An ILO report says that more than two-thirds of 9.2 million workers in the textile & garment and footwear industries in South East Asia will be threatened by automation technology, including 86 percent of Vietnamese workers.

 

Adidas in Indonesia said it plans to cut 30 percent of the labor force, while Hung Wah in Cambodia has removed all manual workers in the cutting and stitching phases. 

 

Mmore than two-thirds of 9.2 million workers in the textile & garment and footwear industries in South East Asia will be threatened by automation technology, including 86 percent of Vietnamese workers.

 

In Vietnam, automatic cutting and stitching technology has been used since 2015. Each automatic cutting machine can replace 15 workers, while businesses can take back investment capital within 18 months.

A survey in the US in 2016 showed that a company replacing three workers with one automatic sewing machine would be able to save $180,000 within five years. As the automation technology is getting cheaper, the cost for automatic sewing machines would be four times cheaper than manual workers by 2020.

 

However, Dr Phan Minh Ngoc, a respected economist, has reassured the public that  automation in the labor intensive industries such as textile & garment and footwear won’t be a big threat, but an inevitable and laudable trend. 

 

The reports by ASEANstats and other agencies all show that Vietnamese population growth has slowed down. 

 

Vietnam had 90.7 million people in 2014 but it saw an average growth rate of 1.06 percent in the 2009-2014 period, the lowest level in the last 35 years. 

 

The figure is lower than the average growth rate of 1.3 percent per annum in the region.

With the reduced fertility rate and increased life expectancy, Vietnam has entered the aging period with the percentage of people over 65 on the rapid rise, though Vietnam still has a high percentage of young working age people.

 

The aging of the population will lead to the gradual decrease in the number of workers, thus putting pressure on wages. 

 

Wages are expected to increase even more rapidly than economic growth rate and productivity.

 

In fact, this tendency has been seen in the last few years. A report by CIEM showed that the real wage in Vietnam has been increasing by 8 percent per annum in recent years, higher than GDP growth rate and productivity (4.2 percent)

 

In such conditions, automating labor-intensive work and replacing workers with robots will be the most effective way to deal with the labor shortage.

 

In principle, many unskilled workers will lose their jobs because of automation. 

 

However, Ngoc believes that new opportunities will be brought to workers, because the demand for skilled workers will be increasing.