Improve productivity, relieve pressure on labor costs

Textiles and garments are still considered a labor-intensive industry. Due to historical factors, the textile and garment industry developed in a context where the country was still facing difficulties, low income, and a lot of labor, especially unskilled labor. Mr. Le Tien Truong - Chairman of the Board of Directors of Vietnam Textile and Garment Group - commented that the industry's initial origin was quite simple, businesses that could take advantage of labor and produce at low prices had a market.

Now that the economy is more developed, the competitive advantage based on labor and labor prices is no longer effective. According to calculations, the average monthly salary cost for garment workers in Vietnam is at 300 USD/person/month, much higher than Bangladesh at 95 USD/person/month, Cambodia at 190 USD/person/month, and India at 145 USD/person/month.

Wage costs are much higher than competitors, while order prices are low, with some orders even having prices up to 50% lower than the same period in 2019, which is a big challenge for textile and garment enterprises.

Improving productivity relieves pressure on labor costs. Photo: Duc Duy

The solution to this problem, according to the leader of the Vietnam Textile and Garment Group, is to further increase productivity per capita. This will determine the income of workers.

Accordingly, businesses need to invest in and use highly automated equipment, reduce the number of workers per product, and at the same time seek niche products with higher value, thereby increasing the value of workers' working hours. " All solutions of businesses in the Group system are aimed at this content. In addition to implementing automation, there are also raw material production industries that have reduced labor costs by up to 60% per product, thus ensuring increased wages for workers, " Mr. Le Tien Truong informed.

For the garment industry, all stages requiring high skills and large orders have been automated. “ Previously, to grow by 1 billion USD, we had to recruit 100,000 more workers, but today, to grow by 1 billion USD, we only need about 20,000 - 30,000 workers ,” said Mr. Le Tien Truong.

In addition to the general solution, the general requirement is to invest in technology, increase productivity, automate, and increase higher value, each business will have its own solution, its own direction. Some businesses will look for very specific products; niche, small markets, but bring great efficiency, such as specialized technical fabrics, high-quality fabrics... are different products, not common, popular fashion fabrics...

In fact, improving labor productivity is a complex issue and a combination of many factors. Based on reality, each enterprise has a suitable direction for increasing productivity. However, investing in technology equipment and digital transformation in management and production at factories is indispensable.

Like Phu Bai Fiber Joint Stock Company, in addition to promoting vocational training for workers, the company has established an investment project to replace equipment in 2024 as well as planned investment in 2025 and an in-depth investment plan for the period 2026-2030 to completely replace equipment that has been used for over 20 years for the goal of sustainable development. Investment work is carefully considered and calculated to ensure stable production, customer retention, financial stability, aiming for the goal of labor cost/kg of yarn not higher than that of the existing factory of 30,240 spindles.

Or Garment Corporation 10 - JSC has been gradually implementing digitalization and digital transformation to meet the reporting time as prescribed and improve management. Digitalization and digital transformation continue to be researched and improved for each type of business, operating unit, and business process.

The leaders of the Vietnam Textile and Apparel Association also stated that achieving good total labor productivity (TFP) is the "key" to help businesses improve their capacity and production efficiency. To achieve good TFP, it is necessary to review and evaluate the level of achievement, readiness, and measurement indicators of the 4 groups of TFP contents to develop appropriate action plans.

Accordingly, for technology application and innovation, it is necessary to prioritize reviewing human resources to find implementation solutions. Assess the complexity and priority for digital transformation of each specific activity. Have solutions and need to invest appropriate funds in human resources for innovation and digital transformation issues. Research management solutions to supplement the current model to be able to implement innovation. Develop measurement and evaluation indicators for each group of implementation content.

Source: https://congthuong.vn/nganh-det-may-nang-cao-nang-suat-hoa-giai-suc-ep-chi-phi-nhan-cong-339600.html