Labor and employment in small and medium enterprises in Van Lam district, Hung Yen province
INTERNATIONAL CONFERENCE: DEVELOPMENT OF SMALL AND MEDIUM ENTERPRISES
IN VIETNAM IN THE CONTEXT OF INDUSTRIAL REVOLUTION 4.0
LABOR AND EMPLOYMENT IN SMALL AND MEDIUM
ENTERPRISES IN VAN LAM DISTRICT, HUNG YEN PROVINCE
Dao Van Tu and Pham Minh Duc,
University of Finance and Business Administration, Vietnam
Abstract:
The number of small and medium enterprises in Van Lam district, Hung Yen province
have recently increased rapidly. Accordingly, the labor force has increased and there are many
shortcomings and difficulties for enterprises in human resource management.. The paper focuses
on studying the situation of labor, labor structure, labor qualification, consciousness, labor
discipline, ... clearly indicating the causes of these shortcomings; Based on the results of the
analysis the article offers some solutions to improve the efficiency of labor use, improve business
efficiency for SMEs in Van Lam district, Hung Yen province.
Key words: Small and medium enterprises, labor situation, employment
1. Introduction
Van Lam is a district in Hung Yen province, bordering on Gia Lam district, Hanoi city
has the process of rapid industrialization. The number of enterprises has increased rapidly, they
have operated in many fields. Most of them are small and medium-sized enterprises (SMEs)
accounted for 98.5%. These SMEs have played an increasingly important role in local economic
development. However, in the process of developing enterprises, there are still many problems
and shortcomings, making the quality and efficiency of operations not high. Among them, labor
is one of the most influential factors, the content of the paper will focus on the actual situation of
labor and employment of SMEs in Van Lam district.
2. Actual situation of labor and employment of SMEs in Van Lam district
2.1. Number of SMEs in Van Lam district
Table 1: Number of SMEs by administrative units of district
administrative units of
district
2016
2017
2018
number
%
number
%
number of
%
of SMEs
203
of SMEs
245
SMEs
252
1
2
Nhu Quynh town
27.0
15.0
29.06
14.35
26.89
14.51
Trung Trac commune
113
121
136
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3
4
5
6
7
8
9
Tan Quang commune
Lac Dao commune
Dinh Du commune
Lac Hong commune
Chi Dao commune
Dai Dong commune
Minh Hai commune
88
78
71
46
45
42
42
16
7
11.7
10.4
9.5
97
81
86
55
45
45
43
17
8
11.51
9.61
10.20
6.52
5.34
5.34
5.10
2.02
0.95
100%
112
93
95
67
51
52
47
21
11
11.95
9.93
10.14
7.15
5.44
5.55
5.02
2.24
1.17
100%
6.1
6.0
5.6
5.6
10 Luong Tai commune
11 Viet Hung commune
Total
2.1
0.9
751
100%
843
937
Source: Van Lam Tax Department
The North of Van Lam district borders on Hanoi capital and Bac Ninh province; Road
No5 also passes through this district, which affects the distribution of SMEs in the area. The
number of enterprises is not evenly distributed in the administrative units of the district, the
enterprises are most concentrated in Nhu Quynh town, the economic and commercial center of
the district accounts for over 25%, the followings are Trung Trac commune, Tan Quang and
Dinh Du communes; Viet Hung commune is ranked last. The number of enterprises concentrated
along Road No5, industrial zones and trade villages, Nhu Quynh commune has Nhu Quynh
industrial zone, Minh Khai commune has trade village, Tan Quang commune has Tan Quang
industrial zone (Table 1).
Table 2: Number of SMEs classified by number of employees
2016
2017
2018
Number of employees of the
enterprise
employ
employe
emplo
%
%
%
ees
406
236
83
es
478
247
87
yees
534
261
96
1
2
3
4
5
Less than 10 employees
From 10 to 19 employees
From 20 to 49 employees
From 50 to 100 employees
Over 100 employees
Total
54.10
31.40
11.10
2.80
56.70
29.30
10.32
2.97
56.99
27.85
10.25
3.95
21
25
37
4
0.50
6
0.71
9
0.96
751
100
843
100
937
100
Source: Van Lam Tax Department
Enterprises employing less than 10 employees account for over 55%, enterprises
employing from 10 to 19 employees account for from 27% to 31%. These two groups account
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for over 80% of the number of SMEs in Van Lam district. The number of SMEs employing over
100 employees accounts for a very small proportion.
