Adidas Supplier in Ho Chi Minh City to Cut 1,200 More Jobs

Pouyuen Vietnam, the largest employer in Ho Chi Minh City and a contractor for renowned brands like Adidas, Nike, and Reebook, will be laying off more than 1,200 workers due to a lack of orders. Huynh Le Nhu Trang, Deputy Head of the HCMC Department of Labor, Invalids, and Social Affairs, announced on Wednesday that the affected workers, who have indefinite contracts, will receive information about their severance pay, social insurance, and tax procedures on Saturday.

As per the severance pay policy, workers will be compensated with 0.8 times their monthly salary for each year of service. For instance, an employee who has worked for the company for 20 years will receive VND192 million ($8,060) in severance pay. The process to terminate employment contracts will be completed in September, and compensations will be distributed within the next seven days, according to Trang.

This marks the fourth round of layoffs at Pouyuen, impacting thousands of employees, since the company’s establishment in HCMC in 1996. In June 2020, over 2,800 workers were laid off, and this year has seen two additional rounds resulting in 8,000 job losses. Currently, the company, located in Binh Tan District, employs approximately 40,000 individuals, which is about half of its peak workforce.

A report from the Private Economic Development Research Committee, addressing business difficulties and economic prospects at the end of 2023, predicts that waves of layoffs will persist in the coming months. The report indicates that around 30% of businesses will experience a 50% reduction in revenue, with only 2.5% of businesses expecting revenue growth. Among the 9,560 businesses surveyed in April, 82% stated their intention to downsize, suspend, or cease operations in the latter half of the year. Of these businesses, over 7,300 plan to continue operating, but 71% of them, particularly in the construction and industrial sectors, anticipate laying off workers. Half of the businesses planning layoffs are located in HCMC and its neighboring province, Binh Duong. The primary challenge cited by these businesses is the lack of orders.