Unemployment: Risk of Spreading

 

In the context of the difficult economy, the banking system is facing many challenges and when credit is becoming exhausted, salary cuts and staff reduction are seen as a solutions in order to solve the difficult situation. According to the financial reports in the first 9 months of 2012, salaries and allowances of Viettinbank staff had been cut more than VND2,380 billion (nearly 47 percent). At Vietcombank, average salaries and allowances of employees dropped by 13 percent / year.

 

Unemployment situation of bankers is happening on a large scale. Techcombank has reduced 600 employees in the last 3 months. ACB recently laid off a large number of aggressive probationary employees. Several other banks also promote layoffs related to bad debt by several ways: lower wages, forced debt collection targets ... Some banks let their employees leave job in an indirect way by not assigning work.

 

According to the forecast of a joint stock bank in HCM City, from now until next year, the banking sector has to lay off a quarter of employees and cut about one third of the cost of compensation. Chair of Oriental Bank, Trinh Van Tuan also viewed that currently, the process of restructuring the banking system is going strong and that a number of banks decrease by 10 – 15 percent of the labour force is also normal.

 

Looking at the stock market, the situation seems worse as the sector that was once seen as the dream of many people has plummeted particularly securities brokers. Hardy people can imagine the income of securities brokers today. Some people only earn VND 1 million a month like unemployed people.

 

Recognising the severity of the changes in compensation and personnel structure of Finance-Bank-Stock enterprises, finance-banking expert Can Van Luc said that change is inevitable in context of the whole system under restructuring process, accompanied by the pressure of bad debts and the pressure to complete the business plan targets.

 

In the perspective of many other experts, that state of "half” unemployment and unemployment of those sectors above is understandable because in the past, businesses have recruited massively due to the development rapidly in these sectors, now, the business faces difficulty, real estate and stock market "freeze" so the employee is not able to complete targets: businesses cannot afford to pay wages, they are forced to restructure personnel, screen and select qualified people to both reduce costs and provide the best performance.

 

It’s not just the banking sector that suffers a wave of unemployment, but many other areas are facing even a bigger problem of the matter. Statistics in the first nine months of 2012 of the General Statistics Office showed there were nearly 35,500 enterprises closing down their business (up 7.1 percent compared to the same period last year). The number of registered unemployed people increased by 44 percent over the same period. In Hanoi market, by the end of October, there had been 2,300 people receiving unemployment insurance, nearly equal to the numbers of registration in 2010. That's not to mention the labor force does not completely fall in unemployment but do not have a job and their income temporarily unavailable. According to Dr. Nguyen Thi Lan Huong, General Director at Institute of Labor and Science Affairs, the goal of creating jobs for 1.5 million people this year may be lower than last year by about 5 percent. Resonance effects of the economic downturn, business bankruptcy are the main cause leading to increase in unemployment and underemployment in urban areas.

According to Mr Tran Anh Tuan, Deputy director of the Centre for forecasting labour demand and labour market information (Department of Labour, Invalids and Social Affairs Ho Chi Minh City), in October 2012, there are many branches having labor supply higher than demand such as construction, architecture, accounting, human resource management, office administration, management of chemical engineering, finance and banking. But some sectors still lack qualified workers, such as information technology, business personnel, sales, insurance, services, pharmaceutical and biotechnology. Therefore, clearance of increase in unemployed workers firstly needs to have training plans to restructure human resources.

 

In the long run, sharing experience to deal with the unemployment situation, the experts from the International Labour Organization (ILO) took Korea as an example. Accordingly, South Korea promotes the specific employment services, market information and working systems, organizes practice and business programs for young people, to help them better prepare when entering the labor market, avoiding running to the most professional trends and to reduce the challenges of employment issues.