed that one-third of production facilities in the city witnessed a decline in workforce demand during the first quarter of this year. Industries such as footwear, clothing, and construction were particularly affected. To mitigate the impact of the pandemic, PouYuen Vietnam had previously placed 20,000 workers on paid leave in rotation last year.
The Vietnamese Ministry of Labor, Invalids, and Social Affairs reported that over 630,000 workers in Vietnam lost their jobs or experienced reduced working hours in 2020. The latest layoffs at PouYuen Vietnam add to the increasing unemployment rate in the country, further highlighting the challenges faced by the workforce amidst a global economic slowdown.