3 years of difficulty in "recovering capital"
“The Yen is too low. Salaries are still the same, while everything else is going up. Now I can only send home 16 million VND a month. At this rate, it will take 3 years to pay off the debt, principal and interest, without leaving any money,” said Tran VN, a Vietnamese worker in Japan.
With a salary increase of 990 yen/hour after one year of work, each month after tax, Mr. N. has an average of 14 man (1 man = 10,000 yen), equivalent to about 22 million VND.
After deducting my living expenses, I can send home at most 16 million VND each month. That is thanks to the monthly tax deduction, which saves me nearly 1 million VND each month by transferring money back through official channels, through Japan's SBI Remit. This is a very low amount of money compared to my expectations before going to Japan.
Previously, according to information from brokers, each worker going to Japan would send home from 20-30 million VND/month, or even more if working overtime.
“Back then, the Japanese Yen was worth 220 Vietnamese Dong, but now it is only 161. When I first came here a year ago, the Japanese Yen was at 178-180 VND/Yen, and now it is continuing to decrease. I can’t work extra because it is illegal. My regular working hours are also not fixed,” said Mr. N.
In fact, the Japanese Yen bought by Vietcombank at the end of the afternoon of July 3 was only 160 VND/Japanese Yen. This is the lowest level since around November 2022.
Income has not improved, prices of goods and food have increased, making it difficult for many Vietnamese workers to quickly "recover capital" when going to work in Japan.
High initial cost
In theory, the cost of working in Japan compared to other markets is not much, only including some types such as: health check, training, a little brokerage, documents, visa, papers, air tickets. However, the total actual cost is not small.
Specifically, the cost for each trip is about 6,000-8,000 USD depending on the company and the "order" that the worker goes to Japan to do, not including the cost of food, accommodation, travel during the process of learning the language, learning a trade and waiting for a flight.
As in the case of Mr. Tran VN, the family had to wait 2 years due to the epidemic and the total cost to be able to go to Japan to work was up to 300 million VND.
According to a recent study by the General Statistics Office with the support of the International Labor Organization (ILO), Vietnamese workers have to pay up to 8,000 USD (nearly 200 million VND) to be recruited for their first job in Japan.
The reason is explained by many experts as many expenses arising such as mortgage, guarantee, orientation education, etc. and high costs for brokers. According to regulations, employees only have to pay a maximum of 1 month's salary according to the contract for 1 year of work, a maximum of 3 months' salary and deducted from the management fee and service fee paid by the receiving party.
However, the amount of money Vietnamese people want to go to Japan to work is still quite high. Many people who go to Japan to work said that the cost is 200-300 million VND.
Despite the high cost, the number of Vietnamese workers going to the Japanese market accounts for a very high proportion, approximately 50% of the total number of foreign markets.
Vietnamese workers face more difficulties
Not only is the cost of working in Japan high, the continuous depreciation of the Yen in recent years has made the income of Vietnamese people in VND increasingly low, making the recovery of initial capital slow.
According to Mr. N., the term for one trip is 3 years. With the current income sent back, the whole period will only pay off the debt, without any remaining money. Therefore, it is likely that Mr. Nam will ask for a 2-year extension, continue working for the current company, or move to another company and possibly stay for another 5 years.
However, with the current income, it is difficult to save a large sum after returning home. Besides, many workers are quite uncertain about what they will do next when they return to Vietnam.
After rising again at the beginning of the year, the Japanese Yen has recently fallen sharply against the USD and VND.
As of 5:00 p.m. on July 3 (Vietnam time), the Japanese Yen had dropped to 144.6 yen/USD. This is the lowest yen price since mid-November 2022.
Earlier in 2022, the Japanese Yen suffered a terrible decline. The currency plunged from 115 Yen to 1 USD at the beginning of the year (2022) to 150 Yen/USD in mid-October 2022, equivalent to a decrease of about 30%. This was also the lowest level in 33 years compared to the USD.
As for VND, the Japanese Yen has also decreased by about 19%, compared to 198 VND at the beginning of 2022, thereby causing disadvantages for Vietnamese workers in Japan. The Yen/VND exchange rate is at a 14-year low, since 2008.
The Japanese Yen has depreciated sharply as the US and many countries around the world continue to tighten monetary policy, while the Bank of Japan (BoJ) continues to go against the monetary tightening trend of many other central banks around the world.
On June 16, the BoJ decided to maintain its short-term interest rate at an ultra-low -0.1% and maintained its view that it would take time to reach its 2% inflation target. The BoJ also continued to guide the yield on Japan's 10-year government bonds around 0%.
Since March 2022, the US Federal Reserve (Fed) has raised interest rates 10 times, a total increase of 500 basis points. The Fed is forecast to raise interest rates two more times in the second half of 2023.
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