2.2. Actual situation of labor and employment of SMEs in Van Lam district
The paper is based on the actual research at 125 enterprises with the number of
employees from 15 people or more, belonging to many sectors, in the communes in Van Lam
district (the total number of employees at the end of 2018 is 6406 employees). The research
shows the labor status in enterprises as follows:
Firstly, A large number of workers in SMEs are not residents of Van Lam district
(accounting for over 80%), mainly from the provinces of Son La, Phu Tho, Bac Giang, etc. most of
which are ethnic minorities. This has a great impact on the efficiency of human resource
management and business performance of businesses. They are unskilled workers with educational
level from high school or lower, a large number of laborers are young employees. According to the
data in Table 3, the number of employees aged 35 and under accounts for about 83%.
Table 3: Labor structure of SMEs in Van Lam district by age
and household registration in 2018
Criteria
Age
Amount
3185
2171
876
Ratio
49.72%
33.89%
13.67%
2.72%
17-25 years old
26-35 years old
36-50 years old
>50 years old
174
Permanent residence From Van Lam district
1192
5214
6406
18.61%
81.39%
100%
From other places
Total
(Source: summary of survey)
Regarding labor structure by gender, the proportion of men and women is approximately
50%. In industry and construction, men account for a higher proportion than momen (over 70%),
while in trade and services, women account for a higher proportion than men (over 80%).
Secondly, the situation of workers quitting, skipping and being sacked in small and
medium enterprises takes place regularly, especially after the Lunar new year every year.
Returning home to celebrate the Lunar new year , leaving the company to work in other places,
jumping to other businesses for better compensation, ... According to a survey data, up to 78% of
businesses think that the phenomenon of job severance in labor is frequent; 20% of businesses
have little severance status, only 2% have very little job severance. The situation of the laborers
entering and leaving the enterprises is very popular, which has caused shortage of laborers and
difficult recruitment for many years. Therefore, businesses often need to recruit more, most
businesses have to recruit workers for the whole year, 72% of businesses say that they recruit
regularly during the year, 15% of businesses recruits once a quarter, 9.1% of businesses recruits
twice a year, 3.9% of businesses recruits once a year.
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Thirdly, the education and qualification of the laborers are low. Many of them are from
other provinces, especially from mountainous areas. Most of the workers in SMEs have low
education, many have not graduated from high school. The training activities of enterprises are
still poor, not conducted properly. They can only provide training in the form of mentoring,
guidance, and only carried out in the probationary period.
Table 4: Labor structure in the SMEs in Van Lam District by qualification in 2018
Criteria
unit
Manufacturing
67.7
Construction
29.8
Trade - Services
27.5
Number of employees Employ
Average / enterprise
ees
%
High school and lower
Vocational school , college
67.3
24.2
8.5
65.3
26
56.5
29.5
14
%
University degree
and post graduate
%
8.7
(Source: summary of survey)
Fourthly: Accommodation of the workers is still a problem. About 70-80% of the labor
force is living in rented rooms and houses. They come from very remote and mountainous
provinces. The rented rooms are in bad condition which are scattered in residential areas
adjacent to industrial zones. They are built and leased by local residents at low prices. The
security is not very good . Most enterprises do not have houses for their workers.
Fifthly: The management apparatus of SMEs in Van Lam district is simple, unorganized
and lack of cohesion leading to inefficiency in leading and operating businesses. Most
enterprises do not have an independent department of human resource management or there is
usually only one person in the department and he has to do a lot of work. More than 80% of
human resource positions are assigned directly without official appointments. For enterprises
with a labor force of less than 30 employees, the human resource management is conducted
directly by the director, deputy directors, accounting department, or workshop managers.
