A Case Study
Increasing wages alone does not always lead to improved financial wellbeing for workers. While employers should undoubtedly pay a living wage, they should also consider providing workers with additional support. The purchasing power of an employer is far greater than that of an individual worker and therefore employers can often provide non-salary benefits that have disproportional value to workers. Workers know this, and researchers have found that employees overestimate the value of benefits, perceiving them as 40 percent of total compensation, even though the Bureau of Labor Statistics puts the figure at about 31 percent.
In Vietnam, as elsewhere in world, inflation is on the rise and economic times are hard for both workers and businesses. The global economic downturn has been particularly challenging for Vietnam’s apparel and footwear industry, with suppliers facing reduced orders and revenues. Workers are also struggling; wages have not kept up with inflation and with high unemployment rates, workers are supporting more family members than ever and paying more for necessities.
Labor Solutions works with nearly a hundred manufacturers in Vietnam to deploy annual worker surveys (amongst other tools) to understand worker sentiment, needs and wellbeing. As economic challenges mount, worker surveys are more important than ever to help employers get ahead of problems by proactively addressing concerns in their workforce. This case study examines how one factory leveraged worker survey results, Labor Solutions’ advisory services, and eLearning to better support workers during these challenging times and to support better business outcomes.
Identifying the Challenge
Even before the economic downturn, one factory frequently received low scores from workers on compensation. Late last year, as the economy started to take a turn for the worse, the factory decided to increase wages. Despite the increase in wages, a survey conducted one quarter after the wage increases showed workers’ perspectives on compensation had not changed and the factory was still receiving low marks from workers. Eager to ensure their efforts met workers’ needs, but confused on next steps, the factory engaged Labor Solutions.
Listening to Workers
Labor Solutions designed an additional survey to collect specific information regarding compensation and personal and family needs. Often compensation concerns are not just about money, but also can be addressed by providing additional support, tools, and systems that help workers and their families reduce daily expenses, so understanding what challenges workers are facing is key to providing the most impactful support.
Our survey found that workers had low financial literacy and struggled to save and to use the formal banking sector. Over 80% of workers reported not planning before making a big purchase, like a motorcycle. Workers also reported that high childcare costs resulted in at least one adult family member not being able to work, reducing the overall family earning potential.
In response to these results, Labor Solutions worked with the factory management to design two programs to better support workers’ financial wellbeing.
The factory launched Labor Solutions’ financial literacy eLearning courses via WOVO to all workers. The factory was able to activate the courses almost immediately and workers were able to access a range of financial wellbeing courses on topics like savings, managing expenses, financial planning and more. Each lesson is designed to be digestible in one sitting (15 minutes or less), and is animated and designed with interactions and games to keep learners engaged.
The factory announced that it had decided to set up an onsite daycare for working parents. The onsite daycare planning is under way and will launch later in 2023.
Results
In just one quarter, over 65% of workers completed at least one financial literacy online course. The factory continues to promote the program to ensure all workers who need the course know about it and can easily access the courses.
Another worker survey was conducted three months after the launch of the financial literacy courses and announcement of the upcoming daycare center. The number of workers who were actively saving money increased from 8% to 40%. Sixty percent of workers reported they had started to make plans before purchasing big ticket items. Workers also gave the factory 23% higher scores on compensation with increased responses indicating they were able to meet their family’s needs. Still, there is room for improvement, and anticipation of the daycare center is high.
We look forward to seeing next year’s results and the impact of employer-provided free childcare.
Labor Solutions, a women-owned and -led impact-focused business, leverages technology to build resilient supply chains by connecting, engaging and educating workers. Over a million and a half workers in 36 countries use Labor Solutions’ worker engagement platform, WOVO. Labor Solutions’ advisory services focus on building healthy social eco-systems within companies with global supply chains that engage workers, suppliers and buyers and support and facilitate responsible business practices and protection of human rights.