Vietnam's labor market is experiencing yet again its familiar paradox of increasing unemployment and a shortage of workers.
The number of people registering for unemployment assistance has increased, while many firms say they are not able to get the workers they need to maintain production.
According to a recent report prepared by the jobs department of the Ministry of Labor, War Invalids and Social Affairs, nearly 147,000 people registered for unemployment in the first five months of this year, up 131.1 percent over the same period last year. Of these, 119,000 applied to get unemployment insurance, an increase of 179.1 percent.
After registering for unemployment with provincial employment agencies, workers can get a monthly allowance of 60 percent of their average income in the most recent six months. The unemployment provision can be collected for three to 12 months.
Explaining the rise in the number of unemployed, the deputy head of the jobs department, Le Quang Trung, said many firms, hurt by higher input costs and lower sales, have narrowed production and reduced their workforce. Thus, the unemployment number rises, while fewer jobs are created.
The department's report said some 720,000 jobs were generated in the first half of this year, of which 676,000 were created in the country, or just 45 percent of the annual target.
Vietnam may create some 1.5 million new jobs in 2011, meeting 95 percent of the government's target, Trung said.
Despite the high unemployment numbers, many firms still have a great need for workers, especially in major cities like Hanoi, Vinh Phuc, Hai Duong and Ho Chi Minh City.
Vu Trung Chinh, head of an employment center in Hanoi, said the number of laborers, especially manual workers that firms can employ, is much smaller compared to their demand.
The shortage now is common among labor-intensive industries like the garment, footwear, and seafood industries. It is easy to see dozens of firms in many industrial parks in Hanoi announcing new recruitment drives seeking hundreds of employees each.
Dang Quang Dieu, deputy head of the policy department under the Vietnam Labor Federation, said firms are not able to employ enough laborers because the salaries and perks they offer are too low.
"Workers are terminating their contracts in the hope of finding new jobs with better incomes, and in the meanwhile, registering to get unemployment allowance," he said.
Firms should consider raising salaries for employees in order to keep them long term. But even this is difficult because firms are also trying to cut their costs.
The director of a garment firm in Hanoi said that his firm could not continue to raise salaries because it was not possible to increase prices as material prices and other production costs have risen sharply. If firms increase salaries further, they would earn no profit at all, he said.
"We have no other way than to frequently employ new workers to offset those who leave," he said.