An increase in orders and higher export prices have helped garment makers offer better salaries and working conditions, but the sector’s labor shortage shows no sign of easing.

Many garment firms have raised salaries, offered more allowances and benefits to try and retain workers, industry insiders say.

Phi Ngoc Trinh, deputy director of garment firm Ho Guom, said the average monthly salary of a worker in his firm now is VND3-3.3 million (US$143-158). The firm also buys health and social insurance for them, and does not ask them to work extra hours, he said.

He said people are usually not interested in working for garment firms, mainly because of low income and poor working conditions. Many firms need more employees but are not able to hire enough workers.

“The most important factor to keep laborers is that the salary must be enough for their needs. This (increasing salary) can only be done by raising prices,” he said.

Some exporters said prices under FOB contracts have jumped an average of 15-20 percent over the past year, while outsourcing prices had risen by 5-10 percent, and that many firms have booked orders through the end of the third quarter of this year.

Like Ho Guom, many other garment companies have increased salaries and benefits for their workers to prevent them from quitting.

Luong Van Thu, vice general director of garment firm Dap Cau, said his company raised the average salary to VND3.2 million from VND2.8 million a year ago. “Our target is to increase the average monthly salary of workers to VND3.5 million. So we are negotiating to get orders with better prices while improving working conditions, increasing productivity and cutting production costs.”

Orders from the main importers of Vietnamese garments, like the US, EU and Japan, have increased. The country shipped garments worth $2.8 billion in the first quarter, up 27.9 percent over the same period last year, according to the General Statistics Office.

Thu said the salary increase, in fact, the was not remarkable in the context of high inflation. In addition, the hard work has made jobs in garment firms less attractive to laborers. “Although workers can be off on Sunday, they have to work 9-10 hours per day,” he said.

According to the Vietnam Textile and Apparel Association, garment workers’ salaries increased 10-15 percent in 2010, but the increase was only enough to offset the inflation rate of 11.75 percent last year. Thus, the life of garment workers was still very difficult.

Meanwhile, the increase in export prices sometimes did not keep up with that of material costs, said Thu. Cotton now costs around $5.20 per kilogram, three times that of early last year.

Thu said 80 percent of Vietnamese garment firms perform outsourcing work for foreign partners, so it is difficult for them to negotiate good prices.

“There is a common pricing standard. The outsourcing price for a jacket is about $5, so it is a success if you can negotiate that to $5.50,” he said. “The highest average salary that garment firms can pay for workers is VND4 million each month.”

Nguyen Ngoc Quang, director of  Yen Phong Garments Co., said his firm could not recruit enough workers to meet all new orders, so he had to refuse some of them. “We are always short of workers. If we could hire enough people, we could open an additional workshop.”