Vietnam garment workers may lose jobs as export orders dip

25 Jul '12

2 min read

The Southeast Asian nation of Vietnam is currently witnessing a slump in demand for its apparels from its major markets, and if the trend continues, it may result in loss of jobs for several garment workers in the country.

According to Vietnam Textile and Apparel Association (VITAS), garment makers in the country have been battling against several odds like dearth of export orders and other market difficulties that have arisen on account of the ongoing EU debt crisis.

VITAS said only big garment enterprises have been able to secure orders for the third quarter of current year, while demand slump has compelled a number of small and medium sized producers to cut production.

It is estimated that demand from the EU markets has fallen sharply by almost 20-30 percent over the past few months, compared to demand for Vietnamese apparels during the same period last year.

As noted by the General Statistics Office, the Vietnamese garment and textile industry grew at a year-on-year rate of 8.7 percent during first half of the current year, which is much lower than the growth rate of 30 percent year-on-year witnessed during the corresponding period of last year.

If the adversities continue, VITAS apprehends that it may force the textile and garment makers in Vietnam to cut their workforce by about 20 percent.

In addition to the fall in export orders, Vietnamese textile and garment producers, particularly the smaller ones, are also faced with other challenges like adhering to stringent quality and social responsibility norms, set by the EU markets.

Efforts made by Vietnamese enterprises to adhere to EU quality norms result in increased input costs to producers, which ultimately reduces their price competitiveness, experts say.

Vietnamese garment producers face tough competition from Cambodia, Myanmar, Bangladesh and China. While Cambodia and Bangladesh already enjoy duty-free access for their garment exports to the EU, Myanmar is also close to achieve the same status.

Further, deceleration in value of Euro against US dollar has also cut the profits of Vietnamese exporters, as they pay in US dollars for their raw material imports from Thailand, China and Taiwan, but receive payment in Euros for their exports to the EU countries.

Fibre2fashion News Desk - India

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