Just several months ago, local newspapers reported that domestic enterprises were thirsty for laborers to fulfill export contracts, and that they were trying to recruit workers by offering big preferences. However, the situation is quite different now: the bad business result has forced many enterprises to narrow their production and lay off workers.

According to the HCM City Labor Force Information Center, the recruitment demand of the enterprises in the city in July dropped by 40 percent on average. Especially, the labor intensive industries such as garment, footwear and processing have seen the demand drop dramatically by 60 percent.

The center has also said it cannot see better signs in the labor market for August 2011. It has predicted that in August, local enterprises would offer 20,000 jobs, a decrease of 20 percent in comparison with July.

The same situation can be seen in Hanoi, which gathers many industrial zones. The job centers in Hanoi said enterprises nearly do not have the plan to recruit new workers. The noteworthy thing is that while employers have reduced their demand, the number of workers seeking jobs has also decreased.

“The number of laid-off workers who come to our center to find new jobs has also reduced significantly,” the Director of a job center in Hung Yen province said. “It seems that both employers and workers now keep silent and listen for the news”.

The sharp labor demand fall and the unemployment increase have been explained by the fact that enterprises, after a long period of struggling with difficulties, have got exhausted, and they have to either to get dissolved or scale down the production. High inflation input material price increases, higher interest rates, higher labor costs and higher production costs all have burdened enterprises.

An expert has cited the figures released by the Vietnam Chamber of Commerce and Industry (VCCI) that out of the 580,000 registered businesses, only 360,000 have become operational, while many enterprises have scaled down the production or got dissolved.

The report by the Bac Giang provincial business association shows that 43 enterprises have stopped operation so far this year, an increase of 30 percent over 2010. Similarly, in Bac Ninh province, 44 enterprises have got dissolved and have got the licenses revoked since the beginning of the year.

In HCM City, business associations have reported that 30 percent of the total registered businesses have got bankrupted.

Director of a Hanoi-based company said that it is now really a difficult period. “We have never before faced such big difficulties. We cannot access bank loans, while the capital costs have increased dramatically,” he said.

“We are working at moderate level. If the situation does not go better in the time to come, the dissolution proves to be inevitable,” he said.

Meanwhile, VnMedia has quoted its sources as saying that nearly 600 businesses are on the verge of bankruptcy.

The newspaper has also reported that with the support by the President’s Office, CRV, a credit rating firm, will join forces with economists to conduct a survey and release the annual report on Vietnam credit ratings in 2011, which will rank the 596 enterprises which have shares listed on the HCM City and Hanoi Stock Exchanges.

There are nine rating levels, with AAA being the highest which will be given to the enterprises which have good business results, good self-financing, long-term growth prospects, strong financial strength, and healthy solvency. Meanwhile, C will be the lowest rate to be given to the enterprises with prolonged losses and high risks.

Source: VietnamNet.