Covid-19 impact and responses: Vietnam

Updated on: 4 August, 2020

What is the current situation?

General information

  • On 25 July, Vietnam’s first community transmission case was reported in Da Nang city after 99 consecutive days without a single community infection case. 
  • As of 4 August, Vietnam’s Ministry of Health confirmed 205 new Covid-19 cases, 184 of which are linked to Da Nang City, bringing it to a total of 652 cases. However, 374 of the affected patients have recovered and have been discharged from hospitals. For the first time, Vietnam has recorded eight deaths due to the pandemic.  The new community transmission has been spread into 13 provinces/cities, in which the highest cases are found in Da Nang, Hanoi, Ho Chi Minh, Quang Nam, Quang Ngai and Dak Lak.
  • Up to date, there are four workers of four factories in industrial zones in Da Nang are positive with COVID-19, one of them being a garment worker. The garment factory has been temporarily closed since 31 July.
  • Non-essential businesses such as bars and nightclubs in Hanoi and Ho Chi Minh City have also been closed since 30 July and 31 July respectively until further notice. Gatherings of more than 30 people have also been banned.
  • Social distancing measures have been imposed in Hoi An, Dac Lak, Da Nang since 29 July in a bid to prevent further spread of the virus.
  • As part of the social distancing measures, all flights, passenger buses, taxis, and trains to and from Da Nang have also been suspended.
  • Three hospitals including Da Nang General Hospital, Hospital C and the Orthopaedic and Rehabilitation Hospital, where patients first visited before testing positive, have been put under lockdown.
  • In addition, Da Nang city authorities have stopped accepting tourists for 14 days starting from 26 July, while non-essential services such as amusement parks, bars, beauty parlours, discos, karaoke, massage parlours and schools have been closed until further notice. However, hotels, restaurants, supermarkets, lottery services will continue to operate with preventive measures.

The situation with factory production

  • According to General Statistic Office of Vietnam, as of June 2020, there were 30.8 million persons aged 15 and over negatively affected by COVID-19, including those who had lost their jobs, had to be laid-off/had to take work off in turn or had to reduce their work hours, and had their income reduced, etc. The effects of income reduction accounted for the highest proportion with 57.3% of the total number of affected people (equivalent to 17.6 million persons).
  • The reduction in the labour force was mainly in rural areas and the female workforce. The labour force in rural areas decreased by 4.9% over the previous quarter and by 5.6% compared to the same period last year, which was higher than the decline in urban areas. The female workforce decreased by 4.4% against the previous quarter and by 5.4% over the same period last year, which was higher than the drop of the male workforce.
  • The unemployment rate has been the highest in the last 10 years. The unemployment rate has increased the most in the labour group with low qualifications: The working age unemployment rate in the 2nd Quarter of 2020 was 2.73%, and specifically, the working age unemployment rate in the working age in the urban areas was 4.46%, the highest figure in the last 10 years, 1.36 percentage points higher than that in the same period last year.  The unemployment rate of workers qualified at intermediate level and over in the 2nd Quarter of 2020 saw a decrease in comparison to the previous quarter and an increase compared to the same period last year. While the unemployment rate in the 2nd quarter of 2020 of workers with low qualifications (at primary level) or workers without qualifications both increased in comparison to the previous quarter and the same period last year. This shows that when the economy is in shock, the workers with low or no qualification face more difficulties in job opportunities than the workers with intermediate or high levels of qualifications.
  • Based on the domestic and international situation,  the Department of employment (MOLISA), has taken into account the worst scenario: the number of unemployed workers may increase by about 60,000 to 70,000 per month, focusing mainly on the fields such as tourism, accommodation and catering services, construction, transportation, manufacturing and processing, etc. The number of affected businesses will be up to 70%, while the number of employees that have stopped working or have been laid-off could be as high as 3.5-5 million people.
  • Textile and apparel export turnover of Vietnam in the first 6 months of 2020 is estimated at USD $15.68 billion, down by 13.4% compared to the same period of 2019. This is the first time textile and apparel turnover in the first 6 months of the year Vietnam has witnessed a sharp decline in the last decade. This result once again clearly shows the impact of the COVID-19 epidemic on Vietnamese textile enterprises.
  • By the end of July, many textile and apparel enterprises have not had orders for the last two quarters for high-value products such as suits, high-end shirts, while masks and protective clothing job support for many garment enterprises in the second quarter, the current price has fallen sharply due to an oversupply worldwide.
  • In fact, many businesses have face masks orders until the end of the third quarter of 2020 and can help maintain jobs for workers in difficult times caused by COVID-19. However, profit margins are not high because 80% of the orders make masks in the form of processing, and have not created much surplus value like FOB and ODM orders. Moreover, when the export of masks and workwear reduces, it will make enterprises have an even more difficult last few months of the year. Vinatex forecast Vietnam’s textile and garment export in the last 6 months of the year will continue to decrease by 14-18% over the same period, bringing the total export turnover in 2020 to about USD $32.75 billion, down about 16% compared to the same period

What are the government policies and regulations to protect employees – the workers?

