How would you comment on the losses of foreign enterprises operating in the labor-intensive fields after a long social distancing period?

Dr. Seng Kiat Kok, Senior Program Manager of Human Resource Management and Entrepreneurship at RMIT University. Photo: RMIT

This is a very challenging and difficult time for all businesses. Some companies have not been able to pivot or look at alternative approaches to operate their business, whereas others have been able to invest in either machinery or altered their product offerings to meet Covid-safe regulations for the workplace and also for lockdown demand. 

Others have not only seen resourcing issues when supporting their staff through the lockdown but have faced an extended period with little to no income. This has been particularly testing, although some have also seen the lockdown as a ‘quiet’ moment to upgrade and develop their processes. Some enterprises have invested in vocational upskilling of their staff in line with modernization plans for their production and business processes. 

Besides, the Vietnamese government, recently, has announced investment in not only upskilling the workforce but also moving towards Industry 4.0 and embedding technologies to develop new production methods and business models. 

The idea is to update labor-intensive enterprises towards the future, removing obsolete mechanization and processes and upgrading both staff skills and technology at the same time. 

What difficulties may the foreign enterprises face in terms of labor as they are restarting operations at full capacity?

Senior managers are also seeing the effect of the pandemic on balancing traditional KPIs and targets with well-being and health safety. Focusing on hours of work or outputs per hour are increasingly being replaced by goal achievement and departmental/organizational objectives, where results are still achieved but where there is increased flexibility and greater awareness of the new normal. 

There is also a keenness for enterprises to catch up for lost time, and to try to make up for the losses of the last few months of lockdown. This needs to be carefully buffered as we slowly come out of lockdown, over-promising, over-stocking and being overly focused on the bottom line, may create a false perception that everything is back to normal. 

In other parts of the world, there are instances where enterprises have hired volumes of casual labor, envisioning heightened demand, only to have to renege on contracts, in the event of a snap lockdown. The potential losses involved and the reputational damage needs to be considered and a return to full capacity carefully measured. 

Local laborers are working at Bac Giang Province's industrial zone. Photo: Bac Giang Provincial Department of Labor-Invalids and Social Affairs

What should the foreign enterprises do to get laborers back to work?

Quite a few enterprises are also investing in health insurance and enhanced Covid-safe mechanisms in the workplace. The availability of health insurance has helped to alleviate the fears of the workforce returning to the office and has provided employees with additional assurance. 

Some enterprises have even extended these benefits to the immediate families of their staff, enhancing not only the incentives to return to the workplace, but also addressing the concerns for their loved ones’ safety. 

While practicing Covid-safe approaches is of utmost importance, there are also more efficient methods to undertake this. Thermal cameras at key entry points help reduce waiting and queueing times, enhancing efficiency and removing time wastage. Effective cleaning systems, rotas and investment in automation (hands-free sanitizer dispensers, touch free taps, swipe entries) have also helped ensure safety while not affecting efficiency.

Internal apps and software have also been invested in to ensure that the organization has data points to analyze room capacities and social distancing requirements, while still maximizing productivity. While the effects of Covid-19 are evident in the new normal, these investments in technology and systems have helped reduce their negative impact. 

What do Vietnamese laborers need in the current context?

Vocational training and upskilling, particularly in advancing technologies and automation. They should also identify companies that are willing to invest in on-the-job training and professional development, providing longer term employment stability. 

Laborers could also invest in themselves, in gaining skills and experiences that are being sought after in high-demand sectors. Patience and perseverance are also going to be vital, given the uncertain nature as normality and instability of global economies, there is huge flux in the marketplace. Agility and adaptability, alongside a can-do attitude are vital in difficult times. 

What would you recommend the Vietnamese government and the Ministry of Labor, Invalids and Social Affairs do in terms of support financial packages to the enterprises and their workers?

The pent-up demand post lockdown means that access to and availability of labor is in somewhat short supply for enterprises as they try to reach full production capacities again. 

One of the major issues to be addressed is the wage gap in Vietnam compared to other countries and how the growth in wages needs to be matched by the growth in enterprise, economic productivity and specific targeting of sectors. Similarly, there is a need to upskill the workforce for the future.

The government may choose to develop and support wide ranging training programs for the workforce, potentially subsidizing the costs of these or having government approved trainers across the major economic regions/cities. Enterprises providing training for their staff would be able to claim a tax rebate or the government may provide incentives for the percentage of uptake on training. 

The government may also earmark key sectors/industries planned for future growth, subsidizing training and opening opportunities for skills development here and for Industry 4.0. They may also force businesses to retain a developmental fund for staff. 

Similarly, the government could also seek to reduce taxes on certain imported products/systems or provide a tax-free period where machinery, technology and business infrastructure can be invested in at lower capital spends. 

Alternatively, it’s a good idea to offer tax rebates or financial incentives on initiatives that support ‘community regeneration’. Here monetary incentives could be provided based upon the enterprises’ investment in community programs, percentage of local employment or events that celebrate the ‘local’ community.

In some countries, training and education are incentivized, targeting specific skills shortages and aimed at the youth. There may be a longer-term plan to make skills training more accessible and also to provide scholarships aligned with the development plans for the economy.

Thank you for your time!