Factories left understaffed as revised insurance law drives workers away

Despite signs of business recovery, factory workers are quitting in hordes to make sure they can get a one-time social insurance withdrawal before the law is changed.

By early October, Thuan Thien factory specializing in making shoes in Ho Chi Minh City’s District 12 had received resignation letters from around 500 workers.

The factory’s production has slowed down so far this year due to a lack of orders, and workers do not have to work over time or on the weekend as before, though their salaries are not cut.

Most recently, the factory’s parent company has received new orders to produce more than 3 million pairs of shoes until the year-end, which means the factory must produce 250,000-280,000 pairs per month.

Nguyen Quang Toan, who is in charge of HR management at the factory, said it will need a workforce of 2,500 to meet the deadline but now it has only 2,000 left.

Most of those who had resigned have worked at the factory 10-18 years.

“They all quit so that they could take the one-time social insurance before the revised law takes effect,” he said.

According to the company, laborers started quitting in July when a draft of the revised Law on Social Insurance was up for discussion.

The proposal that most people paid attention to in the draft suggests that those who choose to take a one-time withdrawal will only be allowed to withdraw 50% of their contributions.

According to the current policy, people with social insurance are only eligible to receive their pension 20 years after paying their premiums.

The conditions for withdrawing social insurance at one time are quite easy to fulfill at the moment. Participants of Vietnam’s mandatory social insurance scheme can withdraw it after one year of unemployment; and voluntary participants after one year of not paying premiums.

“We have tried all ways to retain workers as a skilled one is three times more productive than a new one,” said Toan. “If workers continue to quit, it would be very difficult for the company.”

Not far from Thuan Thien factory, Viet An Garment Production Trading Co. Ltd. in Tan Binh District is in the same situation.

Many of its workers now want to quit to get the one-time social insurance while the company has just started to have new orders for the upcoming holiday season after months of suffering low demand.

In Long An and Dong Nai provinces that borders the city, factories have also reported a diminishing workforce prompted by the revised draft law on social insurance.

At a workshop held earlier this month in HCMC to collect feedback for the draft, Bui Thi Ngoc Trang, chairwoman of Long An Province Labor Union of Industrial Parks, said there was a company in the province that had lost more than half of its workforce of 5,000.

Vu Ngoc Ha, director of the legal consulting center of Dong Nai Province’s Labor Union, shared the same situation, saying workers had rushed to apply for resignation despite the fact that factories have started to receive orders again.

Nguyen Phan Bao Khuyen, a staff at the legal consulting center of HCMC’s labor union, said in most cases, workers have been affected by unverified information on social media.

She said workers who wanted to quit and get the one-time social insurance withdrawal told her they wanted to take out the money to start their own business or put the money into banks, which they said would grant them more benefits than continuing to work and pay the insurance premiums only to wait for the retirement pension, which they said was low.

Before 2021 the retirement age was 55 for women and 60 for men. Starting in 2021 the government has gradually increased the retirement age until it reaches 60 years for women and 62 for men.

Those who retire at the retirement age and pay social insurance premiums for at least 35 years (for men) and 30 years (for women) will become eligible for the highest pension rate, 75% of their latest salary.

It means many senior workers who have fully paid their social insurance premiums will have to work many more years to get the maximum pension and feel financially more assured about retirement.

By Le Tuyet – VnExpress.net – October 16, 2023