Sixthly: Human resource management is still limited:
+ Most enterprises (90%) make demand estimates based on the number of employees
that need to be replaced, only about 10% based on changes in science, technology, demand for
products and services, capital, ... and future development trends. When a worker leaves the job,
he will be replaced by another, immediately the recruitment will be deployed or planned to be
implemented under the direction of the business owner for the department of human resource
management or to issue a direct notice in the newspaper or at the gate of the business.
+ Corporate governance activities are mostly directives that have not been documented.
Many enterprises have no specific working regulations, regulations on wages and bonuses or
regulations on economic responsibility, and the discipline of the business is quite loose. The
leadership and management are mainly based on sentiment, spontaneity. Oral direction instead of
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documents causes the situation of neglect of work, debate about responsibility when there are
mistakes in work.
+ The evaluation of work is limited, just covering the time of attendance, controlling the
time of entry and exit, monitoring the consciousness of employees when taking leave with and
without permission, etc... the quality of work has not been evaluated, there are no specific
criteria for evaluation. Most enterprises just evaluate labor by month and by year. This activity is
for the payment of monthly salary and the "13th month salary" before the Lunar New Year. The
number of enterprises that do not evaluate the work accounts for 5.6%, the enterprises evaluate
the work by week account for 10%, the rest evaluate the work by month and by year.
+ Management capability and style of business owners are still backward. Management
style is very authoritarian and small. Sometimes the workers are shouted with vulgar words
which causes very negative psychology to the workers.
3. Causes of the above situation
- The viewpoints of many small business owners on the role of workers are not adequate.
They think that the main factor creating profits for businesses is not employees but employers,
due to the employer's good relationship with the government and local authorities. The good
ability of relationship will determine the development of the business.
- Administration is based on experience. Small enterprises are developed from small
merchants who have low education. In general, knowledge of business management and human
management are not well-trained, mainly based on personal experience. Most business owners
who cannot afford to take full-time classes. Even short-term courses are not considered.
- Material benefits do not meet the needs of the workers. Their wages are low resulting in
hard life, especially for the workers renting accommodation, it can be said that "sweating is out
of money". The salary for an employee mostly ranges from VND 3,000,000 per month to less
than VND 7,000.000 per month. The percentage of enterprises paying from VND 3,000,000 to
VND 4,000,000 per month accounts for 41.8%, the enterprises paying from VND 4,000,000 to
VND 7,000,000 accounts for 40.2% and the enterprises paying over VND 7 ,000,000 accounts
for a low rate (6.2%). Year-end bonuses (before the Lunar New Year) are always concerned by
the businesses (97%) and they are usually equal to one month's salary, so it is also known as the
13th month salary.
- The working mentality is still unstable, especially for young laborers. When getting
better opportunities from other enterprises, they are ready to move. Their education is still low.
They haven‘t been trained, sense of responsibility, attitude of working is very poor; Awareness
for the profession and the work is very simple and limited.
- Local training activities have not yet been paid attention to, funding for training is very
low. Most small enterprises have a small number of employees, so the organization of vocational
training courses and qualifications are very limited. Moreover, the business owners do not want
to spend money on training workers.
4. Some solutions to improve the quality of labor for SMEs in Van Lam district,
Hung Yen province
For enterprises:
- Managers and business owners need to have a proper view of the role of human
resource in general and laborers in particular in improving labor productivity, increasing profit
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and the sustainable development of the enterprise. In the viewpoint of management scientists
whose school aimed at human being, in the long term, the determinant of the existence of the
business is the laborer. Managers in Vietnamese small enterprises should learn from small
enterprises of Japan - the country has many similarities with Vietnam. In the viewpoint of
Japanese small enterprises, the human factor decides to turn a small enterprise into a large
corporation, the factor brings strong and sustainable development.
- There should be good policies to attract and use laborers. For the leadership, from the
deputy head of the departments or higher, it is necessary to have stability and policies to attract
and retain the contingent of administrators. In the current condition, the living standard of
Vietnamese people is still low, the policy of economic encouragement is still very effective.