  • After receiving lots of feedback from employees about difficulties accessing the support package, MOLISA has submitted to the Prime Minister amendments and supplements to a number of articles in Decision No. 15/2020 / QD-TTg to align the regulations more closely with the reality of job loss. ‘Of employees working under the labour contract regime without taking leave due to disease. Specifically, the time of postponement of labour contract performance, unpaid leave during the term of the labour contract is calculated from 23 January to the end of June, instead of 1 April to the end June as previous regulation.’  For enterprises (which also indirectly support workers), amend and supplement Clause 2, Article 13 of Decision No. 15/2020 / QD-TTg in the direction of more clearly: ‘Turnover in the first quarter of 2020 is reduced from 20% or more compared to the fourth quarter of 2019 or compared to the same period in 2019,’ instead of general financial difficulties, it is difficult for procedures to review and check records.
  • All provinces/cities are reactive the epidemic prevention system, specifically in the manufacturing factories.  For example, measuring temperature, wearing a mask, spraying anti-bacteria solutions, washing hands, keeping a distance at work as well as on shifts, splitting meals, etc. are applied very thoroughly.

What are local organisations doing to support and protect workers?

  • Up to date, there are 4 workers of 4 factories industrial zones in Da Nang are positive with COVID-19, of which one is a garment worker. The garment factory has temporarily closed since 31 July. Those factories have been applying measures to filter infections and disinfect.
  • Director of the International Labour Organization (ILO) in Viet Nam, Chang-Hee Lee, has called for concerted efforts among the government, workers’ and employers’ organisations to save jobs and protect vulnerable workers as the pandemic is taking its toll on the country’s labour force.
  • On 22 June, with technical support from CNV Internationaal, social partners VITASLEFASO, Vietnam Chamber of Commerce and Industry VCCI, and Vietnam General Confederation of Labour VGCL have singed a joint statement on a cooperation initiative to address the COVID-19 impact on workers and businesses of the textile-garment and leather- footwear-handbag industries in Vietnam. The statement is a call to action to partners in the European Union and the Vietnamese government to invest in strategic partnerships to promote social dialogue in line with international labour standards. It further request investment in the education of the workers and making them more employable. The stakeholders also ask for timely and substantive support for workers and businesses affected by the pandemic, with easily accessible and simplified procedures. In conclusion, the Vietnamese partners aim to become an innovative industry able to produce more sustainable and ecological products and production methods.
  • The Vietnam Textile and Footwear Public Private Partnership, a combination of industry, public entities, NGOs and CSOs, hosted by the Ministry of Industry and Trade, in which Fair Wear Foundation is a member, is conducting 2 studies on:
    1. Impact Assessment of Covid-19 on the Apparel and Footwear Industries in Vietnam. The study aims to provide a comprehensive analysis of the changes in the textile-garment and footwear industries during and after the pandemic so as to suggest directions for the interested agencies, to adjust their strategies in terms of markets, products and labour force management to recover from the pandemic and thrive in the post-pandemic world. The study also aims to provide evidence to advocate the government for better policy to support the industry and its workers. 
    2. Assessment of COVID-19 impact on Workers Working in the Apparel and Footwear Sector in Vietnam. This study aims to understand how the pandemic impacts the workers and their families and what challenges they are facing. The study will also examine the implications of medium and long-term impact on workers, their workers’ coping strategies, and the availability and access to the support schemes initiated by government, trade unions, worker representatives and other stakeholders. They are expected to launch by end of 2020.

What have been the responses and requests of business associations to support the industry?

1.Vietnam’s government issued Decree 58/2020 ND-CP (Decree 58) for employers in specific industries that allows them to reduce their Social Insurance (SI) contribution for the occupational diseases and accident category. Decree 58 came into effect on 15 July. Garment, apparel or shoes manufacturing is eligible under this decree.

Summary of the Decree

Businesses that operate in the specific sectors under the occupational diseases and accident category are eligible to contribute to a lower rate of 0.3% compared to the current rate or 0.5 percent

Businesses that want to apply for the lower SI contribution rate must meet the following conditions as stipulated in Article 5 of Decree 58:

  • They should not have been subject to administrative or penal liability in violation of occupational safety, safety, sanitation and social insurance in the past three years;
  • Have reported occupational accidents, safety and sanitation issues accurately and in a timely manner for the past three years; and
  • The number of accidents in the last year has been reduced by at least 15% compared to the average of the last three years; or
  • No accidents have occurred in the last three years.

Businesses will then need to submit an application form with the relevant documents such as Form 1 in Decree 58 to the Ministry of Labor, Invalids and Social Affairs (MOLISA). If approved, the social insurance contribution reduction for the business will be valid for a period of three years. The business can renew the application to continue to benefit from the lower contribution rate.

2. According to Vice minister -Le Van Thanh, MOLISA has asked the government to amend some conditions for businesses to access the support package under Resolution 42 and Decision 15. Specifically, a policy bank loan to support 50% of the salary for workers. The original policy required many conditions including no turnover, financial difficulties to the extent that there is no salary to pay, or paid workers 50% in advance. Now we would propose to remove/reduce those conditions. If a business has reduced revenue, it is eligible for the support loan. In addition, MOLISA is proposing to continue to suspend for additional six months (until December 2020) the retirement and survivorship fund payment for businesses and workers.

What are international brands doing to support suppliers and protect workers?

As with many other garment factories in Vietnam, Long Ma (ID 2266) was also met with big challenges from the supply from China, leading to a shortage of materials for production. Long Ma has also been facing the challenges of order cancellations from other buyers. In February, Long Ma actively shared its difficulties with Fair Wear member brand Bierbaum Proenen, expecting the brand’s support. After exploring the situation and the capacity of Long Ma, Bierbaum Proenen agreed to increase double orders to support the factory in keeping production stable. This is huge support for the factory in general, and for workers in particular, given the difficult circumstances. Therefore, Long Ma is one of the few factories in Vietnam that does not need to reduce working hours and that can still keep up regular operations.

Relevant links for more information