Worker recruitment and selection in the garment and footwear companies in dong nai industrial zones

HCMC, July 2000Student: NGUYEN THI THANH THANH GRADUATION PAPER SCHOOL OF FOREIGN LANGUAGES IlfflIliI~i101000427Ilflilll~~ill WORKER RECRUITMENT AND SELECTION IN THE GARMENT AND FOOTWEAR

HCMC, July 2000

Student: NGUYEN THI THANH THANH

GRADUATION PAPER SCHOOL OF FOREIGN LANGUAGES

IlfflIliI~i101000427Ilflilll~~ill

WORKER RECRUITMENT AND SELECTION IN THE GARMENT AND FOOTWEAR COMPANIES

IN DONG NAI INDUSTRIAL ZONES

HO CHI MINH CITY UNIVERSITY OF FOREIGN LANGUAGES -INFORMATION TECHNOLOGY

"

HO CHI MINH CITY UNIVERSITY OF FOREIGN LANGUAGES -INFORMATION TECHNOLOGY

SCHOOL OF FOREIGN LANGUAGES

GRADUATION PAPER

IN DONG NAI INDUSTRIAL ZONES

Student: NGUYEN THI THANH THANH

COMMENTS

1.1.2 The importance of recruitment and selection 2

1.3.2 Internal source of recruitment 12

1.3.3 External source of recruitment 14

1.5.1 An overview of Vietnam garment and footwear industry 23

1.5.2 Characteristics of worker recruitment and selection in garment and

CHAPTER II

WORKER RECRUITMENT AND SELECTION OF THE GARMENT AND

FOOTWEAR COMPANIES IN DONG NAI INDUSTRIAL ZONES 30-55

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INTRODUCTION

to*03

In recent years, together with the country's development, Dong Nai Province

has gained a lot of economic achievements It has established many industrial zones

which are significant in creating jobs and pushing up the economic growth There are

numerous enterprises in the industrial zones Human resource management in many of

them, however, is not fully concerned and studied for better efficiency

This study aims at analyzing the recruitment and selection activities to improve

the enterprises' human resource management Nevertheless, being limited as a

graduation paper, it only focuses on the worker recruitment and selection of gannent

and footwear companies in the provincial industrial zones, the advantages and

disadvantages of those activities so that some measures are suggested for more

effective management

Theory foundation is first presented in Chapter I to generalize concepts of

recruitment and selection An overview of Dong Nai province's economy and the

garment and footwear companies is introduced in the following Chapter The actual

process of worker recruitment and selection is also given here Chapter III analyses

the existing advantages and disadvantages and then gives some suggestions to the

companies as well as the Government to improve the process

••

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CHAPTER I

THEORY FOUNDATION OF RECRUITMENT AND

SELECTION ACTIVITIES.

1.1.1 Human resource management

The term" human resource management" has come into popular usage in recent

years It is widely accepted in the workplace, and refers to the management of people, with

the current emphasis on links to business strategy and the fact that human resources are as

important as any other resource One of the main underlying themes in the philosophy of

human resource management is that human resource needs must be taken into account in

getting everyone to meet organizational objectives Hence people are important whether they

are full or part - time employees, permanent or temporary,' or contract workers who are

actually employed by another company

Many of the traditional aspects of people management are increasingly devolved to

line managers, so that in many modern organizations, the human resource department exists to

initiate involvement and discussion of human resource issues The department defines policies

and strategies so that everyone can contribute to organization's overall effectiveness

1.1.2 The importance of recruitment and selection.

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Of various activities of human resource management such as training, development,

performance appraisal and management, compensation, health care, insurance, discipline

recruitment and seleCtion are decisive tasks As Figure 1.1 shows, the three main goals of

human resource management are as follows:

~ To attract an effective workforce

~ To develop an effective workforce

~ To maintain an effective workforce

The first goal of human resource management can only be reached when recruitment

and selection are well perfo~med Recruitment and selection, with the support of human

resource planning and job analysis, match employees with the organization The recruitment

and selection activities benefit human resource management in the following aspects:

(1) Recruitment and selection are obligatory when an organization is established At

the beginning of the organization operations, recruitment and selection are the first activities

to form organizational staff

(2) Performing recruitment and selection effectively can increase job performance

efficiency and job satisfaction Consequently, turnover which results from underrecruitment or

overrecruitment can be significantly reduced

(3) Matching appropriate applicants to vacant positions is cost and time - saving for

organizations Cost for training and developing the organization's workforce is also reduced if

recruitment and selection are effectively performed

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Figure 1-1 HUMAN RESOURCE MANAGEMENT GOALS

ATTRACT AN EFFECTIVE WORKFORCE.

