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Impacts of COVID-19 on Vietnam's garment sector

Background information on garment sector

Vietnam is the third largest garment exporting country by volume (behind China and Bangladesh), and the apparel industry accounts for 16% of the country’s total exports. The apparel industry employs 2.5 million people, 80% of whom are women. The minimum wage ranges from 3,070,000 VND (US$133) to 4,420,000 VND (US$191), however this still falls short of the estimated living wage of 13,183,848 VND (US$570) per month.

The European Union and United States account for more than 60% of the country’s garment exports. Canada, Mexico, Japan and China are also key export destinations. In August the EU-Vietnam Free Trade Agreement came into force, which provides preferential tariffs for Vietnamese goods exported to the EU, including textiles and garments. Brands sourcing from Vietnam on our tracker can be viewed below.

The 2020 ITUC Global Rights Index – which rates countries on a scale from 1 (best) to 5+ (worst) on the degree of respect for workers' rights – rates Vietnam as 4, indicating workers experience systematic violations of internationally recognised labour rights.

Impacts of pandemic

Job losses

One million workers are reported to have lost their jobs in Vietnam’s garment sector as a result of the pandemic. The Vietnam Textile and Apparel Association reports that 80% of businesses in the industry laid off workers in April and May. According to the Ministry of Industry and Trade, Vietnam’s textile and garment sector is likely to see further job losses in the second half of 2020 as a result of order cancellations by global brands.

Vietnam’s footwear exports have decreased by 7% in the first half of 2020, while clothing production was down by 6%. The Ministry of Industry and Trade reports an overall “sharp decrease” in manufacturing in the country’s clothing sectors and has said that Vietnam’s export activities faced “many challenges” due to the sharp decline in footwear and garment demands.

Wages & social protections

In April 2020, the Vietnam Chamber of Commerce and Industry decided to allow factories to apply new articles of the Law on Labour 2019 sooner than the scheduled time of applicability in 2021, allowing them to reduce their workers' salaries during the outbreak. A government support package of US$2.6 billion has been introduced for workers who have lost their livelihoods due to the economic impact of the pandemic. The Ministry of Labour, War Invalids and Social Affairs, Vietnam Social Security and Vietnam General Confederation of Labour have issued guidance on suspension of mandatory contributions, which include social insurance premiums to retirement and survivorship funds, and trade union fees.

The National Insurance Fund is responsible for the payment to workers who are quarantined due to COVID-19. A letter from the Ministry of Labor, War Invalids and Social Affairs provides guidance to companies to mitigate the impact of the COVID-19 crisis in line with Labor Code 2012, which minimises retrenchment and protects workers’ legal rights and spells out the obligations of employers. On 9 April, the government issued Resolution No. 42/NQ-CP to provide assistance for people affected by the pandemic, including cash support to workers whose employment contract was terminated but are not eligible for unemployment allowance.

Labour and human rights violations

In Vietnam, we have tracked reports of the following rights violations of garment workers during the COVID-19 pandemic:

This is not a comprehensive list of violations and cases, full coverage of the impacts of COVID-19 on Vietnam’s garment sector and related industrial disputes can be viewed here. Actions taken by fashion brands sourcing from Vietnam in response to the pandemic can be viewed below.

Demands from local unions & civil society groups

Asia Floor Wage Alliance, WIEGO, HomeNet South Asia and HomeNet South East Asia are calling on brands to make a one-time Supply Chain Relief Contribution equal to 60 days of wages lost for all garment workers in their supply chains – including time-rated, piece-rated, subcontracted and home workers – during the COVID-19 crisis, as a requirement of responsible business practice.

Local unions have also campaigned for employers to pay 70% of normal salaries to quarantined employees, or to apply annual leave, to ensure that their earnings are not lower than the region-based minimum wages.

Click below to find out more information directly from local labour groups:

Vietnam Labour Update

Vietnam National Union of Workers in Industry and Trade (VUIT)

You can view a list of campaigns and demands by international civil society organisations demands here.

[This is a live tracker we update on an ongoing basis. If you have additional information on these issues please contact us at [email protected] with the subject line ‘COVID-19 Action Tracker’]