- Taking care of the laborers who are from remote and mountainous provinces, focusing
on training, encouragement, housing issues, etc. Enterprises need to build reasonable wage
policies in the direction of having a strong decentralization of wages. Capable laborers must
have a high salary and vice versa, and they take clear regulations of authority and responsibility.
No matter how small the enterprise is, it is necessary to have a complete salary, bonus and
working regulation and be implemented in a sufficient, open and fair manner. There should be a
reasonable salary to ensure a living standard, especially for young employees. After one year of
work, the employee can see the income results or may accrue a part of the income.
For universities and colleges in Van Lam district:
- Needing training according to the requirements of the labor market, renovating and
expanding the types of training to meet the needs of enterprises, especially SMEs. It is also necessary
to open short-term training courses from 1 to 6 months,etc... in the trend of practical training. They
should train just the knowledge and skill for the work, cutting off unnecessary content. Training
courses can be conducted at the business in the evenings, on Saturdays or Sundays.
- Coordinating with local authorities to exploit the financial solutions from the
Government to support SMEs in the labor training effectively.
- It is necessary to build a close relationship between universities, colleges and the
enterprises in the district in training and retraining activities; job placement for students; in
training and practicing for students; providing qualified laborers for enterprises.
For the local government:
- Promoting the propagation and education of laborers: The state agencies of the district,
the communication agencies need to have programs and activities to educate laborers
(employees), especially the employees coming from other provinces and mountainous provinces
about employees' sense of responsibility for enterprises, localities, and society. This makes
employees work voluntarily and responsibly. This should be done by the communication
agencies of the district and communes, and the system of the labor union and the youth union.
- The authorities of the district should establish an interdisciplinary organization in
charge of helping SMEs develop. The focus is on human resources, the laborers from
mountainous provinces such as Son La, Lai Chau, Dien Bien, etc. The intellectual level is much
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lower than that of the local people. Rented housing, social evils, poor sense of labor,... are issues
that cause many difficulties for enterprises, and need the help from the local authorities.
- Combining and supporting enterprises in sustainable human resource training and
development. Organize training courses on "Industrial manners" for the employees to raise
awareness and help employees understand the importance and necessity of industrial manners in
working environment towards professionalism of the labor force.
- Ensuring security for laborers in the district. Most workers have to rent houses of the
local people. Therefore, the situation of security, social order and safety, social evils in
residential quarters of workers still poses many risks. The
The Labor Union should propagate and disseminate laws, capture the thoughts and
aspirations of workers and solve urgent problems of workers.
5. Conclusion
Small and medium-sized enterprises in Van Lam district, Hung Yen province have
increased rapidly in recent years. A reality is that labor and employment in SMEs is still limited
and weak. The majority of workers have low education and qualifications and a weak sense of
labor discipline; low labor productivity. The reason is that many workers from remote and
mountainous provinces, young workers have not received professional training; housing issues
of workers is still difficult, management qualifications of business owners are poor; ... From
analysis of the current situation of labor and employment in SMEs in Van Lam district. The
paper has proposed a number of solutions for the businesses, local authorities, universities and
colleges in the locality to improve labor efficiency and production efficiency, business operation
and sustainable development of small and medium enterprises in the district.
REFERENCES
1. Human resource management in SMEs in Van Lam district: Situation and solutions,
grassroots level projects, University of Finance - Business Administration, 2017, code:
02.17.02;
2. Proceedings of Scientific Conference (2017): Actual situation of human resource
management in SMEs in Van Lam district: Situation and solutions ‖, Department of
Business Administration, University of Finance and Business Administration, June 14,
2017.
3. Van Lam Tax Department, (2018), Situation of enterprises in Van Lam district from 2016-
2018.
4. Le Nguyen Duy Oanh, (2013), Small and medium enterprises need more support,
5. Nguyen Ngoc Thang "Enhancing the management capacity of small and medium-sized
enterprises", economic magazine and forecast No. 17, September 2012.
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