Human resource Planning

Job analysis

Recruitment Selection

• Experiences Match with • Benefits

MAINTAIN AN EFFECTIVE WORKFORCE

• Wage and salary

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1.2 SUPPORT ACTIVITIES

1.2.1 Human resource planning

Human resource planning is the process of systematically reviewing human resource

requirements to ensure that the required number of employees, with required skills, is

available when needed It is the process of matching the internal and external supply of people

with job openings anticipated in the organization over a specified period of time

•: Steps of human resource planning:

Environmental scanning helps human resource planners identify and anticipate source

of threats and opportunities and drive the organization's strategic planning It provides a better

understanding of the context in which human resource decisions are or will be made Both

external and internal environmental scans are critical for effective planning

Analysis of external conditions requires to tay.!€- the following factors into

consideration:

• Economic conditions (GDP, GNP, inflation, crisis,ect )

• Social, political factors

• Government and legislation

• Demographic conditions (population, workforce, age, sex,ect )

• Market and competition, technological development

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With the same level of importance, the following factors are needed when analyzing

the internal conditions:

• Organization and job design

• Plan and budget

• Management policies and philosophy

• Technologies

.• EEO goals and plans

Step 2: Labor demand forecast

Labor demand forecast, or requirement forecast, is an estimate of the number and

kinds of employees the organization will need in the future Before human resource

requirements can be projected, demand for the firm's products or services must first be

forecast This forecast is then converted into people requirements for the activities that will be

required to meet this demand

Step 3: Labor supply forecast

Whereas the labor demand forecast projects human resource needs, the labor supply

forecasts project resource availability In other words, it determines whether the firm will be

able to secure employees with the necessary qualifications and from what sources It helps

the management to determine whether the needed employees may be obtained from within

the company, from outside the organization or from both of the two sources Supply forecast is

typically broken down into two categories: internal and external supply

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Internal supply consists of those individuals available within the firm When looking

for the appropriate candidates from the internal supply, managers should consider either

management inventories, which contains detailed information about each manager and is used

to identify individuals to move into higher level positions, or skills inventories - information

that is maintained on the availability and readiness of nonmanagerial employees to be

appointed to higher level positions

External supply consists of those individuals in the labor force who are potential

recruits of the firm (including those working in another firm) The skill levels being sought

determine the relevant labor market The entire country (or world) may be the relevant labor

marker for highly - skilled job whereas for simple jobs, the relevant labor market is usually the

local community Determining the relevant labor market will also decide what type of

recruiting approach should be used

Step 4:Gap analysis

Gap analysis is used for reconciling the forecasts of labor demand and supply At least,

this process identifies potential shortages or surplus of employees, skills, and jobs In addition,

however, planners can compare several environmental forecasts with alternative supply and

demand forecasts to determine the firm's readiness for different business scenarios From a

problem-solving perspective, gap analysis is used to pair up potential strengths and

opportunities with solutions in order to evaluate how the firm might attack the future This

decision-making process involves (1) a search for alternative solutions, (2) an evaluation of

alternatives, and (3) a choice of solutions

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Step 5: Action programming

Action programming is the step of human resource planning that lays out the events

that need to be executed to realize the human resource plan It makes certain that the

decisions on environmental scanning and labor forecast (in the previous four steps) turn to

reality

Step 6: Control and evaluation

Control and evaluation monitor the effectiveness of human resource plans over time

Deviation from the plan is identified and actions are taken Obviously, actual staffing levels

compared to projected levels should be evaluated for accuracy Conducting evaluations also

makes it easier to determine whether long-run planning objective will be met

1.2.2 Job analysis

Job analysis is a systematic process of gathering information about a job It determines

the job's duties and responsibilities, skills and knowledge required for performing the job, its

relationship to other jobs and working conditions under which it is performed

•: Job analysis is performed on three occasions:

• First, it is done when the organization is founded and a job analysis program is

initiated for the first time

• Second, it is performed when new jobs are created

• Third, it is used when jobs are changed significantly as a result of new technology,

methods, procedures, or system The majority of job analyses are performed because of

changes in the nature of jobs

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Job analysis information is used to prepare both job description and job specification

Job description is a document that provides information regarding the tasks, duties, and.

responsibilities of the job Job description should be both relevant and accurate They should

provide concise statements of what employees are expected to do on the job and indicate

exactly what employees should follow, how they do it, and the conditions under which the

duties are performed The contents of job description vary with the purpose for which it will be

used However, the most common sections are as follows:

• Job identification: The job identification section includes the job title, department,

relationship, and a job number or code A good title will closely approximate the nature of

work content and will distinguish that job from others

• Date of the job analysis: The job analysis date is placed on the job description to aid

111 identifying job changes that would make the description obsolete It may be useful to place.

