Asian factory workers on the brink of Western supply chain crisis | Global development
For weeks, Hoang Thi Quynh * worked and slept in a garment factory in Tien Giang Province, southern Vietnam. She started her shift at 7.15 a.m. and then, after a day of sewing sportswear, entered an empty hall in the factory complex and settled in for the night.
Each worker had a tent, spaced one or two meters apart, containing an aluminum mat, a pillow, a blanket and a box to store their belongings. No worker was allowed to meet anyone from outside the factory; even talking to a visitor over the doors was prohibited.
A wave of Covid that swept through Vietnam’s industrial areas earlier this year put intense pressure on the country’s manufacturing sector – just as factories were producing goods for stores before Christmas.
Vietnam is one of the main manufacturing centers in Asia and produces products for some of the leading Western brands in tech, clothing and sportswear. Reports of the outbreak have warned of delays in delivery of iPhone 13s and disruptions in the supply of everything from Toyota cars to Ikea curtains.
“Vietnam probably makes a third of all clothing production [for the US]Said Jana Gold, senior director at Alvarez & Marsal Consumer and Retail Group in Washington. âOf all the countries affected by Covid, this has really had an impact on the industry,â she said.
Many factories have asked workers to stay put to comply with government rules designed to minimize infections – a policy that has since been dropped, including by Quynh’s workplace, which allowed her to return home. in November.
But production has still not returned to normal; Analysts are predicting it won’t do so until the end of the first quarter of 2022. As Christmas approaches, retailers scrambled to prioritize products stores needed most. Some continued to ship until mid-November and even chartered planes to get the clothes to the main streets on time.
The real crisis, however, was felt by the workers – many of whom are internal migrants – who feed factories across the country.
In July, when the Covid cases escalated, a severe lockdown was imposed on industrial areas, prohibiting people from leaving their homes, even to buy food. Hundreds of thousands of workers have entered factories through an arrangement known as âthree on site,â where workers sleep, work and eat in their factories. In October, around 300,000 workers were doing it in Binh Duong province alone.
For workers whose factories closed during the lockdown, there was no alternative but to stay in their rental rooms, in limbo. They were unable to earn a living, but prevented from returning home to their families. Workers had little money to face the ordeal, said Nguyen Phuong Tu, a visiting scholar at the University of Adelaide, specializing in the rights of factory workers. “Most will try to hand their savings over to family members in their hometown, so the savings they have for themselves are not really that big,” she said. Although some government support was available, it was far from sufficient.
When movement restrictions were lifted in early October, many workers decided they had had enough and left industrial areas en masse. Motorcycles, strapped in plastic bags filled with personal belongings, flooded the streets. No less than 90,000 people fled Ho Chi Minh City for their home province in the first weekend alone, according to official media.
Tran Thi Lan * was among 300,000 people reported to have left Binh Duong, which is part of the garment-making hub in the south. Her region was at the center of a Covid epidemic, and she spent four months in lockdown. Eventually, she caught Covid herself. âI knew it would be my turn to get infected. Every two weeks people were tested and the infected rooms moved closer, âshe said shortly after returning home.
Normally, she earns a basic monthly salary of around 4.8 million VND (154.56 GBP), which makes her trainers. She would get an additional 20,000 VND (64 pence) per hour of overtime and an additional 300,000 VND (9.66 GBP) as a food allowance. It wasn’t much, she said, considering how exhausting the work was. Her company, which suspended operations during the lockdown, has not provided her with any support, she said.
Instead, she relied on charity food packages. She received 800,000 VND (25.76 GBP) from a relief fund and her landlord helped her by cutting her rent in half.
The crisis has highlighted the vulnerability of migrant workers’ lives and the need for better government protection, Tu said. Their jobs are both poorly paid and insecure. In the past, it was known that foreign-invested enterprises simply closed without paying workers’ wages or social insurance benefits.
Access to public services is also tied to a person’s registered address in their home province, which means that they cannot access key services such as health care, childcare. children or child rearing while working in industrial areas. âI think the economic importance of these workers has been undervalued,â she said. “Although we know that Vietnam continues to attract foreign investment due to the attractiveness of a cheap and plentiful supply of labor.”
Factories are now facing serious labor shortages because many workers have left. Many are expected to stay home with their families at least until the Lunar New Year holidays.
Gold estimates that among the vendors she works with, 60 to 70 percent of workers are back on the job. ” Normally [they] might be able to handle it, but with the increase in demand right now, that only compounds the problem, âshe said. There are also ongoing and sporadic outbreaks of Covid, resulting in temporary closures. On top of that, manufacturers and brands face ongoing disruptions in raw material supply and shipping.
Mohamed Faiz Nagutha, ASEAN economist at Bank of America Securities in Singapore, said output is unlikely to return to normal levels before the end of the first quarter of 2022. In a hypothetical world, output would have been – it will take much longer, âNagutha added.
The crisis has prompted some retailers to rethink their balance between an efficient and less precarious supply chain, Gold said. Others take a more selective approach to buying goods and do fewer promotions that require products to be sold in much greater numbers to generate the same amount of income.
You are, however, skeptical as to whether the current crisis will bring more rights to workers. Some bosses have offered higher wages to entice workers back to factories, but those benefits are likely temporary, she said, adding that the local government needs a concrete policy change. “I would be careful to say that the bargaining power of workers has increased during this particular period,” she added.
Instead, she fears the pressures on workers who remain in industrial estates will be magnified, as they face the colossal task of overcoming months of production delays. The government has proposed to raise the annual ceiling for overtime from 200 hours to 300 hours to revive the sector in the face of Covid.
So far, many workers have voted with their feet. âWhen I was stuck inside the rental room, I was really worried that I would get infected and that it might affect my long-term health,â Lan said. âWith this my money is running out. I was afraid that I would no longer be able to meet my family.
* Some names have been changed