Nike and Adidas shoe manufacturer in Vietnam will eliminate 6,000 jobs.

Hanoi: One of Vietnam’s largest shoe manufacturers for major brands such as Nike and Adidas will cut thousands of workers at the end of the month due to a slump in orders, according to local authorities.

PouYuen Vietnam, a unit of Taiwan-based Pou Chen Group, will lay off 3,000 factory workers and will not renew the contracts of 3,000 others because of “very few production orders in 2023”, according to a Ho Chi Minh City labour department document obtained by AFP on Monday.

Vietnam, one of the world’s largest exporters of clothing, footwear and furniture, has been badly affected by the cost-of-living crisis in major markets in Europe and the United States, with the buying power of worldwide consumers plunging.

PouYuen is commercial capital Ho Chi Minh City’s largest employer, with around 50,000 employees.

“The company has told the workers’ union that in February it plans to cut 3,000 workers… and it will expect to make an announcement to those workers on 25 February,” the document said.

Factory workers will continue to be paid until they receive unemployment benefits, according to the document.

The lay-offs come after PouYuen put 20,000 of its workers on paid leave in rotation at the end of last year.

More than 630,000 workers lost their jobs or had their hours cut in Vietnam in 2022, according to the labour ministry.

In the final quarter of 2022, orders were down 30 to 40 percent from the United States and 60 percent from Europe, compared to the previous year, according to the Vietnam General Confederation of Labour.