an expiration date on the document to ensure periodic review of job content and minimize the

number of obsolete job description

• Job summary: The job summary provides a concise overview of the job It is

generally a short paragraph that states the job contents

• Duties perform: The body of job description delineates the major duties to be

performing Usually one sentence beginning with an action verb such as carry, establish,

perform, analyze adequately explains each duty

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Job specification is a document containing the minimum acceptable qualifications that

a person should possess to perform a particular job Items typically included in the job

specification are educational requirements, experiences, personality traits, and physical

abilities This document, together with job description, ensures the organization to avoid either

overrecruitment or underrecruitment That means the organization can select the most

appropriate employees through the effective tool of recruitment - the job analysis

When human resource planning involves adding to the labor force and the job analysis

indicates exactly what is the job's duties and responsibilities and what qualifications are

needed, that is where recruitment comes in So, recruitment can only be effectively carried out

with the aid of human resource planning and job analysis

1.3 RECRUITMENT

1.3.1 The recruitment process

Recruitment is the process of attracting individuals on a timely basis, in sufficient

numbers and with appropriate qualifications, and encourage them to apply for jobs with an

organization Applicants with qualifications most closely related to job specification may then

be selected Unless a sufficient number of qualified prospects apply; a firm cannot have a truly

selective employment system

As Figure 1-2 shows, when human resource planning indicates a need for employees,

the firm may evaluate alternative ways to meet this demand When other alternatives are not

appropriate, the recruitment process starts Frequently, recruitment begins when a manager

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initiates an employee requisition The employee requisition is a document that specifies job

title, department, the date the employee is needed for work, and other details With this

information, the human resource manager can work out the job analysis

The next step in the recruitment process is to determine whether qualified employees

are available within the firm (the internal source) or must be recruited from external sources

like colleges, universities, or other organizations Because of the high cost of recruiting,

organizations need to utilize the most productive recruitment sources and methods

External environmental scanning Internal environmental scanning

Strategic planning

Human resource planning

Alternatives to recruitment

InternalSources

ExternalSources

InternalMethods

Recruited individuals

Figure 1-2: The recruitment process

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ExternalMethods

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When source of potential employees has been identified, appropriate methods for

either internal or external recruitment are used to accomplish recruitment objectives

1.3.2 Internal source of recruitment

As mentioned above, internal sources refer to the availability of currently employed

staff within the organization The organization's own practices and policies can affect

(

decisions of internal recruiting A major internal factor that can greatly aid recruitment is

human resource planning Examining alternative source of recruits and determining the most

productive methods for obtaining them take time After identifying the best alternatives, the

human resource manager can make appropriate recruitment plans

An organization's promotion policy can also have a significant impact on recruitment

Promotion from within is the policy of filling vacancies above entry-level positions with

current employees Basically, an organization can stress a policy of promotion from within its

own ranks or a policy of filling positions from outside the organization Depending on the

circumstances either approach may have merit

Another factor that may also affect the firm's recruitment is the policy related to the

employment of relatives The content of such policy varies greatly, but some companies to

have policies that discourage the employment of close relatives This is especially true when

their assignments would place them in the same department, under the same supervisor, or in

supervisor-subordinate roles

After determining that the job vacancies can be filled with current employees, human

resource manager may find it helpful to consider information from management and skills

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inventories As a recruit?1ent device, these inventories have proved to be extremely valuable

to organization when they are kept up-to-date., Other methods used in internal recruitment can

be job posting and bidding Job posting is a procedure for informing or notifying the employees

about the job openings through the use of bulletin boards Job bidding is a technique that

permits employees who believe that they possess the required qualification to apply for a

posted job

There are four major advantages to internal recruitment First, it is considerably less

costly and time-consuming than external recruitment Second, it provides the organization's

employees with incentive and motivation Promotion from within encourages employees

greatly, so they have morale to work Promoting an employee can also create challenges and

competition among the others and they will try their best to contribute more to the

organization The third advantage is that an organizational policy of promotion from within can

enhance organizational commitment or loyalty and job satisfaction These variables have been

shown to be correlated with lower employee turnover rates' and higher productivity

Understanding between the employees and their supervisors can be the fourth advantage to

internal recruiting Organizations typically have a better knowledge of internal applicants'

skills and abilities than those of external candidates The employees' knowledge of

organizational regulation, production or services, opportunities, threat competition, ect is also

better than the outsiders

There are disadvantages to internal recruiting as well Continuity is not always a good

u

thing One theory of internal recruiting is that the approach simply promulgates the old ways of

doing thing There is no advance and creativity in solving the organization's problems

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Another disadvantage is that when selecting only one employee for the position, the

organizational management can disappoint other qualified employees They may be in low

morale for work and thus create job dissatisfaction This is especially true when the rejected

employees have been trying to show their abilities and contributing efforts to the

organization's development

Disorder situation is the third disadvantage to internal recruiting Promoting an

employee will leave a vacancy which has to be fulfilled by transferring within the organization

or by another recruitment

Internal recruiting programs must be carefully integrated with other human resource

functions Effective human resource succession planning, job analysis, personnel selection,

and performance appraisal are all important for an effective system that can fill required _

positions with the most qualified personnel in the shortest time

1.3.3 External source of recruitment

External recruiting concerns looking for qualified applicants from outside the

organization to fill the job openings The following circumstances require external

recruitment: (1) to fill entry-level job, (2) to acquire skills not possessed by current employees,

and (3) to obtain employees with different backgrounds to provide new ideas

Factors external to the organization can significantly affect the firm's recruitment

efforts The demand for and supply of specific skills in the labor market is one important

factor If demand for a particular skill is high relative to supply, an extraordinary recruiting

effort may be required In addition, when the unemployment rate in an organization's labor

market is high, the firm's recruitment process may be simplified The number of unsolicited

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applicants is usually greater, and the increased size of the labor pool provides a better

opportunity for attracting qualified applicants Conversely, as the unemployment rate drops,

recruitment efforts must be increased and new source must be explored

The firm's corporate image is another important factor that affects recruitment Good

reputations can result in more and better-qualified applicants seeking employment with the

firm An organization with good public image is the one believed to be "an ideal place to

work", and the recruitment efforts of such a firm are greatly enhanced

Depending on the qualifications desired employees might be attracted from a number

of outside source The common sources preferred by the management are as the followings:

• Vocational schools, colleges and universities

• Direct application

• Former employees

• Competitors and other firms

• The unemployed

After thoroughly examining recruitment source, an organization will determine where

potential qualified applicants are and then select the most appropriate methods of recruiting

Advertising, employment agencies, and employee referrals may be effective methods in

attracting individuals with virtually every type of skills Executive search firms and

professional organizations, however, are particularly helpful in the recruitment of managerial

and professional employees Depending on the specific circumstances, management can find

one of the above methods most useful and economical However, a combination of several

methods can make the recruitment process more effective

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One big advantage of external recruiting is that the approach can facilitate the

introduction of new ideas and thinking into corporate decision making The new blood comer

with no ownership of past strategies, which often hinders an objective assessment of future

strategy Recruitment from external source allows employees to make changes and initiatives

without having to please constituent groups Another advantage is that when recruiting from

outside, human resource managers can maintain organizational hierarchy There is not any

vacancy left after recruitment and the organization keeps running smoothly

Together with advantages, external recruiting also has its disadvantages A major

disadvantage is that the introduction of new personnel may have a negative impact on work

group cohesion and morale Also, new personnel from outside the organization typically take

longer to learn the jobs Another disadvantage is that external recruitment can be very costly

for the fee of searching qualified, applicants, testing, interviewing and it may be more

time-consuming than internal recruitment The final disadvantage of external recruiting is that

management typically has less reliable performance data on external candidates There is thus

a need for assessment procedure and a good assessment can be very costly to the organization,

too

Both internal and external sources are necessary for an organization when performing

recruitment However, which source to choose depends greatly on the qualifications required,

organizational policies and strategies, and internal as well as external environment Good

decision on appropriate sources will determine effective recruitment and, therefore, make the

organization's selection easy and precise

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1.4 SELECTION

Whereas recruitment encourages individuals to seek employment with a firm, the

purpose of the selection process is to identify and employ the best-qualified individuals for

specific positions Selection is the process of choosing from a group of applicants the best

suited for a particular position

1.4.1 External selection

1.4.1.11nitial assessment methods

Initial assessment methods are referred to as preemployment inquiries and are used to

minimize the costs associated with substantive assessment methods by reducing the number of

people assessed Predictors' typically used methods are cover letter and resume application

blanks, biographical information, reference reports, literacy testing, and initial interviews

• Resume and cover letters are the first introduction of the applicant to the organization.

A problem with resumes and cover letter is fake Almost no research exists on resumes and

cover letter We do not know their validity and reliability Thus, organization using them in

selection should carefully evaluate their effectiveness

• Application blanks: Most application blanks request in written form the applicant's

background with regard to education, training and job experiences The major advantage of

application blanks over resume is that the organization, rather than the applicant, dictates what

information is presented

• Biographical information, or biodata, is personal history information on an applicant's

background and interests Basically, results from a biodata survey formulate a general

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description of a person's life history Like application blanks, biographical information blanks

ask applicants to report on their background Responses to both of these questionnaires can

provide useful information in making initial selection decisions about applicants

• Reference reports: Background information about job applicants can come not onlyfrom the applicant, but also from people familiar with the applicant in previous situation (e.g.,

employers, creditors neighbors, colleagues ) Background information solicited from others is

called reference report and consists of letter of recommendation, reference check, and

background testing The applicant on the resume, application form and biodata can use

reference reports to verify information presented

' Literacy testilig: Most jobs required that employees possess reading and writingskills In some jobs, the need for these skills is obvious In others, while the need is not

obvious, these skills are nevertheless critical to successful on-the-job performance

• Initial interview: The initial interview occurs very early in the initial assessmentprocess, and is often the applicant's first personal contact with the organization The purpose of

the initial interview is to screen out the most obvious cases of person and job mismatches To

do this well, predictors should avoid bias or halo effects or any other judgements that may

distort the real characteristics of the applicant

1.4.1.2 Substantive assessment methods.

While initial assessment methods are used to reduce the applicant pool to candidates,

substantive assessment methods are used to reduce the candidate pool to finalists for the job

Numerous substantive assessments will be discussed, including tests (personality, ability, job

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knowledge, and performance/work sample); interest, value, and preference inventories; and

structured interviews

• Personality test: Recent advances have suggested much positive conclusions about the

role of personality tests in predicting job performance Mainly, this is due to the widespread

acceptance of taxonomy of personality Measures of personality traits can be survey,

projective techniques or interview However, survey measures in general, are the most

reliable and valid means of personality testing for selection decisions

• Ability tests are measures that assess an individual's capacity to function in a certain

way There are two major types of ability tests: aptitude and achievement Aptitude tests look

at a person's innate capacity to function, while achievement tests assess a person's learned

capacity to function Surveys reveal that organizations consider ability tests a key determinant

of employee performance Without a certain level of ability, be it innate or learned,

performance is unlikely to be at an acceptable level

• Job knowledge tests attempt to directly assess an applicant's comprehension of job

requirements Job knowledge tests can be one of two types: one type asks questions that

directly assess knowledge of the duties involved in a particular job The other type focuses on

the level of experience with critical job tasks and tools or processes necessary to perform the

job

• Performance tests and work sample: These tests are mechanisms to assess actual

performance rather than underlying capacity or disposition A performance test measures what

a person actually does on the job, while a work sample is designed to capture parts of the job

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A performance test is more costly to develop than a work sample, but it is usually a better

predictor of job performance

•: Interest, values, and preference inventories

Interest, values, and preference inventories attempt to assess the activities individuals

prefer to do both on-the-job and off-the-job This is in comparison with predictors that measure

whether the person can do the job However the person's ability does not guarantee success on

the job If the person does not want to do the job, he or she will fail regardless of ability

Although interests seem important, they have not been used very much in human resource

selection

•: Structured interview

The structure interview is a very standardized job-related method of assessment It

requires careful and thorough construction There are two principal types of structured

interviews: situational and experienced-based Situational interviews asses an applicant's

ability to project what his or her behavior would be in future hypothetical situations The

assumptions behind the use of the situational interview is that the goals or intentions

individuals set for themselves are good predictors of what they will do in the future

Experience-based or job-related interviews assess past behaviors that are linked to the

prospective job The assumption behind the use of experienced-based interview is the same as

that for the use of biodata: past behavior is a good predictor of future behaviors

1.4.2 Internal selection

1.4.2.1 Initial assessment methods

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Internal selection refers to the assessment and evaluation of employee from within the

organization as they move from job to job via transferor promotion systems Given the time

and cost of rigorous selection procedures, organizations use initial assessment methods to

screen out the applicants who do not meet the minimum qualifications Initial assessment

methods typically include the following predictors : skill inventories, peer evaluations,

managerial sponsorship and informal discussion and recommendations

~ Skill inventory: An immediate screening device in applicant assessment is to rely uponexisting data on employee skills These data can be found in personnel files, which are always

available in the firm

~ Peer assessments: Assessment by peers or coworkers can be used to evaluate theprofitability of an internal applicant A virtue of peer assessments is that they rely upon raters

who are very knowledgeable of the applicant's ability, skills and knowledge due to their day

-to-day contact A possible problem with peer assessment, however, is that they may encourage

friendship bias Also, they may undermine morale in a work group by fostering a very

competitive environment

~ Managerial sponsorship is the method with which the organizations rely upon ups in the organization to identify and develop the qualifications of those at lower levels

higher-Historically, the higher-up has been the person's immediate supervisor because he or she has

daily contact with the employees, and thus, is very knowledgeable of the subordinate' ability,

skills and knowledge

~ Informal discussions and recommendatio!ls: Not all promotion decisions are made onthe basis of formal human resource policy and procedures Much of the decision process

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occurs outside normal channels through informal discussions and recommendations Some

discussion are simply idle talk, and therefore, they are suspect in terms of their relevance to

actual job performance

1.4.2.2 Substantive assessment methods

While initial assessment methods are used to narrow down the applicant pool to

candidates, the substantive assessment methods will help the management to select the

finalists They include seniority and experience, job knowledge test, and performance

appraisal

~ Seniority and experience:

Seniority typically refers to length of serVIce of tenure with the organization,

department or job Conversely, experience has a broader meaning Experience includes not

only length of service in the organization or in various positions, but also the kinds of activities

employees have undertaken in those position In practice, both seniority and experience,

which are often misconstrued the same, are very considerable for internal selection

~ Job knowledge tests:

Job knowledge measures one's mastery of the concept needed to perform certain work

The test is usually done with paper-and-pencil form to identify whether the candidate's job

knowledge is good enough for the vacant position

~ Performance appraisal:

One possible predictor of future job is past job performance Data on employee's

previous performance is routinely collected and available for use in internal selection

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.: All the methods presented above are very useful for making recruitment and

selection decisions There are various methods However, which methods to apply depend

greatly on the type of vacant position (managerial or non-managerial), management policy and

strategies, internal and external environment Circumstances differ from organization to

organization, so the decisions on the methods should be carefully evaluated The effectiveness

of recruitment and selection process is measured by the cost, reliability, validity, utility of the

methods and the applicant's reaction to the process

processes and methods suggested There will be a presentation of the differences between

the concepts presented above and the actual worker selection process in Vietnam garment and

footwear industry

INDUSTRY.

1.5.1 An overview of Vietnam garment and footwear industry.

Garment and footwear products respond to human beings' basis need which includes

food, clothes, and accommodation (Maslow's need hierarchy) For this reason, garment and

footwear industry is indispensable in every country In developed country like US, France,

Italy, Japan, etc garment and footwear production has become one of the most profitable

industries They have even made their products worldwide renown names like Nike, Adidas,

Pride, Head, Reebok, Gucci, Calvin Klein, Polo, Levi's, Valentino, Armani, Versace, etc In

Vietnam, however, the target of country liberty and unity was the core of every activity in the

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last decades Production under the war conditions was quite uneasy to develop Garment and

footwear production was not an exception Consequently, it was not invested to develop until

the late 1988s with the Government's open door policy

Despite its newly established background with difficulties of capital sources, market,

technology, skilled labourers, ecL Garment and footwear industry has greatly contributed to

the national economic development The benefits it has brought to the country include the

followings:

First, a great number of garment and footwear compames which require a lot of

workers have significantly reduced the unemployment rate (in 1999, unemployment rate was

6.85% in cities and 27.65% in rural areas) At present, demand for workers in these industries

is increasing Sewing worker wanted advertisements frequently appear on the newspaper and

at every employment agency in Ho Chi Minh City As estimated by Ho Chi Minh City

Department of Labor, War Invalids and Social Affairs, there is a need for some 25,000

labourers to work in the city' garment and footwear enterprises in 2000 The garment and

footwear companies that have greatest demands for workers in Ho Chi Minh City are

introduced in Figure 1-3

Second, garment ,and footwear are produced mainly for export; thus, these industries

contribute considerably to the country's exports Despite the export slide in the first months of

1999, the footwear industry had managed to achieve export growth It shipped USD 650

million worth of products in the first six month, a rise of 25% on the same period in 1998 The

industry was poised to generate USD L15 - 1.2 billion in 1999, but the actual result by the end

of the year was up to USD 1.5 billion The figure made footwear production the third highest

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Figure 1-3

WORKER DEMAND

No ENTERPRISES TOTAL OF WHICH :

WOMEN

1 Sai Gon Leather - Footwear Company 792 600

6 Gia Dinh Garment and Textile company 350 295

10 Sai Gon Import-Export Garment Company 164 131

14 Kim Thach - A Nguyen Garment Company 150 130

.

foreign exchange earner of Vietnam Similarly, figures of the Ministry of Trade show that the

garment industry reported exports of US $ 120million in the first two months of 20,00,up a

staggering 42,6% from the year-earlier period Vietnam is expected to record garment and

textile exports of more than US $2billion in 2000 as the industry has seen a sharp increase in

orders form foreign customers

• Third, garment and footwear companies provide free vocation training to society

Most workers when entering the companies are untrained or, a little bit better, able to operate

the sewing machine through a short-term course at a vocational training center They become

skillful after sometime of working The training costs are charged for companies in low

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productivity, recycling and low quality products, time and efforts of conducting Therefore,

the garment and footwear industry not only makes use of untrained labourers but also give

them skills, sense of working disciplines, industrial manners which they have never had

before

as the living standard is gradually improved Customers now not only look for high quality

clothes and footwear but also pay much attention to the design, color, prices or many other

standards The suppliers have been in competition to succeed From this competition,

customers have chances to enjoy high quality clothes of Viet Tien, Viet Thang , Legamex

(Lega Fashion), Thanh Cong, Nha Be, Max.x, AD, TLC, T&N footwear of Biti's, Bita's,

Hunsan, Fulam, Thuong Dinh, Vina-Giay, T&T Vietnam's garment and footwear companies

have established a good prestige in the domestic market and gradually replaced foreign

products due to their competitive quality and prices

The above benefits have made garment and footwear industry become one of the

•

important factors boosting Vietnam economic development Therefore, it is given attention

and support from the government Beside general measures such as increase of privileged

invested capital, reduction of interest rate of loans offered by State- owned commercial banks,

the Government has carried out export encouragement statute by awarding quota bonus to

business exporting products in large, quantities to non-quota export market, using high

percentage of local materials for their export products, exporting new products and reducting

quota fee The Government also negotiates with Singapore, Indonesia to obtain more quota on

some categories so that businesses have chance to boost up export This is the first advantage

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of the garment and footwear industry The second one is the workforce Vietnam has immense

labor force: 65,2% of the population is of the 16 - 35 age bracket The working population is

on the increase: 2,95% of the population (around one million people) comes to the working

age very year Besides, Vietnamese are intelligent and industrious by nature They are quick

to learn new technology and creatively apply to different working conditions Labor price is

also relatively cheap

However, there are some disadvantages to garment and footwear industry as well

Vietnam labor price is not very competitive at this point of time Investors are turning to

exploit Cambodia, Myanmar, Bangladesh or remote Chinese provinces whose labor price is

much cheaper than Vietnam's In addition, the regional countries which suffered from the

monetary crisis have quickly and effectively renovated and their labor price has become

cheaper and cheaper This is a new challenge to Vietnam The second disadvantage is that the

proportion of trained laborers to the working population is very low (11,6% in 1998) In 1999,

the labor structure was not significantly changed: 88% of the country' workforce were

unskilled

Besides, there remain many other disadvantages such as obsolete technologies which

maintain low productivity, the difficulty of expanding export markets, expensive imported

raw-material, lack of efficient management, etc But in this period of time, the most difficult

task of garment and footwear companies is searching for skilled laborers in sufficient quantity

at the set time

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1.5.2 Characteristics of worker recruitment and selection in garment and footwear industry.

Although there are many differences between garment industry and footwear

industry, they are not much different in recruitment and selection The common characteristics

of the two industries in recruiting and selecting workers are as follows:

workers due to its handiwork and semi-automatic production lines (regardless the automatic

chemise assembly line which is utilized for the first time in Vietnam by Viet Tien Garment

Company) Thus, a great amount of workers is required as garment and footwear companies

are increasing both in number and size

90-95% Of these, women are majority (75-80%) This is very specific trait of the industry and

should be considered not only in recruitment and selection process but also in planning and

applying policy for laborers

garment and footwear companies' recruitment They are industrious and possible to accept an

average or even low salary level However, they are untrained and, therefore, have low

productivity

intensity Workers have to work overtime in some months, sometime to more than 12 hours a

day, and they are idle in other months of the year Monthly income is therefore unstable This

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is attributed to the contracts signed with partners to which the company's production plans and

activities are dependent

usually used for selecting workers This is because the job duties, responsibilities, working

conditions and qualifications required are not complicated and often unchanged Besides,

recruitment and selection of workers are frequent activities, much more frequent than those

of office staff, so recruiters can get used to selecting the right employees for the jobs without

concerning overrecruitment or underrecruitment Job analysis, therefore, can only be helpful

when the firms are initially established In selection process, tests are often of performance

and work sample type and they are carried out at the workshops A structured interview is also

unnecessary in this Process

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CHAPTER II

WORKER RECRUITMENT AND SELECTION OF GARMENT- FOOTWEAR COMPANIES IN DONG NAI

INDUSTRIAL ZONES

2.1 AN OVERVIEW OF DONG NAI PROVINCE

With an area of 586,034 ha, Dong Nai is located in the south-eastern strategic

economic region The province's population was recorded at 2,103,016 in 1998, with a density

of 359 residents per sq.km About 28.9 percent of the population live in cities and the

remaining 71.1 percent are in rural areas

The province borders Lam Dong in the north and north-east, Binh Duong in the north

and north-west, Ba Ria-Vung Tau in the east and south-east, and Ho Chi Minh City in the west

and south-west Dong Nai includes eight districts and the city of Bien Hoa

2.1.1 Economic growth

Dong Nai recorded an average economic growth rate of 13 percent in the period from

1991 to 1995 (4.8 times that in 1986 - 1990 period) However, the rate of growth has slowed

and this is attributed to natural disasters and the regional financial crisis The rate of growth

was only 11.75 percent in the period from 1996 to 1998

•: Foreign trade

Total import and export revenues in 1995 were up 3.5 times from 1990 Revenues in

1998 were US$ 1.85 billion (87.8 percent from foreign- invested enterprises), an increase of

6.5 times over 1995 (exports up 6.2 times and imports 6.8 times)

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The State sector has maintained its vital role in various fields of operation such as

industrial production, mater,ial and service supply, import-export, finance and banking,

infrastructure construction (power, water supply, post and telecommunication projects)

2.1.2 Economic structure

Dong Nai's economic structure has been transformed in accordance with the Party

plans for modernization and industrialization on the path of communist development, with the

promotion of industry In 1990, industry accounted for only 19.2 percent of the local economy,

agriculture 49.6 percent and services 29.1 percent The percentages changed to 33.4 ; 32.1 and

30.7.percent respectively in 1995 and 48.0 ; 25.5 and 26.5 percent in 1998 (See Figure 2.1)

I Figure 2.1

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2.1.3 Foreign investment

Dong Nai ranks third nationwide behind Ho Chi Minh City and Hanoi in attracting

foreign investment capital By the end of 1999, Dong Nai had 240 on-going projects with a

total investment capital around US$4.8 billion Priorities are for projects involved in producing

new plant and animal varieties, agricultural product processing, export processing, labor

intensive projects and projects to develop local tourism

In 1998, foreign-invested businesses made up 20 percent of the provincial

economic structure, and accounted for some 88 percent of total imports-exports This

demonstrates that foreign - invested businesses are an integral part of the provincial

economy, forming a close link between the nation's as well as the foreign investors'

interests

2.1.4 Agriculture

With the largest cash crop and cereal cultivation area in the country's southeastern

region, Dong Nai has a huge potential for animal husbandry and agricultural product

processing These are the principal directions for the province's agriculture in the next

century, with the goal of linking industry further to agricultural production

With more than 70 percent of inhabitants living on agricultural production over a total

land area of 340,000 ha (making up more than half of the province's total land area),

agriculture contributes some 25.5 percent of the province's GDP The provincial trade sector

estimates that export of agricultural products accounted for more than 20 percent of the

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province's total export revenues

Dong Nai is also a leading province in animal feed processing It now operates eight

businesses (of which four are foreign-invested: Proconco, Cargill, CP Group and Vitaga) with

a production capacity of 1.2 million tones animal feed/year

In the field of foodstuff processing, Vedan and Ajinomoto, two well-known

multi-nationals, use locally available materials The processing industry makes use of locally grown

sugarcane, cotton, cashew nut and coffee Dong Nai currently operates three sugar plants and

75 manual labor sugar production facilities The province produce one-seventh of the

country's total ofraw cotton, amounting to some 2,000 tonnes

o Growth rate: 3.85 - 4 percent / year

o Raising the productivity of cash crops in 2005:

o The portion of semi-processed agricultural products: 80 percent

o The growth rate of animal husbandry activities: 10 - 12 percent Animal husbandry will

comprises 30 percent of agriculture activities in 2005

o Building food processing projects

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2.1.5 Industry

Dong Nai's industrial sector grew 14.6 percent during the first half of 1999, ranking

second only to Ho Chi Minh city's growth The figure indicates the growth faster than the

country's average, but industrial growth in the province has recently slowed There is a

number of varying reasons First, the regional monetary crisis was a cause of falling domestic

consumption demand and increasingly vigorous competition with neighboring countries The

regional countries took advantage of lower prices of export industries products that resulted

from the depreciation of local currencies Second, natural calamities during 1999 have led to

the weakening of the purchasing power in rural areas, adversely affecting industrial

production Third, guidance on the value added tax earlier in 1999 was flawed, badly

influencing industrial production

Despite the above reasons, industry in Dong Nai keeps growing, though more slowly

than previous years, and greatly contributes to the provincial economic growth A very

essential factor which influences the province's development is the establishment of industrial

zones Up to now, the province has plans to develop 17 concentrated industrial zones with a

total area of 8, 367 ha Nine out of the 17 industrial zone with an area of 2,365 ha have been

approved by the Government for following the industrial zone regulations; the others are being

studied to establish feasible projects

(1) Bien Hoa 2 industrial zone:

- Foundation: 1993

- Land area: 365 ha, of which 246 ha have been leased

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- Labour: 36,609 people

- Projects: 102, investment capital: US$ 1,214.6 million

- Investment incentive: clean and hi-tech industries

(2) Nhon Trach 1 industrial zone:

- Foundation: 1995

- Land area: 430 ha, of which 51 ha have been leased

- Labour: 4,920 people

- Projects: 162, investment capital: US$ 295.8 million

- Investment incentive: hi-tech industries, construction material, high grade

wrapping, equipment and materials for industry

(3) Nhon Trach 2 industrial zone:

- Foundation: 1997

- Land area: 350 ha, of which 127 ha have been leased

- Labour: 4,150 people

- Projects: 9, investment capital: US$ 999.9 million

- Investment incentive: clean and hi-tech industries

(4) Nhon Trach 3 industrial zone:

- Foundation: 1997

- Land area: 368 ha, of which 28 ha have been leased

- Labour: 202 people

- Projects: 4, investment capital: US$ 267.8 million